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Open Access

Interregional Value-Added Tax in the Era of E-Commerce: Tax Policy Design Based on Big Data from Online Retailing

Yu Chen1,†, Luwei Xiang2,†, Hu Yang3( )
School of Public Finance and Taxation, Central University of Finance and Economics, Beijing 100008, China
School of Management and Economics, The Chinese University of Hong Kong, Shenzhen 518172, China
School of Information, Central University of Finance and Economics, Beijing 100008, China

† Yu Chen and Luwei Xiang contribute equally to this paper.

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Abstract

The value-added tax (VAT) in China is levied and allocated based on the origin principle. Under the background of the increasing substitution of online retail for traditional offline retail, this mechanism will exacerbate the disparity of regional tax revenue, and intensify tax competition among local governments. Therefore, reconsidering the allocation mechanism of value-added tax in China can be an important policy decision, and it is influenced by various economic and social factors. Firstly, we utilize large-scale retail transaction data from an e-commerce platform to measure regional disparities in retail and consumption among different regions and then reveals present tax policy results in revenue imbalance in different regions. Secondly, we establish a model based on game theory to illustrate how the origin principle leads to fierce tax competition among regions. Furthermore, by establishing and solving tax allocation models between local governments and the central government, this study simulates and calculates the degree of revenue imbalance under different scenarios and attempts to propose policy measures. The results indicate that implementing the destination principle will reduce regional tax imbalances. Moreover, adjusting the allocation ratio between the central government and local governments based on city levels is advantageous for further reducing regional tax revenue disparities.

Keywords

e-commercevalue-added taxdestination principleorigin principle

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Journal of Social Computing
Volume 5 Issue 1,
March 2024
Pages 46-57
DOI: 10.23919/JSC.2024.0006
Cite this article:
Chen Y, Xiang L, Yang H. Interregional Value-Added Tax in the Era of E-Commerce: Tax Policy Design Based on Big Data from Online Retailing. Journal of Social Computing, 2024, 5(1): 46-57. https://doi.org/10.23919/JSC.2024.0006

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Received: 29 November 2023
Revised: 07 March 2024
Accepted: 08 March 2024
Published: 30 March 2024
© The author(s) 2024.

The articles published in this open access journal are distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).
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