Long Term Treatment Effects of Nudges on Small Businesses Tax Compliance Behaviour in Indonesia

Last registered on February 17, 2023

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Pre-Trial

Trial Information

General Information

Title

Long Term Treatment Effects of Nudges on Small Businesses Tax Compliance Behaviour in Indonesia

RCT ID

AEARCTR-0010721

Initial registration date

January 02, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

January 03, 2023, 5:34 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated

February 17, 2023, 12:42 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country

Indonesia

Region

North Jakarta, South Sumatera, Nusa Tenggara

Primary Investigator

Name

Agung Satyadini

Affiliation

ANU

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Mathias Sinning

PI Affiliation

ANU

Contact Investigator

PI Name

Sarah Dong

PI Affiliation

ANU

Contact Investigator

Additional Trial Information

Status

On going

Start date

2021-12-01

End date

2023-03-31

Keywords

Behavior, Governance, Other

Additional Keywords

tax compliance, small businesses

JEL code(s)

C93, H25, H26

Secondary IDs

Prior work

This trial is based on or builds upon one or more prior RCTs.

Abstract

The aim of this trial is to investigate the long-term compliance behaviour of small businesses in Indonesia. More specifically, the trial analyses the long-term compliance effects of three treatment letters, i.e., deterrence, literacy, and public goods provision letters. The target population consists of approximately 12,000 small businesses – those with annual turnover less than IDR4.8 billion from the period of 2017 to 2019. Three treatments will be tested: (1) deterrence letter, which highlights the submission deadline, administrative late-filing penalty IDR100,000, utilisation of computerised audit, the possibility of utilisation computerised audit and further enforcement actions towards non-compliers; (2) literacy letter, in which we simplify the letters, adopts less-formal style letter, emphasizes the simple guidance on how to pay and report taxes, and attaches the QR code to access official mobile apps and DGT webpage; (3) public goods provision letter, which highlights the taxpayer’s contribution for national budget, particularly for COVID-19 expenditure and future generation education. The treatments will be compared to a control group consisting of individuals who are received no letters. About 12,000 small businesses were randomly assigned to the four groups (about 3,000 individuals to each group).

External Link(s)

Registration Citation

Citation

Dong, Sarah, Agung Satyadini and Mathias Sinning. 2023. "Long Term Treatment Effects of Nudges on Small Businesses Tax Compliance Behaviour in Indonesia." AEA RCT Registry. February 17. https://doi.org/10.1257/rct.10721-1.2

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Experimental Details

Interventions

Intervention(s)

Three treatments will be tested: (1) Treatment 1: "deterrence letter", which highlights the submission deadline, administrative late-filing penalty IDR100,000, utilisation of computerised audit, the possibility of utilisation computerised audit and further enforcement actions towards non-compliers; (2) Treatment 2: "literacy letter", in which we simplify the letters, adopts less-formal style letter, emphasizes the simple guidance on how to pay and report taxes, and attaches the QR code to access official mobile apps and DGT webpage; (3) Treatment 3: "public goods provision letter", which highlights the taxpayer’s contribution for national budget, particularly for COVID-19 expenditure and future generation education. The control group consists of individuals who are not received letters from the DGT. Copies of sample letters and emails are attached in "Docs & Materials" of this registration.

Intervention Start Date

2021-12-01

Intervention End Date

2023-03-31

Primary Outcomes

Primary Outcomes (end points)

The outcome measures consist of (1) a dummy indicating tax returns filing, (2) a dummy indicating non-zero payment, (3) a dummy indicating timely filing, (4) a dummy indi- cating both non-zero payment and timely filing, (5) a dummy indicating improvement in tax filing, which derived from the indicator of Compliance Risk Management (CRM) dashboard – a combination assessment score between taxpayer’s fiscal importance and risks 10, (6) a dummy indicating electronic payment, whether taxpayers utilised e-billing; (7) number of inbound communications to tax office, a log contact from taxpayer in the following month; and (8) amount of tax payment.

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

About 12,000 individuals were randomly assigned to three treatment groups and a control group (about 3,000 individuals were assigned to each group).

Experimental Design Details

Randomization Method

The full de-identified population was provided by the DGT. Each case was randomly assigned to one of the treatment groups or the control group within each stratum. This technique provided an even distribution of taxpayers across groups based on their baseline characteristics. Randomization was performed using a random variable generator in STATA and a random selection of the seed. For stratified randomisation, the user-written command ’randtreat’ version 1.4 was utilised.

Randomization Unit

individual taxpayers

Was the treatment clustered?