The Taxation of Microenterprises

Last registered on December 20, 2023
View Trial History

Pre-Trial

Trial Information

General Information

Title
The Taxation of Microenterprises
RCT ID
AEARCTR-0012682
Initial registration date
December 11, 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
December 20, 2023, 9:50 AM EST

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

Locations

Country
Zambia
Region

Primary Investigator

Name
Daniel Overbeck
Affiliation
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
On going
Start date
2023-11-21
End date
2024-06-15
Keywords
Behavior, Firms & Productivity, Governance
Additional Keywords
Taxation, Public Economics, Microenterprises
JEL code(s)
H25, H26, O12, O17
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The project aims at understanding how SMEs approach taxes and how tax policy can be improved accordingly. In particular, the study tries to elicit explanations for why firms bunch in "dominated regions" above tax schedule discontinuities in Zambia. To this end, a survey (-experiment) on turnover taxpayers will be conducted. Information on the way firms file their taxes, their interaction with the Zambia Revenue Authority, and on how they keep records of business activities will be collected. This may yield relevant behavioral patterns which can help to understand the bunching behavior. ⁠In addition, randomly assigned information treatments on audit probabilities as well as tax clearance requirements to secure government contracts will allow to causally identify the determinants of the observed bunching behavior.
External Link(s)

Registration Citation

Citation
Overbeck, Daniel. 2023. "The Taxation of Microenterprises." AEA RCT Registry. December 20. https://doi.org/10.1257/rct.12682-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2023-11-21
Intervention End Date
2024-01-15

Primary Outcomes

Primary Outcomes (end points)
The outcomes of the descriptive survey part yield information on how SMEs approach taxation The answers to questions about interactions with ZRA, record keeping and perceived audit probabilities will be important to understand patterns in the administrative tax data.
The outcomes of the experiment are whether a respondent chooses a high payment (bunch above) or a low payment (bunch below). This is asked and measured after being confronted with a notch around the preferred payment the respondent provided.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experiment is included in a survey of owners (or employees with financial responsibilities) of firms under turnover tax. Respondents are asked what tax payment (in Zambian Kwacha) the would consider appropriate for their business. Then they are randomly assigned to one of three groups: 1. control group (no relevant information treatment), 2. audit treatment group (information about tax audits of SMEs - aimed at increasing perceived audit probability), 3. government contracts treatment group (information on the volume of business contracts between the Zambian government and SMEs together with the reminder that one needs a tax clearance certificate for such contracts - aimed at increasing the perceived benefit of paying taxes).
The respondents are then confronted with a "notch" i.e. they are being told that their payment cannot be made. Instead they have to choose to either pay 10% more or 10% less than what they have stated.
It is then possible to estimate the effect of the information on the "propensity to bunch above the threshold" i.e. the probability of stating to prefer a high payment.
Experimental Design Details
Not available
Randomization Method
Randomization is done by the survey software before each interview.
Randomization Unit
Randomization happens at the respondent (i.e. firm) level.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
There will be no clustering of the treatment as it happens at the unit level.
Sample size: planned number of observations
approximately 500 firms
Sample size (or number of clusters) by treatment arms
approximately 170 by treatment arm (including control)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethikkommission, University of Mannheim
IRB Approval Date
2023-11-20
IRB Approval Number
EK Mannheim 54/2023
Analysis Plan