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Cristian Alonso, Ledys Feliz, Patricia Gil, and Miguel Pecho
Invoices document economic transactions and are thus critical to assess tax liabilities. We study a reform in the Dominican Republic that aimed to integrate invoice management into a broader, more comprehensive, risk-based compliance strategy. By rationing authorized invoices based on an extra scrutiny of each taxpayer’s compliance history, the reform led to significant and persistent improvements on filing, payment, and information reporting obligations and a modest increase in reported tax liabilities. Our study shows that deterrence effects over compliance behaviors are strengthened when the tax administration makes explicit and active use of taxpayers’ information, no matter if the invoicing framework is paper-based or electronic.
Cristian Alonso, Ledys Feliz, Patricia Gil, and Miguel Pecho

I. Introduction Invoices document economic transactions, which makes them critical to assess tax liabilities or verify tax deductions, credits, and refunds in value-added tax (VAT). Latin American tax administrations have long acknowledged the central role of invoices and have opted for a relatively tight management approach. Their approach includes: i) regulating the characteristics of every VAT invoice circulating in the economy, ii) authorizing the quantity of invoices that businesses can use for their economic transactions, and iii) enforcing invoice