Tax Administration and Compliance

Image credit: © Uganda Revenue Authority, Vanessa van den Boogaard

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:

January 2021
Tax Certainty? The Private Rulings Regime in Uganda in Comparative Perspective
by Samuel Kahima, Solomon Rukundo & Victor Phillip Makmot

Taxpayers sometimes engage in complex transactions with uncertain tax treatment, such as mergers, acquisitions, demergers and spin-offs. With the rise of global value chains and proliferation of multinational corporations, these transactions increasingly involve transnational financial arrangements and cross-border dealings, making tax treatment even more uncertain. If improperly structured, such transactions could have costly tax consequences….

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December 2020
Simulating the Impact of COVID-19 on Formal Firms in South Africa
by Adrienne Lees, Giulia Mascagni & Michael Kilumelume

This note uses administrative tax data for formal firms to measure the direct impact of lockdown restrictions on firms’ profitability, employment, and exit rates. The authors separate the economy into three categories, according to the size of the shock experienced, and consider two lockdown scenarios: one lasting three months and one lasting five months. These…

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Tax Amnesties in Africa: An Analysis of the Voluntary Disclosure Programme in Uganda
by Solomon Rukundo

Tax amnesties have taken centre stage as a compliance tool in recent years. The OECD estimates that since 2009 tax amnesties in 40 jurisdictions have resulted in the collection of an additional €102 billion in tax revenue. A number of African countries have introduced tax amnesties in the last decade, including Nigeria, Namibia, South Africa…

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December 2020
How Effective has the TADAT Framework Been in Improving Tax Administration in Uganda?
by Doris Akol, Margaret Magumba, Patrick Loke, Milly Nalukwago Isingoma & Tina Kaidu

Like several other revenue administrations, prior to the introduction of the Tax Administration Diagnostic Assessment Tool (TADAT) in Uganda, there was no comprehensive standard tool for assessing revenue administration against internationally recognised good practices. Detailed assessment was spread across different facets of revenue administration and indicators were not standardised. The first TADAT assessment of Uganda’s…

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December 2020
Gender and Tax Compliance: Firm Level Evidence from Ethiopia
by Seid Yimam & Fissha Asmare

Many Sub-Saharan African countries, characterised by government budget deficits, have been undergoing reforms and improvements to enhance tax revenue collection. However, such improvements often fall short of expectations and do not yield the expected revenue. These economies are highly vulnerable to tax avoidance and tax evasion, mainly due to the lack of a strong, modernised…

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December 2020
What is Wrong with African Tax Administration?
by Mick Moore

National tax administrations in sub-Saharan Africa have undergone considerable reform in recent decades. In several respects, they are, on average, more reformed and more efficient than tax administrations in other low-income regions. Many have made major organisational changes, responding effectively to a number of major challenges. This includes the introduction of VAT, a rather complex…

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December 2020
To File or Not To File? Another Dimension of Non-Compliance: The Eswatini Taxpayer Survey
by Fabrizio Santoro, Edward Groening, Winnie Mdluli & Mbongeni Shongwe

Non-filing of income tax takes place when taxpayers fail to submit a tax declaration, despite being liable to do so, thus becoming ghosts in the eyes of tax authorities. It is a widespread phenomenon in sub-Saharan Africa (SSA). Increasing evidence has been produced on non-filers in Rwanda, Uganda, Malawi, Kenya and Nigeria. Eswatini is no…

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November 2020
Strengthening Tax-Accountability Links: Fiscal Transparency and Taxpayer Engagement in Ghana and Sierra Leone
by Vanessa van den Boogaard, Wilson Prichard, Rachel Beach & Fariya Mohiuddin

There is increasingly strong evidence that taxation can contribute to expanded government responsiveness and accountability. However, such positive connections are not guaranteed. Rather, they are shaped by the political and economic context and specific policies adopted by governments and civil society actors. Without an environment that enables tax bargaining, there is a risk that taxation…

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October 2020
How Best to Nudge Taxpayers? A Tailored Letter Experiment in Eswatini
by Fabrizio Santoro, Edward Groening, Winnie Mdluli & Mbongeni Shongwe

Tax collection in sub-Saharan Africa (SSA) performs poorly, with a tax/GDP ratio of about 15% –this has severe repercussions for service delivery, growth and state-building. The ratio in high-income countries is 35%. Resource-constrained tax authorities in SSA are transitioning towards a new tax era, and implementing innovative compliance strategies such as ‘tax nudges’ – communication…

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October 2020
Gender and Tax Compliance: Firm Level Evidence from Ethiopia
by Seid Yimam & Fissha Asmare

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…

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Blogs:

January 2021
by Max Gallien & Othmane Bourhaba

Informal economies in North Africa have frequently captured public attention in recent years. They not only make up over half of the region’s labour force and a substantive part of its GDP, but often put workers into unsafe environments or in conflict with authorities. While Mohamed Bouazizi’s self-immolation is surely the most famous example, deaths and…

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December 2020
by Laura Wilson & Mamadou Gueye

