The VAT began life in the more developed countries of Europe and Latin America but, over the past 25 years, has been adopted by a vast number of developing and transition countries. A recent IMF study concludes that the VAT can be a good way to raise resources and modernize the overall tax systemﾗbut this requires that the tax be well designed and implemented.
The rapid rise of the value-added tax (VAT) was the most dramaticﾗand probably most importantﾗdevelopment in taxation in the latter part of the twentieth century, and it still continues. Forty years ago, the tax was barely known outside theoretical discussions and treatises. Today, it is a key component of the tax system in over 120 countries, raising about one-fourth of the world’s tax revenue.
