A Study of Relationship between Performance Tax and VAT on Commercial Companies in Northern Tehran

The main target of this research is to study the economic effects of VAT implementation especially in respect of revenue-rasing and its relationship with performance tax of commercial companies in Nothern Tehran Tax Office. In other words, this study evaluates the relationship between commercial companie's performance tax and VAT and also between these companie's peformance tax and their value added. The significance of the difference between performance tax and VAT of the selected companies in a sample is also tested. For this purpose, 203 commercial companies with more than 20 billion rials sales per year were selected randomly as the sample size and their information of the year 1388 were extracted from their tax records. The results of regression models indicate that their VAT could not cover their performance tax completely. The hypothesis that VAT is proportional to performance tax couldnt be accepted firmly in the whole sample companies. In different classifications which are based on sales amount and activity type of companies, the results show that tax bases in companies with low annual sales couldnt support these mentioned relationships. While the results show that performance tax and VAT are proportional in companies which have high annual sales and VAT can cover performance tax well. In relation with the differences between performance tax averages and its VAT in the selected companies based on T – test, this paper has concluded that between these two averages there are meaningful differences and the average of performance tax is higher than the average of VAT.