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May I Calculate Your Taxes?: The Effect of Bookkeeping on Tax Compliance under a Simplified Regime

Author

Listed:
  • Bando, Rosangela
  • Canozzi, Otavio
  • Martinez-Carrasco, José
  • Dezolt, Ana Lúcia

Abstract

Many countries worldwide face significant miss reporting in tax declarations. Miss reporting leads to undesired low revenue and economic distortions. This paper discusses the extent to which the residual bookkeeping burden faced by small firms in simplified regimes influence tax declarations. A randomized control trial among 1,500 irregular firms in Piaui, Brazil showed that adding the tax amount due and records on transactions to a warning notification improved compliance in 21 percentage points and increased the reported revenue in 39 percent. Firms without an accountant were less likely to regularize their status without the added information. These findings suggest the use of third party information to support voluntary compliance may present an opportunity for digital services to improve tax revenue services.

Suggested Citation

  • Bando, Rosangela & Canozzi, Otavio & Martinez-Carrasco, José & Dezolt, Ana Lúcia, 2021. "May I Calculate Your Taxes?: The Effect of Bookkeeping on Tax Compliance under a Simplified Regime," IDB Publications (Working Papers) 11381, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:11381
    DOI: http://dx.doi.org/10.18235/0003386
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    Cited by:

    1. Motta Café, Renata & Yarygina, Anastasiya & Escalante, Lisseth, 2024. "Leveraging Data to Improve Tax Compliance for Micro and Small Firms: Evidence from Brazil," IDB Publications (Working Papers) 13603, Inter-American Development Bank.

    More about this item

    Keywords

    Tax compliance; Taxpayer support; Accounting; Tax Support;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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