Key Questions in Considering a Value-Added Tax for Central and Eastern European Countries

In the course of introducing a market-oriented tax system, most Central and Eastern European countries are actively considering the merits of a value-added tax. Social, economic, and technical issues pertinent to the introduction and operation of the VAT are examined, including the burden distribution of the VAT, its effect on price level and economic growth, as well as coverage, definition of the base, and choice of rate structure. Various legal and administrative aspects are also reviewed. The paper draws on the experience of EC member states and other OECD countries with value-added taxes.