The central question we try to answer is why would taxpayer report inconsistent information of their VAT transactions to the authority? The question is relevant since we documented in a forthcoming ICTD working paper that the extent of depth of VAT discrepancies in Rwanda is alarming and it is still not clear what is causing it. Very little is known about it. We formulated some hypothesis in terms of blatant evasion, poor record-keeping or lack of knowledge. Pomeranz (2015) in Chile showed that evasion is key explanation for VAT misreporting.

To explain internal discrepancy between VAT return and EBM data we propose different hypothesis such as lack of knowledge of the EBM, poor record-keeping, evasion due to low perception of enforcement with the EBM data. Behind the observed external discrepancies between sellers and buyers, we think that buyers’ under-claiming is mainly due to strategic gaming of buyers that postpone their claim, as well as lack of knowledge on how to process a claim or the intention of appearing small and go undetected by the authority


Mads Knudsen

Yves Nsengiyumva

Yves Nsengiyumva is a researcher and community engagement specialist working on socio-economic development initiatives in Rwanda. He's a management consultant and also the in-country analyst for Euromonitor International.

Fabrizio Santoro

Fabrizio is a Research Fellow at the Institute of Development Studies, and the Research Lead for the second component of the ICTD's DIGITAX Research Programme. His main research interests relate to governance, public finance, and taxation, with a strong focus on impact evaluation methodologies and statistical analysis. He holds a PhD in Economics from the University of Sussex.