Many tax authorities changed the mode of interacting with taxpayers from physical to online as a response to the Covid-19 pandemic, to diminish the spread of the virus. Eswatini, the country under study, mandated the use of online tax filing through the e-Tax system for all income tax payers, coupled with a zero-cash-handling policy for tax payment. By means of a difference-in-difference (DID) strategy, reinforced by a propensity score matching (PSM), this paper offers an impact evaluation of the mandate on taxpayer filing and payment behaviour. We present three sets of results. First, we describe which firms are most likely to register for e-Tax – mostly large firms and those in the primary and tertiary sectors. Second, we show that e-Tax uptake significantly improves filing behaviour, as well as payment behaviour. E-Tax registered taxpayers are less likely to file nil (by 60 per cent), declare more turnover and taxable income, and are 70 per cent more likely to pay conditional on filing. Third, we shed light on the mechanisms behind our main findings, showing that the technology improved accuracy and reduced compliance costs. E-Tax-registered treated taxpayers are more likely to file on time, file for VAT, report more accurately, and, on the payment side, to pay their liabilities in full.
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.
Razan Amine is a Research Consultant, working as part of the DIGITAX programme. Her research interests include economic development, taxation, and public finance in developing countries. She is also a research manager at the Abdul Latif Jameel Poverty Action Lab South Asia (J-PAL SA) managing a range of projects in India. As well as this she engages in research at the University of Oxford, where she recently completed her MSc in Economics for Development and was awarded a scholarship from the Oxford Centre of Islamic Studies. Prior to this, she completed her first master’s degree as a Fulbright Scholar at John Hopkins University SAIS in Washington DC and worked on a range of projects on taxation at the economics department at John Hopkins University. Amine's work with the ICTD does not reflect the work or opinions of J-PAL.