It is widely recognised that “business as usual” will not close the estimated financing gap of USD 2.5 trillion that is needed annually to achieve the Sustainable Development Goals (SDGs) by 2030. United by this realisation, the members of the multi-stakeholder-partnership Addis Tax Initiative (ATI) recently presented the ATI Declaration 2025 to renew political buy-in…

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September 2020
by Giulia Mascagni

Despite being recognised as a critical aspect of tax compliance, taxpayer knowledge is a very under-explored topic. Using evidence from Rwanda and Eswatini, Giulia Mascagni explores why taxpayer education matters, whether it is effective, and how research can inform governments’ taxpayer education programmes. Across Africa, many taxpayers have a shockingly poor understanding of the tax…

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Research Projects:

Current Project
Is Value Added Withholding Tax effective as a tool of enhancing VAT and total revenue generation?
Project Researchers: Simbarashe Hamudi

VAT is a key revenue generating tax in Zimbabwe and all African states. It is also a key source of financing of the African countries budget. VAT revenues have an essential role in budgetary policymaking, and vast sums of VAT are not being collected each year due to issues such as ineffective administration and tax…

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Current Project
How reliable are Taxpayers’ Tax Returns Data? Data Management in Uganda Revenue Authority
Project Researchers: Jova Mayega, URA, Jane Nabuyondo, URA, Milly Nalukwago, URA & Ronald Waiswa, URA

The overall objective of this project is to examine how clean the tax return data is in the Uganda Revenue Authority (URA). The team will examine the following research questions: What data gaps exist in URA tax return records? What are the sources of errors (if any) in the return filing process? What challenges do…

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Past Project
ICTD-RRA National Taxpayer Survey
Project Researchers: Giulia Mascagni & Fabrizio Santoro

In 2019 the Rwanda Revenue Authority (RRA) commissioned a National Taxpayer Survey and related study on tax compliance to the International Centre for Tax and Development (ICTD). This study is meant to serve as background to the new RRA Tax Compliance Strategy, which is scheduled to be launched in July 2020. Data was collected in…

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Past Project
The link between tax revenue allocation and tax morale in Nigeria
Project Researchers: Tom Moerenhout, IISD, Belinda Archibong & Evans Osabuohien

The proposed research will answer three research questions: (1) Do regions that have historically received more tax revenue have better tax morale? (2) What type of tax allocation in the form of public service provision increases tax morale? (3) Can oil producing regions turn the use of revenue from the 13% fund into higher tax…

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Past Project
The Role of Information About Peer Behaviour on Tax Compliance in Nigeria: An Experimental Study
Project Researchers: Adedeji Adeniran, Joseph Ishaku, Precious Akanonu & Chukwuka Onyekwena

Domestic revenue mobilization is a priority for many SSA countries. Yet, low tax compliance constitutes a major challenge to this drive. Improving tax compliance will require an understanding of the underlying factors influencing a taxpayer’s decision to either pay taxes or not. However, little is known about tax compliance behaviour in most SSA countries; insights…

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Past Project
Does Gender Matter in Tax Compliance? The Case of URA’s Individual Taxpayers
Project Researchers: Ronald Waiswa, Uganda Revenue Authority, Nathan Sebaggala & Jalia Kangave, ICTD

There is now an extensive body of literature looking into the factors that influence tax compliance. These studies, loosely known as tax morale studies, employ various tools to understand why some people pay taxes while others do not. In some cases, the studies are gender disaggregated, thereby enabling us to understand how men and women…

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Past Project
Improving State Taxation Capacity using Administrative Data
Project Researchers: Aprajit Mahajan, JPAL-South Asia, Shekhar Mittal & Ofir Reich

Improving the state’s ability to tax effectively is central to the development process. However, tax collections (as a percentage of GDP) are low in most developing countries — in India the ratio is about 15% — and non-compliance is widely seen as an important problem. A common strategy to evade taxes is to establish shell…

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Past Project
The Myth of Gender Tax Compliance in Ethiopian Enterprises
Project Researchers: Seid Yimam Mohamed & Fissha Asmare Marye

This study will examine tax compliance differential between female-owned and male-owned business enterprises in Ethiopia, particularly located in Addis Ababa. Collecting survey data on 400 medium and large size firms, we will estimate the log-odds-ratios from a fixed effect logit model to describe the probability of being tax compliant and apply a generalized Oaxaca–Blinder decomposition…

Project Outputs

Working Paper
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Past Project
Rethinking Tax Morale
Project Researchers: Wilson Prichard, University of Toronto

The past decade has witnessed a surge in international interest in the importance of ‘tax morale’ as a key component of strategies for strengthening tax compliance in developing countries. This focus has been long overdue, and there is now broad research evidence that strengthening tax morale can have important benefits in encouraging ‘quasi-voluntary’ tax compliance….

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Past Project
What shapes tax morale in Ethiopia?
Project Researchers: Gebrelibanos Hadush Amare, Raya University, Nega Afera Reda & Gebremeskel Hailu Tesfay

Citizens’ tax morale can enhance actual compliance behavior and provide governments with the necessary revenue. This study aims to identify the various factors that shape citizens’ attitudes towards taxation and suggest ways to improve compliance through positive motivations. The 2013 5th round Afrobarometer survey conducted in Ethiopia is our main source of data. A sub…

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