WHAT INTERNATIONAL EXPERIENCE CAN TELL US ABOUT THE POTENTIAL CHALLENGES OF ADMINISTERING A US VAT

Much has been written about the possible design of a U.S. VAT. There is less literature discussing the types of compliance issues that the U.S. tax authorities might face if a federal VAT were adopted - in other words, the most common patterns of VAT noncompliance, strategies that tax authorities are implementing to address noncompliance, and the measurement of noncompliance - in the context of advanced industrialized countries. This paper expands on the existing literature by discussing the recent experience of Australia, Canada, New Zealand, and the United Kingdom with ensuring VAT compliance. It also discusses the context for VAT introduction and recent trends.