Nudges and Tax Compliance

Firms receive official letters from the Secretaría de Hacienda de Medellín reminding them of their obligation to file their 2024 Industry and Commerce Tax (ICA) declaration. Letters vary in content across four groups: (1) neutral reminder, (2) deterrence message, (3) social norm message, and (4) combined deterrence and social norm message. All messages are sent via email and certified mail in April 2026, providing firms with a 15-day deadline to file voluntarily before potential enforcement actions.

2026-04-16

2026-08-31

Primary Outcome 1: Tax Filing (Binary)

Definition: Whether the firm filed its 2024 Industry and Commerce Tax (ICA) declaration within 90 days of receiving the Phase 1 treatment letter (April 16 - June 7, 2026)
Measurement: Binary indicator (1 = filed, 0 = not filed) extracted from Tax Authority administrative records
Timeline: Measured on June 1, 2026

Primary Outcome 2: Days to Filing (Continuous)

Definition: Number of calendar days between April 16, 2026 (treatment letter sent) and the date the firm filed its ICA declaration
Measurement: Continuous variable (0-90 days) for firms that filed; censored at 90 days for non-filers
Source: Tax Authority filing timestamp data

Primary Outcome 3: Tax Payment (Binary)

Definition: Whether the firm paid its self-declared 2024 ICA tax liability within 90 days of receiving the treatment letter
Measurement: Binary indicator (1 = paid, 0 = not paid) from Tax Authority payment records
Timeline: Measured on June 1, 2026

Primary Outcome 4: Amount Paid (Continuous)

Definition: Total amount (Colombian Pesos) of 2024 ICA tax paid by the firm within the 90-day window
Measurement: Continuous variable (COP) from Tax Authority payment records
Note: Zero for firms that did not pay
All primary outcomes are measured at the firm level using administrative data from the Secretaría de Hacienda de Medellín. The 90-day window (April 16 - June 7, 2026) corresponds to Phase 1 voluntary compliance period before enforcement actions begin.

All primary outcomes are directly observable from administrative records and require no construction or index creation:
Tax Filing (Binary): Extracted directly from Tax Authority database field indicating declaration submission status. Coded as 1 if filing timestamp falls between April 16, 2026 00:00:01 and June 7, 2026 23:59:59; coded as 0 otherwise.
Days to Filing (Continuous): Calculated as: (Filing Date - April 16, 2026). For firms that filed, this equals the number of calendar days elapsed. For firms that did not file within 90 days, the variable is censored at 90 days for survival analysis, or coded as missing for linear regression specifications.
Tax Payment (Binary): Extracted from Tax Authority payment records. Coded as 1 if any payment toward 2024 ICA liability is recorded between April 16, 2026 and June 7, 2026; coded as 0 if no payment recorded in this window.
Amount Paid (Continuous): Sum of all payments (in Colombian Pesos) applied to 2024 ICA tax liability during the 90-day window, extracted directly from payment transaction records. No winsorizing or transformation applied for primary analysis; robustness checks will use log(Amount + 1) and inverse hyperbolic sine transformations to address skewness.
No composite indices or constructed variables are used for primary outcomes. All outcomes represent actual administrative events (filing, payment) or direct calculations from timestamps and transaction amounts recorded by the Tax Authority in the normal course of tax administration.

Phase 1 Secondary Outcomes (Voluntary Compliance Period):
1. Filing Within 15 Days (Binary)

Definition: Whether firm filed within the initial 15-day deadline stated in the letter (April 16- May 1, 2026)
Measurement: Binary indicator from administrative records
Purpose: Test responsiveness to explicit deadline

2. Tax Base Declared (Continuous)

Definition: Self-reported tax base (gross revenue subject to ICA) in Colombian Pesos
Measurement: Extracted from filed declaration form
Note: Only observable for firms that filed

3. Tax Liability Declared (Continuous)

Definition: Self-calculated ICA tax owed based on declared tax base and applicable rate
Measurement: From filed declaration (COP)
Purpose: Assess whether messages affect reporting accuracy

4. Partial vs. Full Payment (Categorical)

Definition: Payment status categorized as: (0) No payment, (1) Partial payment (<100% of declared liability), (2) Full payment (≥100% of declared liability)
Measurement: Ratio of amount paid to tax liability declared

Phase 2 Secondary Outcomes (Enforcement Response - Exploratory):
5. Filing After Enforcement Notice (Binary)

Definition: Whether firm filed within 30 days of receiving emplazamiento (enforcement notice)
Measurement: Binary indicator for firms that received enforcement
Note: Conditional on non-random enforcement assignment; analyzed with propensity score matching

6. Payment After Enforcement (Binary)

Definition: Whether firm paid within 30 days of receiving emplazamiento
Measurement: Binary indicator from payment records

7. Long-term Compliance Persistence (Binary)

Definition: Whether firm filed AND paid during September-December 2026 follow-up period (delayed compliance)
Measurement: Binary indicator for firms that did not comply in Phase 1 or Phase 2 enforcement window
Purpose: Assess treatment effect persistence beyond immediate response

8. Email Engagement (Binary)

Definition: Whether firm opened the treatment email (if tracking data available)
Measurement: Email open rate from delivery system logs
Purpose: Mechanism check for message delivery

