Working Paper: CEPR ID: DP18151
Authors: Miguel Almunia; David J. Henning; Justine Knebelmann; Dorothy Nakyambadde; Lin Tian
Abstract: We use information on firms’ trading networks from VAT return data to design a randomized tax compliance intervention in Uganda. In treated pairs, either the seller, the buyer, or both receive letters listing discrepancies detected in past tax returns. The amendment rate is 22 percentage points higher in the treatment group, compared to 1.8% in the control group. We find spillover effects within treated firm pairs and in transactions with their untreated trading partners. Overall, there is a small increase in VAT liability for the amended returns. The intervention also leads to fewer discrepancies in subsequent tax declarations.
Keywords: Uganda; Tax Compliance; Trading Networks; VAT
JEL Codes: H26; H25; L14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intervention (D74) | tax compliance behavior (H26) |
| sending letters to treated firm pairs (L14) | amendment rate of VAT returns (H25) |
| amendment rate of VAT returns (H25) | VAT liability (H25) |
| letters (Y20) | discrepancies in VAT reporting (H25) |
| intervention (D74) | improved reporting behavior in subsequent months (C92) |
| spillover effects within treated pairs (C21) | behavior of untreated trading partners (F10) |
| intervention (D74) | long-term effects on overall VAT liability (H25) |