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Massive Regularization for Effective Tax Payment: Evidence from Brazil

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  • Yarygina, Anastasiya
  • Iketani, Eduardo
  • Martínez, André
  • Tiburcio, Ernesto

Abstract

In recent years, tax administrations around the globe have leveraged digital transformation to enhance processes and services to improve tax compliance. Massive self-regularization platforms, which identify noncompliant taxpayers, notify them about the detected inconsistencies, and allow them to amend the situation with the tax authority, are prominent examples of the digital transformation of tax administrations. This study presents the results of the randomized controlled trial evaluating the effectiveness of such a self-regularization platform in the Brazilian State of Para. The results show that the platform increased the amount of the taxes paid by 12.78 times and the probability of tax compliance by 236 percent. Overall, the effectiveness of self-regularization in recovering the evaded tax is 60 percent higher than that of the traditional audit-based approach. The amount of the correction in the declared tax increased by 2.33 times, and the probability of correction by 300 percent. Given the low marginal cost of self-regularization, the results suggest that these platforms are a remarkable opportunity for tax administrations to leverage digital transformation effectively and efficiently, improving tax compliance and increasing tax revenue.

Suggested Citation

  • Yarygina, Anastasiya & Iketani, Eduardo & Martínez, André & Tiburcio, Ernesto, 2025. "Massive Regularization for Effective Tax Payment: Evidence from Brazil," IDB Publications (Working Papers) 13975, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:13975
    DOI: http://dx.doi.org/10.18235/0013392
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    References listed on IDEAS

    as
    1. Youssef Benzarti & Luisa Wallossek, 2024. "Rising Income Tax Complexity," National Tax Journal, University of Chicago Press, vol. 77(1), pages 143-173.
    2. Glenn P. Jenkins & Siamand Hesami & Osaid Alshamleh & Anastasiya Yarygina & Carola Pessino, 2023. "A Cost-Benefit Analysis Methodology for Administrative Prefilling of Value-Added Tax Returns: An Application for Chile," Development Discussion Papers 2023-10, JDI Executive Programs.
    3. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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    More about this item

    Keywords

    digitalization; Tax compliance; Taxpayer support;
    All these keywords.

    JEL classification:

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

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