Working Paper 110
Non-filing refers to taxpayers who fail to submit a tax declaration, thus becoming ghosts in the eyes of tax authorities. It is a widespread phenomenon in sub-Saharan Africa, and has a number of detrimental fiscal effects. Non-filing has been largely unexplored in the literature, which focusses more on active filers. The overall aim of this paper is to shed light on the determinants of non-filing, building on neoclassical and behavioural theories, as well as to contribute to the methodological discussion on how to measure tax compliance. Focusing on Eswatini, the analysis combines survey data from a thousand entrepreneurs with their tax returns and filing history 2013-2018. We show that economic deterrence, compliance costs and moral factors, such as intrinsic motivation and peer pressure, are strongly correlated with actual filing. We also study how our key factors change when controlling for the persistence of filing behaviour in past years, or using a self-reported measure of compliance. We argue that tax knowledge plays a major role in understanding the decision to file. In terms of policy, results show that the tax authority could improve filing rates by adopting both a deterrent and an assistance-related approach, and also by triggering the role of social norms.