Tax Administration and Compliance
Many of the challenges low-income countries face in mobilising domestic resources are related to tax administration as much as tax policy. Our research on this theme encompasses all aspects of tax administration, from technology adoption, to data management and strategies for collecting revenue from different types of taxpayers. Tax compliance is a key focus, as low-income countries struggle with widespread evasion, corruption, and limited administrative capacity. Our research on compliance includes survey-based studies of taxpayers’ perceptions and attitudes, case studies, and large-scale field experiments.
Publications:
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…
Transitioning to an electronic system for tax administration and collection is a welcome development in countries that have hitherto faced difficulty in raising tax revenue. Countries like those in sub-Saharan Africa, for instance, account for about 16 percent of GDP from tax revenue, while Nigeria records 1.48 percent of its GDP from tax revenue (World…
How can governments and tax authorities best encourage taxpayers to be compliant, i.e. to be more honest in declaring information about their tax obligations and paying what is due? Unfortunately, one common response, rather misleadingly termed ‘education’, is to preach at taxpayers: to tell them that it is their duty to pay taxes, and threaten…
Our research explores the factors that drive the ways in which small business owners perceive and use the Integrated Tax Administration System (ITAS) in Nigeria. We surveyed nearly 500 small businesses. We apply logistic regression analysis to the survey data to determine which among a range of factors – relating to the ownership of businesses,…
This paper focuses on the perceptions of a turnover-based presumptive tax system in Ethiopia. It mainly focuses on taxpayers’ perceptions of fairness, simplicity and administrative capacity. In this study, fairness has been assessed based on seven dimensions, namely exchange fairness, procedural fairness, horizontal fairness, vertical fairness, inter-group fairness, time-related fairness and compliance fairness. Exchange fairness…
With the first implementation of e-filing by the US in 1986, many countries in Europe, Asia and Africa followed suit. E-filing for certain tax payments was introduced at the federal level in Nigeria in 2013. However, none of the State Boards of Internal Revenue in Northwest Nigeria have made the system available for the collection…
The tax-to-GDP ratio in developing countries is still remarkably low for many different reasons. One of the key factors behind poor tax collection is low tax compliance. In this paper we look at compliance with income tax in Eswatini, focusing on one particular dimension – filing of nil returns. Nil-filing represents a sizeable share of…
E-filing for some kinds of tax payments was introduced at the federal level in Nigeria in 2013, yet it has not been made available by state government for the collection of Personal Income Tax from micro-entrepreneurs – a major source of revenue. This research was designed to investigate the acceptability of e-filing to micro-entrepreneurs in…
At their most general, presumptive taxes seek to use indirect means to assess the liability of a specific taxpayer, which differ from the usual rules based on taxpayer accounts. Many countries use some form of presumptive taxation to simplify the rules for businesses and individuals that frequently escape taxation. Ethiopia uses presumptive taxation as a…
Blogs:
Nigeria’s performance on collected taxes is poor. Non-oil revenue in the country is around 3-4 percent of GDP, far below countries such as South Africa and Brazil where non-oil revenues lie between 20 and 25 percent of their GDP – or other peers in sub-Saharan Africa who typically collect more than 10 percent of GDP…
Local governments (LGs) across Uganda have recently been looking for ways to improve yields from their property tax systems. The main reasons for this growing interest are the rapid urbanisation taking place in the country, and the increased pressure from city dwellers for public services. Some property tax reforms have shown success in identification, valuation…
Many firms around the world fail to file their tax declarations, even if they are formally registered. This problem is particularly prevalent in low- and middle-income countries. In many such countries, over half of tax-registered firms do not file their tax declaration, and the maximum non-filing rates reaches over 90% in some countries (Figure 1)….
Research Projects:
On February 8th, the International Centre for Tax and Development (ICTD) announced a new capacity-building program with the Ugandan and Rwandan Revenue Authorities. This project will be a year-long pilot of workshops and collaborative research between researchers from the ICTD and staff from the revenue authorities in Rwanda and Uganda. The course is mostly about…
Tax to GDP ratio in developing countries is still remarkably low. One of the key factors behind poor tax collection is low tax compliance. This study aims to test, using a randomized controlled trial, the effect of a multi-faceted nudging strategy from the Eswatini Revenue Authority (SRA), targeting the whole population of income taxpayers in…
How do states in a low-tax, low-capacity equilibrium spur citizens to start paying taxes? This experiment would examine the direct and network effects of an increase in tax enforcement by the government on tax compliance. We partner with the Provincial Ministry of Taxation and randomly assign firms in the city of Kananga, DRC, to one…
In a bid to promote equity in the taxation of individuals and boost revenue collections, the Rwanda Revenue Authority (RRA) would like to establish whether wealthy individuals in Rwanda are paying their fair share in taxes. This project will undertake research aimed at understanding the drivers of wealth in Rwanda’s economy, establishing the policy and…
This project aims to understand what Nigerians think about fuel subsidies and their attitudes towards their reform, reduction or removal. It will draw on a new nationally representative survey of perceptions about taxes and subsidies in Nigeria. The analysis will show the characteristics associated with support for and opposition to subsidy reform. It will then…
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…
The study focuses on assessment of presumptive taxation of small and micro enterprise in Addis Ababa City Administration. It will evaluate the standard assessment processes and procedures, the criteria used for assessment, and the equity of taxes imposed by the tax authority. Data will be collected through surveys and interviews.
VAT, as a consumption tax, can contribute huge amount of tax revenue. But it does not play this role in generating tax revenue in Ethiopia because of low VAT compliance. This can be due to inadequate commitment and capability of tax officials, weak enforcement, low awareness of tax payers, limited application of laws and complex…
Ethiopia’s revenue collection performance remains low at 12.5% of GDP compared to the average for sub-Saharan Africa (17%). This is partly attributable to the failure of government entities to support tax administration. The public sector is vital in terms of withholding VAT payments and income taxes. However, these institutions experience little pressure from the tax administration…
This study aims to evaluate the taxpayer education programs used to aware and educate on the tax knowledge. It may be difficult to shift tax culture without education at an early age or without citizens voluntarily embracing tax payment. So we would like to examine the content and design of mass media in the TV,…