Tax compliance and electronic invoicing in Ecuador: An impact assessment

Abstract

In 2013, the Ecuadorian Tax Administration officially launched the electronic invoicing system as a strategy to reduce tax evasion in tax returns. These information systems allow for designing better monitoring and auditing tools; consequently, such systems increase the subjective risk perceived by taxpayers, thus increasing their compliance. The aim of this article is to determine the effect that this system had on value-Added tax (VAT) returns in the period 2014-2016, using the difference-in-differences (DID) technique. The results show that the increased coverage of the electronic system over time had positive effects on the declaration of sales, purchases, and taxes.