Casting a wider tax net: Experimental evidence from Costa Rica

Brockmeyer, Anne, Hernandez, Marco, Kettle, Stewart and Smith, Spencer (2018) Casting a wider tax net: Experimental evidence from Costa Rica. Centre for Business Taxation Working Paper, Oxford.

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Abstract

The majority of firms in developing countries are informal, and encouraging them to register for taxation is challenging. We argue that non-filing of taxes among registered firms constitutes an important intermediate form of informality, which can be tackled cost-effectively. Using a randomized experiment in Costa Rica, we show that credible enforcement emails increased the tax payment rate (amount) by 3.4 p.p. (US$ 15) among previously nonfiling firms. Highlighting third-party reports of a firm’s transactions further
increased compliance. The effect persisted in the medium term, and treated firms became more likely to report transactions with other firms, facilitating future tax enforcement.

Item Type: Other Working Paper
Keywords: Oxford University Centre for Business Taxation, informality, tax evasion, firms, communication experiment.
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 05 Feb 2019 17:32
Last Modified: 05 Feb 2019 17:32
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/7279

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