Journal of Business & Economic Policy

Evaluating the Effect of Value Added Tax on the Performance of Enterprises (Case Study: Manufacturing and Service Industries in the Khorasan Provinces)
Hadi Ghavami, Mohammad Ali Shabani, Razieh Rahimi

Abstract
The Value Added Tax (VAT) system, the law of which has been ratified and enforced in Iran since 2008, is one type of indirect tax that has affected enterprises. Despite the achievements of the VAT system in the country, as the legal deadline for its pilot enforcement has expired, any decision regarding the permanence of the so-called law and its extension to the final chain requires re-engineering and evaluating its implementation. Considering the outcomes of the VAT tax system, an attempt has been made to examine the impact of this type of tax on production, employment, size, and profitability of manufacturing and service enterprises in the Khorasan Razavi, North, and South Khorasan provinces. The validity, reliability, and normality of the questionnaires were tested using Cronbach’s alpha, Kolmogorov–Smirnov, and Shapiro-Wilk tests. The results of hypothesis testing using factor analysis and the two-dimensional nonparametric test indicated that VAT has a negative and significant effect on the production, employment, size, and profitability of enterprises.

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