Abstract:Value Added Tax (VAT) is one of the main sources of internal revenues in Peru and most countries in Latin America.Since the market in Peru shows a high heterogeneity in terms of fi rms' size and their economic transactions, it is not profi table to collect VAT from the smallest-sized fi rms or audit them. Therefore, there is a powerful incentive for evaders to create small-sized fi rms deliberately with the only aim of issuing invoices that do not support real transactions and selling them for a fraction of th… Show more
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