Design: 2×2 factorial randomized controlled trial
Sample: 4,000 firms in Medellín, Colombia that failed to file their 2024 Industry and Commerce Tax (ICA) declaration
Randomization: Stratified random assignment by firm size (3 categories) × sector (4 categories) × location (3 zones) = 36 strata. Firms are randomly assigned with equal probability to one of four groups (n=1,000 per group).
Treatment Arms:

Group 1: Control message (neutral reminder)
Group 2: Treatment A
Group 3: Treatment B
Group 4: Treatment A + Treatment B (combined)

Intervention Timing: Treatment letters sent April 16, 2026 via email and certified mail from the Secretaría de Hacienda de Medellín
Primary Outcome Measurement: Tax filing and payment behavior measured at 90 days post-intervention (June 1, 2026) using Tax Authority administrative records
Follow-up Period: The study includes an observational follow-up phase (June-December 2026) tracking firms that did not comply during the initial experimental phase. This follow-up phase is non-experimental and analyzes responses to the Tax Authority's standard enforcement procedures.
Analysis: Primary analysis compares filing and payment rates across the four groups using ordinary least squares regression with stratification fixed effects. The factorial design enables estimation of main effects for Treatment A and Treatment B, as well as their interaction effect to test for complementarity or substitution.
Statistical Power: With 1,000 firms per group and assumed baseline compliance of 2-5%, the study is powered at 80% (α=0.05) to detect main effects as small as 1.25 percentage points and interaction effects as small as 1.77 percentage points.

Not available

Method: Computerized stratified block randomization conducted by the Secretaría de Hacienda de Medellín
Procedure:
The Tax Authority will use a random number generator in statistical software (Stata or R) to assign firms to treatment groups. The randomization will be conducted on April 16, 2026 immediately before message dispatch using the following steps:

Stratification: Firms are sorted into 36 strata based on: firm size (3 categories) × sector (4 categories) × location (3 geographic zones)
Block randomization within strata: Within each stratum, firms are randomly assigned to one of four groups (G1, G2, G3, G4) with equal probability (0.25 each) using computer-generated random numbers
Implementation: The Tax Authority executes the randomization algorithm and generates the treatment assignment list. Each firm receives a unique treatment code (1-4) which determines which message variant they receive.
Documentation: The randomization seed and complete assignment list are stored securely by the Tax Authority. Researchers receive only anonymized data with treatment codes (no firm identifiers).

Timing: Randomization occurs on the same day as message dispatch (April 16, 2026) to minimize time between assignment and treatment delivery.
Quality checks: After randomization, balance checks will verify that observable characteristics (firm size, sector, location, prior compliance history, debt amounts) are statistically similar across the four treatment groups.

Unit of randomization: Individual firm (identified by NIT - Número de Identificación Tributaria)
Level: Firm-level randomization. Each of the 4,000 firms is independently assigned to one of the four treatment groups within its stratum.
No cluster randomization: There is no group-level or cluster-level randomization. Each firm is randomized individually, even if multiple firms share the same address, ownership, or accountant.
Stratification: While randomization occurs at the firm level, it is stratified by firm characteristics (size × sector × location) to ensure balance across groups. Stratification does not constitute a separate level of randomization—all randomization occurs at the individual firm level within strata.
Unit of analysis: Matches unit of randomization (firm-level). All outcome measures (filing, payment) are recorded at the firm level from administrative records.

No

Not applicable - no cluster randomization.
Randomization occurs at the individual firm level. Total sample: 4,000 firms.

4,000 firms (1,000 firms per treatment group)

Group 1 (Control): 1,000 firms
Group 2 (Treatment A): 1,000 firms
Group 3 (Treatment B): 1,000 firms
Group 4 (Treatment A + B): 1,000 firms

Total: 4,000 firms

Assumptions: Sample size: 1,000 firms per group (4,000 total) Significance level: α = 0.05 (two-tailed) Power: 80% Baseline compliance rate: 2-5% (assumed 3.5% for calculations) Standard errors clustered at stratification level (36 strata) Minimum Detectable Effects: Primary Outcome: Tax Filing (Binary) Main effects (Treatment A alone, Treatment B alone): 1.25 percentage points Interaction effect (complementarity/crowding-out): 1.77 percentage points Unit: Percentage points change in filing rate Baseline: 3.5% filing rate Effect size as % of baseline: 36% increase for main effects Secondary Outcome: Tax Payment (Binary) Main effects: 1.25 percentage points Interaction effect: 1.77 percentage points Unit: Percentage points change in payment rate Baseline: 2-3% payment rate Secondary Outcome: Amount Paid (Continuous) Main effects: 0.14 standard deviations Interaction effect: 0.20 standard deviations Unit: Standard deviations of amount paid (COP) Note: Exact COP amounts depend on distribution skewness; will report both absolute amounts and standardized effects Power Calculation Method: Following Muralidharan, Romero & Wüthrich (2025) methodology for factorial designs: For main effects: MDE = 2.8 × √[(p(1-p)/n)] For interaction effects: MDE = 2.8 × √[2×p(1-p)/n] Where p = baseline compliance rate, n = sample size per group Interpretation: The study is powered to detect effect sizes consistent with the tax compliance literature. For reference: Hallsworth et al. (2017): 2-5pp effects in UK Castro & Scartascini (2015): 5pp effect in Argentina Del Carpio (2013): 10-20pp effects in Peru Brockmeyer et al. (2019): 3.4pp effect in Costa Rica Our MDEs (1.25pp for main effects, 1.77pp for interaction) are smaller than most published effects, providing adequate power to detect policy-relevant impacts.