The Compliance costs of Value Added Tax (VAT): The case of the Republic of Mauritius

The evaluation of taxpayers’ compliance costs has grown in significance within the tax system research over more than two decades and has predominantly emanated from developed countries. However, compliance costs literature is quite limited in developing countries. This article measures the compliance costs of the Value Added Tax (VAT) for the Republic of Mauritius for the period of 2001/2002, and using consumer price index has estimated the compliance costs for the year to 2009/2010. It also measures the net compliance costs after the effect of the benefits to the VAT registered traders. The regressive effect of compliance costs is proven, measured by the different categories of traders and the number of employee.
A regression model estimating the magnitude of total compliance costs was also formulated with the turnover level, number of invoices and methods of recording as significant indicators.