Document Type : Research Paper

Authors

• Abolfazl Ghiasvand ¹
• Reyhane Movagharisadat Mahalle ²

¹ Assistant Professor, Economics and Acounting Department, Islamic Azad University, Central Tehran Branch

² M.S. in Economic Sciences

Abstract

The main reason for focusing on value added tax (VAT) is expanding tax base and
increasing tax revenues. Regarding the implementation of VAT Act initiated in October
2008, this paper attempts to estimate tax revenue resulting from this Act, which is based on
input ! output table and production method.
Based on the results of this research, VAT base according to the Act is about 44 percent of
GDP; with regard to the rate of 1/5 percent, potential VAT revenue will be 0/67 percent of
GDP.
Results of this study show that the full implementation of VAT act with rate of 1/5
percent will not have significant effect on reducing the operating budget deficit. The VAT
rate should be increased in order to makeup such a deficit.

Keywords

• Value Added Tax
• Tax Base
• Tax Revenue
• Input ! Output Table