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| Author: | Pointon, J. Spratley, D. |
| Title: | Financial effects of an uncertain change in VAT rates in the EU |
| Journal: | European Journal of Finance
1998 : MAR, VOL. 4:1, p. 75-83 |
| Index terms: | VALUE ADDED TAX EUROPEAN UNION CHANGE |
| Language: | eng |
| Abstract: | The aims of this paper are first, to review the background to the harmonization of VAT rates within the European Union and second, to model the financial impact of the risks surrounding structural changes in VAT rates. The underlying sales upon which VAT is based is modelled by a geometric Brownian motion. By contrast the timing of a VAT rate change, consistent with a negative exponential distribution, implies a Poisson jump if and when the VAT rate changes. |
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