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The effects of a risk-based approach to tax examinations: evidence from a tax pilot programme in Tanzania

Author

Listed:
  • Amina Ebrahim

    (United Nations World Institute for Development Economics Research)

  • Elineema Kisanga

    (University of Dar Es Salaam)

  • Ezekiel Swema

    (Tanzania Revenue Authority)

  • Vincent Leyaro

    (University of Dar Es Salaam)

  • Edwin P. Mhede

    (Ubungo Maji)

  • Ephraim Mdee

    (Tanzania Revenue Authority)

  • Heikki Palviainen

    (Tampere University)

  • Jukka Pirttilä

    (University of Helsinki)

Abstract

Technical assistance and increased use of ICT in tax administrations hold promise for greater revenue collection. Yet, the evidence on how these activities work in the real-world circumstances of developing countries is scant. The paper attempts to fill this gap by evaluating an intervention undertaken jointly by the Finnish and Tanzanian revenue administrations. The programme introduced a new risk-based case selection method for enhancing the effectiveness of firm tax examinations in Tanzania complemented by supplementary staff training and developing management practices. Our results, stemming from a difference-in-differences analysis and administrative data from the Tanzanian Revenue Authority, indicate that the intervention increased the corrected amount of taxable income by approximately 20% during the first year of the new approach.

Suggested Citation

  • Amina Ebrahim & Elineema Kisanga & Ezekiel Swema & Vincent Leyaro & Edwin P. Mhede & Ephraim Mdee & Heikki Palviainen & Jukka Pirttilä, 2025. "The effects of a risk-based approach to tax examinations: evidence from a tax pilot programme in Tanzania," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(3), pages 851-871, June.
    • Handle: RePEc:kap:itaxpf:v:32:y:2025:i:3:d:10.1007_s10797-024-09858-5
    DOI: 10.1007/s10797-024-09858-5
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    More about this item

    Keywords

    Risk-based approach; Firm tax audits; Tanzania;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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