The role of information in tax compliance: Evidence from a natural field experiment
AbstractIt is challenging to distinguish the role of information in tax compliance from other factors affecting it. This paper utilizes a novel natural field experiment design to study the issue. In the experiment firms reporting their VAT were sent a letter asking them questions about their attitude towards the tax authority. The introductions to the questions provided candid information about VAT rules for a randomized treatment group, while a randomized control group was only asked questions without additional information. We observe the effects of the treatments directly from firm-level tax records. Providing information did reduce the noncompliance in tax reporting, which indicates that there were unintentional errors. The experimental design also allows us to study whether the difficulty and novelty of the tax code plays any role in tax compliance. The results indicate that tax reporting changes when new and easy information is provided.
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Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Working Papers with number 48.
Date of creation: 16 Sep 2013
Date of revision:
Find related papers by JEL classification:
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-18 (All new papers)
- NEP-EXP-2013-10-18 (Experimental Economics)
- NEP-IUE-2013-10-18 (Informal & Underground Economics)
- NEP-PBE-2013-10-18 (Public Economics)
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