Experimental Design Details
We adopt a randomised controlled trial design with parallel conditions and individual level randomisation. Participants (Guatemalans declaring their tax liability), will be randomly assigned to see one of 7 CAPTCHAs (control or one of the six treatment arms) after selecting the tax form to fill in on the main Declaraguate website, and before the form page.
This trial will be conducted over the course of 4 months. There are four types of tax included in this trial described below . The trial involves approximately 4% of Guatemalans, and all Guatemalans who declare online for these four tax regimes. For income tax and VAT general this is 100% of declarations as online declaration is mandatory for these tax regimes, for VAT small taxpayers approximately 90% of declarations are made online.
It is reasonable to assume that our interventions may have differing effects for taxpayers declaring for the four different regimes. For this reason we produce separate results for each type of tax in our trial. This will be described in more detail later in this protocol. As well as our primary analytical objectives (determining whether more tax has been paid), we aim to gain insights into the behavioural mechanisms in action and to identify the medium-term effects of messaging (over the course of the four months of the trial). We note that choices of tax are fixed within the period of the trial, and so although these are endogenous they do not interfere with our analysis.
Guatemalan income tax is charged in one of two ways, selected by the taxpayer. The two taxes are paid differently (using different forms), and we are considering both in this trial.
Regime over profits from lucrative activities
Taxpayers can choose to pay income tax in this way. This is charged at a rate of 28% on non-deductible income. Deductions include income from capital. This tax must be paid every 3 months, with returns filed within ten days of the end of the quarter.
Simplified optional regime over income from lucrative activities
Participants in this scheme pay 7% of their annual income in taxation (from April 2014). Participants in this tax regime must make monthly tax returns not later than the 10th of the subsequent month, and an aggregated return to be completed annually.
There are good reasons to expect different treatment effects depending on the tax being declared. The regime over profits from lucrative activities is charged at a higher rate, and so the incentive to behave dishonestly may be higher. Individuals and businesses that complete this kind of return may however be more affluent, which in turn could reduce their incentive to be dishonest due to a lower marginal value of money
Finally, the simplified option is, as its name implies, less complex a form. This may lead to greater honesty as there are fewer dimensions across which it is possible to obfuscate tax liability.
Value Added Tax (VAT)
Two regimes exist for Value Added Tax (VAT) payments in Guatemala. VAT is levied at 12% for taxpayers under the general regime (with annual turnover of more than GTQ 150,000), and 5% for taxpayers in the small taxpayers regime (with annual turnover of less than GTQ 150,000) . VAT is charged on sales of goods within the country, sale of services in the country, any imported goods, leasing contracts, transfers of real estate, and insurance and bond sales. Exports, banking activities, payments in-kind, mergers, trade in financial instruments, and trust arrangements are exempt from VAT. We consider taxpayers under both regimes. Similar to income tax we have reason to expect differential treatment impacts for taxpayers under the two VAT regimes.