Active Ghosts: Nil-filing in Rwanda

Mascagni, Giulia; Santoro, Fabrizio; Mukama, Denis; Karangwa, John; Hakizimana, Napthal

doi:10.1016/j.worlddev.2021.105806

Cited by 30 publications

(44 citation statements)

References 25 publications

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“…The definition of fully or partly balanced panel does not affect our results.11 The average sales reported in Table1.1 are calculated excluding nil-filers, which represent about a third of all declarations. This figure is consistent with evidence presented inMascagni, Santoro, Mukama, Karangwa, and Hakizimana (2020) for Rwanda,Santoro and Mdluli (2019) for Eswatini, andAlmunia, Gerard, Hjort, Knebelmann, Nakyambadde, Raisaro, and Tian (2017) for Uganda.…”

supporting

confidence: 90%

Using Administrative Data to Assess the Impact of the Pandemic in Low-Income Countries: An Application with VAT Data in Rwanda

Mascagni¹,

Lees²

2021

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This paper uses administrative data from Value Added Tax (VAT) returns to provide insights on the impact of the COVID-19 pandemic in Rwanda. We show that the lockdown in Rwanda had a severe impact on the domestic economy, despite relatively low case numbers. However, the economy quickly rebounded after restrictions were lifted, with overall sales losses amounting to 5 per cent of GDP. Although in absolute terms, these losses are concentrated amongst the largest firms, in proportional terms, small firms have been worse affected. We also show that firms providing accommodation, food and transport services, as well as those based in the capital, have been particularly affected by the crisis. Overall, the decline in economic activity translates to a 5.1 per cent loss in VAT revenue for the government. Our results offer policy-makers evidence on the real impact of the crisis, both in aggregate terms and disaggregated by firm size, sector, and location. In a literature that has largely focused on higher-income countries, these results complement projections to inform appropriate policy responses in the specific context of low-income countries.

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supporting

confidence: 90%

Using Administrative Data to Assess the Impact of the Pandemic in Low-Income Countries: An Application with VAT Data in Rwanda

Mascagni¹,

Lees²

2021

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“…15 43% of taxpayer-quarter observations are nil-filers in at least one quarter and 35% are nil-filers across all quarters in which they file. These figures are largely in line with other evidence on nil-filers in lowincome countries, includingAlmunia et al (2021) in Uganda,Mascagni et al (2018) in Ethiopia,Santoro and Mduli (2019) in Eswatini andMascagni et al (2022) in Rwanda.16 The FGDs took place on the premises of a private research company in Kigali. Each FGD was led by one ICTD researcher, with assistance from the Rwandan research company.…”

supporting

confidence: 80%

“…The full sample, including the latter, would be about 2,000 taxpayers. More details on nil-filers in Rwanda can be found inMascagni et al (2022). In order to survey 1,059 taxpayers, 1,631 attempts have been run.…”

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confidence: 99%

The VAT in practice: equity, enforcement, and complexity

Mascagni

Dom

Santoro

et al. 2022

Int Tax Public Finance

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The value-added tax (VAT) is meant to be an efficient and self-enforcing tax on consumption. Yet, being a rather sophisticated tax, the VAT can also be complex and costly to administer. By examining the case of Rwanda, this paper assesses the extent to which the VAT’s potential materialises in the context of a lower-income countries. Using a mixed-methods approach, which combines qualitative information from focus group discussions with the analysis of administrative and survey data, this paper makes two contributions. First, it documents reporting inconsistencies in VAT data, providing new evidence on how weak capacity prevents tax administrations in lower-income countries from reaping the full benefits of the VAT. Second, it shows that the VAT, as applied in practice, differs substantially from its theoretical functioning. This generates differences in tax burdens across firms, despite a proportional tax rate, with important distributional implications. We also document that the VAT chain often breaks down, with implications on the VAT’s efficiency.

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“…Previous research on tax compliance notes that non-compliance can be explained by a wide range of factors including outright evasion (Allingham and Sandmo 1972), weak tax knowledge on the part of taxpayers (Mascagni, Santoro and Mukama 2019), unrealistic targets and inaccuracies in taxpayer registers that are caused by ambitious taxpayer registration expansion campaigns (Mayega et. al., 2019;Mascagni, Santoro, Mukama, Karangwa and Hakizimana 2020;Santoro and Mdluli 2019;Moore 2020) and a genuine inability on the part of taxpayers to pay the taxes that are imposed on them (Fjeldstad and Semboja 2001;Lahey 2018;Carroll 2011). In interpreting the findings that we provide in this paper, it is important to bear these factors in mind.…”

Section: Discussionmentioning

confidence: 99%

Are Women More Tax Compliant than Men? How Would We Know?

Kangave¹,

Waiswa²,

Sebaggala³

2021

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Most research on tax compliance, including research on gender differences in compliance, is based on one of two problematic sources of data. One is surveys enquiring about attitudes and beliefs about taxpaying, or actual taxpaying behaviour. The other is experiments in which people who may or may not have experience of paying different types of taxes are asked to act out roles as taxpayers in hypothetical situations. Much more accurate and reliable research is possible with access to ‘tax administrative data’, i.e. the records maintained by tax collection organisations. With tax administrative data, researchers have access to tax assessments and tax payments for specific (anonymised) individual or corporate taxpayers. Further, tax administrative data enables researchers to take account of a phenomenon largely ignored in more conventional compliance research. Tax payment is best understood not as an event, but as part of a multi-stage process of interaction between taxpayers and tax collectors. In particular, actually making a tax payment typically represents the culmination of a process that also involves: registering with the tax collecting organisation; filing annual tax returns; filing returns that indicate a payment liability; and receiving an assessment. The multi-stage character of this process raises questions about how we conceptualise and measure tax compliance. To what extent does ‘compliance’ refer to: registration, filing, accurate filing, or payment? The researchers employed this framework while using tax administrative data from the Uganda Revenue Authority to try to determine gender differences in compliance. The results are sensitive to the adoption of different definitions of compliance and subject to year-to-year changes. Finding robust answers to questions about gender differences in tax compliance is more challenging than the research literature indicates.

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Active Ghosts: Nil-filing in Rwanda

Cited by 30 publications

References 25 publications

Using Administrative Data to Assess the Impact of the Pandemic in Low-Income Countries: An Application with VAT Data in Rwanda

Using Administrative Data to Assess the Impact of the Pandemic in Low-Income Countries: An Application with VAT Data in Rwanda

The VAT in practice: equity, enforcement, and complexity

Are Women More Tax Compliant than Men? How Would We Know?

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