Information Technology and Fiscal Capacity in a Developing Country: Evidence from Ethiopia

Does E-Government Improve Government Capacity? Evidence from Tax Compliance Costs, Tax Revenue, and Public Procurement Competitiveness

“…On the one hand, our results suggest that e-filing adoption helps reduce income tax evasion by companies and individuals (in line with Ali et al, 2015;Eissa and Zeitlin, 2014). This effect is driven largely by less developed countries, because they more often implement simpler transactional e-filing systems.…”

“…While there have been an increasing number of studies on the impact of ICT on various aspects of development (Aker and Mbiti, 2010;Jack and Suri, 2014), industry competition (Jerbashian and Kochanova, 2016b), and aggregate economic performance (Ketteni et al, 2011), empirical research of e-government is very scarce. Ali et al (2015) and Eissa and Zeitlin (2014) find that the introduction of electronic machines to record sales transactions of firms improved tax compliance and revenue mobilization in Ethiopia and Rwanda, respectively. Yilmaz and Coolidge (2013) show that e-filing significantly reduced tax compliance costs for firms in South Africa, but not in Ukraine or Nepal, which indicates possible limits of e-government.…”

Aid and domestic resource mobilization with a focus on Sub-Saharan Africa

“…In principle this allows the ERCA to receive data on reported revenues and VAT liabilities on a daily basis and to monitor reporting patterns; 'unusual activity' such as fewer transactions than would be expected for the business can be identified and visits by officials can be targeted. This improvement in risk management and monitoring payment obligations is estimated to have increased VAT revenue by up to 20 per cent (Ali et al, 2015). However, as only registered businesses are required to use the machines, sustained effectiveness relies on the integrity of the register and businesses could evade by closing down and re-emerging in the informal sector.…”

Innovations in Tax Compliance: Conceptual Framework

“…These revenue gains have occurred across both direct and indirect taxes, though the most important gains have been from the VAT, which has been a focus of donor support and new investments. There is now, for example, emerging evidence of the impact of electronic tax registers in strengthening VAT compliance in low-income countries, 57 and the ability of higher capacity administrations to use the paper trails created by the VAT to strengthen compliance. 58 Even in places where progress has been slower overall, research has captured important successes if political commitment has been present: for example, some localities have successfully introduced and expanded digitized property tax systems, 59 while other administrations have expanded the use of third-party data for income tax enforcement.…”