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Leveraging Trading Networks to Improve Tax Compliance: Experimental Evidence from Uganda

Author

Listed:
  • Almunia, Miguel
  • Henning, David J.
  • Knebelmann, Justine
  • Nakyambadde, Dorothy
  • Tian, Lin

Abstract

We use information on firms’ trading networks from VAT return data to design a randomized tax compliance intervention in Uganda. In treated pairs, either the seller, the buyer, or both receive letters listing discrepancies detected in past tax returns. The amendment rate is 22 percentage points higher in the treatment group, compared to 1.8% in the control group. We find spillover effects within treated firm pairs and in transactions with their untreated trading partners. Overall, there is a small increase in VAT liability for the amended returns. The intervention also leads to fewer discrepancies in subsequent tax declarations.

Suggested Citation

  • Almunia, Miguel & Henning, David J. & Knebelmann, Justine & Nakyambadde, Dorothy & Tian, Lin, 2023. "Leveraging Trading Networks to Improve Tax Compliance: Experimental Evidence from Uganda," CEPR Discussion Papers 18151, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18151
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    More about this item

    Keywords

    Uganda;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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