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IFS/STICERD/UCL Development Work in Progress Seminar

Using third-party data to improve tax compliance in a context of low enforcement

Léo Czajka (IFS and Louvin), joint with Florence Kondylis, Bassirou Sarr and Mattea Stein

Thursday 09 June 2022 13:00 - 14:00

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About this event

This paper investigates a potentially cost-effective way to improve tax compliance when enforcement capacity is low, by leveraging inter-firm relationships and third-party reporting. Using rich administrative data from Senegal, we first document persistent concentration of tax revenue among the largest taxpayers and significant under-reporting among smaller firms. We randomize a low-cost communication intervention which induces the largest firms to comply with a policy whereby they must declare payments made to their suppliers and either withhold a 5% tax from those which are not tax-registered, or provide their suppliers' fiscal identifier to the tax authority. Early results suggest large firms do not correct withholding payments for past transactions but do provide more complete information about their suppliers. In a follow-up intervention, we will test whether exploiting this new information reinforces the efficiency of legal procedures targeting suppliers which have been detected as significantly under-reporting their revenues.

This seminar series is jointly organized by the IFS, STICERD, and UCL.

IFS/STICERD/UCL Development Economics Work In Progress seminars are held on Thursdays in term time at 10:00-14:00, at the IFS, unless specified otherwise.

Seminar organisers: Oriana Bandiera (STICERD, LSE), Imran Rasul (UCL), Britta Augsburg (IFS) and Jonathan Weigel (LSE).

For further information please contact Lubala Chibwe, either by email: l.chibwe@lse.ac.uk.

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