Working Paper 113

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 values of trust (Prichard, Custers, Dom, Davenport and Roscitt 2019). To do so in an effective and targeted way, policymakers need clear evidence on how tax compliance correlates with key taxpayer characteristics, such as gender. However, such evidence remains limited in the Global South, particularly in Africa, and our study aims to fill this gap. In this study, we investigate the correlation between business owner’s gender and tax compliance in Ethiopian enterprises. We measure the tax compliance of businesses from tax audit registry data and combine it with survey data collected from 408 enterprises. Our results suggest that enterprises’ tax compliance behaviour is significantly affected by their owners’ gender: female owned enterprises are more likely to be tax compliant than those owned by men. The correlation between the owner’s gender and tax compliance also becomes stronger as enterprises get larger in size. The results of our study imply that development-related polices, especially in the area of tax administration and compliance, should consider the behavioural variation among male and female business owners. Moreover, improving the participation of women in business in the country may also enhance equity and tax revenue collection for better resource mobilisation and development.


Seid Yimam Mohamed

Seid Yimam is based at the Institute of Development Studies, working as a Research Associate focusing on tax administration, gender and tax compliance, informal tax, and environmental taxes. He is also a PhD student in Economics at the University of Sussex on a scholarship funded by ICTD. Outside of the field of taxation, his main research areas are in contemporary development focusing on Agriculture and Food Systems Transformation. He holds an MSc in Economics (Policy Analysis) from Addis Ababa University and an MSc in Economics from the University of Copenhagen. He worked as a Research Officer at the International Food Policy Institute (IFPRI) and the Policy Study Institute (PSI), and he was also a lecturer of Economics at Debre Berehan University in Ethiopia prior to joining ICTD.

Fissha Asmare Marye

Fissha Asmare is a Research Fellow at Scotland's Rural College (SRUC).
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