Ethiopian Tax Research Network (ETRN)

The widespread introduction of ICTs and digitised data management systems is one of the most important developments amongst African tax administrations in recent years. However, very little evidence is available on their effectiveness to increase compliance and on how taxpayers respond to these changes. This paper starts filling this gap by reporting three sets of…

This paper examines the effect of intergovernmental fiscal transfers on the fiscal behaviour of local governments in Ethiopia for the period 2004-2018. The empirical findings suggest that central government grants bolster state-level employment and expenditure. However, grants from the central government to states do not crowd out state-level revenue collection. Hence, this paper argues that…

Developing countries often lack tax information and enforcement capacity necessary to effectively implement instruments of a modern tax system, such as VAT, income taxes and others. An alternative strategy to increase tax compliance, and thus revenue, in these countries may depend on the capacity of policymakers to harness individual’s civicmindedness, social norms, reciprocity and cultural…

Efforts to reform property tax systems in African cities tend to focus more on how to value properties for purposes of tax assessment than on how to better collect taxes due. The same is true of the literature on property tax reform. There is however reason to believe that a greater initial focus on improving…

Tax evasion is typically very hard, if not impossible, to measure. In the case of trade flows however, it is possible to capture it thanks to “missing imports”: the difference between the total value of exports recorded by country A to country B and the total value of imports of country B from country A….

It is well documented in the literature that developing countries raise less tax revenue as a share of their economy than their developed counterparts. Part of this gap can be explained by the relatively higher tax evasion in the former. Recent literature shows that increasing the availability of information reduces evasion, by increasing the probability…

Tax is a major source of government revenue. Many countries prioritise mobilising domestic resources to finance government spending. However, many factors influence the revenue generated by taxation, including the population’s level of compliance with tax expectations. A country’s ability to raise funds from tax depends on the level of tax compliance. Tax compliance refers to…

Why turnover-based presumptive taxation? The Ethiopian economy is cash-based and dominated by a large number of micro and small businesses. Hence, taxing this sector assists in raising government revenue and increasing the number of taxpaying firms. Turnover-based presumptive taxation provides a regime that simplifies the tax rules for small taxpayers and helps introduce them to…

African governments are increasingly seeking to improve tax compliance in the pursuit of domestic revenue sources. Despite this trend, there is limited understanding of value added tax (VAT) compliance in Africa. In Ethiopia, increased VAT compliance is essential for the government to meet its ambitious domestic revenue goals. Therefore, we surveyed 652 Ethiopian VAT-registered businesses…

The tax compliance behaviour of the public sector has been largely neglected in the tax literature. Other than appearing in tax laws as taxpayers, in practice the compliance strategies employed by revenue authorities do not sufficiently cater to government agencies. Enforcement of tax payments on these agencies is generally perceived to be a difficult undertaking…