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Tax compliance and information provision: A field experiment with small firms

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  • Doerrenberg, Philipp
  • Schmitz, Jan

Abstract

We study tax compliance in Slovenia using data generated in a field experiment. Small accounting companies were randomly assigned to an untreated control group and two treatment groups. Companies in the first treatment group received a letter that highlighted the importance of paying taxes and informed about the likelihood of becoming subject to an audit. In the second treatment group, tax officers from the tax authorities handed out in person the same letter that companies in the first treatment group received by post. The results indicate that such letters can increase compliance, and trigger even more compliance if handed over in person. These findings are in line with the theoretical predictions that we derive to rationalize the experiment.

Suggested Citation

  • Doerrenberg, Philipp & Schmitz, Jan, 2015. "Tax compliance and information provision: A field experiment with small firms," ZEW Discussion Papers 15-028, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:15028
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    Cited by:

    1. Marie Bjørneby & Annette Alstadsæter & Kjetil Telle, 2018. "Collusive Tax Evasion by Employers and Employees: Evidence from a Randomized Field Experiment in Norway," CESifo Working Paper Series 7381, CESifo Group Munich.
    2. Pomeranz, Dina D. & Vila-Belda, José, 2019. "Taking State-Capacity Research to the Field: Insights from Collaborations with Tax Authorities," CEPR Discussion Papers 13688, C.E.P.R. Discussion Papers.
    3. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    4. Giacomo De Giorgi & Matthew Ploenzke & Aminur Rahman, 2018. "Small Firms’ Formalisation: The Stick Treatment," Journal of Development Studies, Taylor & Francis Journals, vol. 54(6), pages 983-1001, June.
    5. repec:eee:soceco:v:70:y:2017:i:c:p:10-22 is not listed on IDEAS
    6. Giulia Mascagni, 2018. "From The Lab To The Field: A Review Of Tax Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 273-301, April.
    7. Armenak Antinyan & Luca Corazzini & Filippo Pavesi, 2018. "What Matters for Whistleblowing on Tax Evaders? Survey and Experimental Evidence," Working Papers 07/2018, University of Verona, Department of Economics.
    8. Martin Brown & Jan Schmitz & Christian Zehnder, 2018. "Communication and Hidden Action: Evidence from a Person-to-Person Lending Experiment," Working Papers on Finance 1819, University of St. Gallen, School of Finance, revised Nov 2018.

    More about this item

    Keywords

    Tax Compliance; Audits; Randomized Field Experiment; Tax authority; Information provision;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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