Increasing VAT revenues and formalization through lotteries: Evidence from Tanzania

Last registered on August 29, 2022
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Pre-Trial

Trial Information

General Information

Title
Increasing VAT revenues and formalization through lotteries: Evidence from Tanzania
RCT ID
AEARCTR-0009981
Initial registration date
August 26, 2022

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
August 29, 2022, 1:53 PM EDT

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

Locations

Country
Tanzania, United Republic of
Region

Primary Investigator

Name
Ingrid Hoem Sjursen
Affiliation
Chr. Michelsen Institute
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Other Primary Investigator(s)

PI Name
Vincent Somville
PI Affiliation
Norwegian School of Economics and Chr. Michelsen Institute
Contact Investigator
PI Name
Odd-Helge Fjeldstad
PI Affiliation
Chr. Michelsen Institute and Africa Tax Institute
Contact Investigator
PI Name
Osama Moeed Nawab
PI Affiliation
Norwegian School of Economics and Chr. Michelsen Institute
Contact Investigator

Additional Trial Information

Status
On going
Start date
2022-07-04
End date
2022-10-10
Keywords
Firms & Productivity, Other
Additional Keywords
Taxation
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study evaluates the effect of introducing a VAT receipt lottery for customers on business' receipt printing behavior, their reported sales, VAT-registration and VAT revenues in Tanzania. VAT receipts printed from Electronic Fiscal Devices (EFDs) are used as tickets in a lottery with weekly and monthly monetary prizes. The lottery is expected to act as an incentive, pushing customers to request receipts. Increasing the issuance of VAT receipts will improve the information about transactions available to the government because the EFD machines automatically send transaction details to the Tanzania Revenue Authority (TRA). This, in turn, makes enforcement easier, and is therefore expected to increase VAT compliance. The lottery is implemented by the Tanzania Revenue Authority in one of the tax regions (Tegeta) from July to October 2022. To evaluate its effects, we use a difference-in-difference event study estimator comparing the outcomes in the region with the lottery (treated) to the regions without a lottery (control).
External Link(s)

Registration Citation

Citation
Fjeldstad, Odd-Helge et al. 2022. "Increasing VAT revenues and formalization through lotteries: Evidence from Tanzania." AEA RCT Registry. August 29. https://doi.org/10.1257/rct.9981-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
The intervention is a VAT receipt lottery for customers. VAT receipts printed from Electronic Fiscal Devices (EFDs) are used as tickets in a lottery with weekly and monthly monetary prizes. The lottery is expected to act as an incentive, pushing customers to request receipts. Increasing the issuance of VAT receipts will improve the information about transactions available to the government because the EFD machines automatically send transaction details to the Tanzania Revenue Authority (TRA).
Intervention Start Date
2022-07-11
Intervention End Date
2022-10-03

Primary Outcomes

Primary Outcomes (end points)
1) Number of receipts printed
2) Sales (excluding VAT, value in local currency, Tanzanian Shilling/TSH)
3) VAT liability (value in TSH) (for VAT registered businesses only)
4) Whether the sales are above TZS 100/12 millions, and hence above the threshold on average. We use an indicator variable taking the value of one if the business crossed this threshold in month m and zero otherwise. (For non-VAT businesses only)
Primary Outcomes (explanation)
Variables with a few extreme values (sales, receipts, vat) will be winsorized at the 99th percentile. The winsorizing will be done separately for VAT-registered and not-registered firms

Variable 4): Given that the lottery is planned for three months, we cannot test the effects using the legal definition of the threshold (sales above TZS 100 millions over twelve months or above TZS 50 millions over six months).

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The lottery is implemented by the Tanzania Revenue Authority in one of the tax regions (Tegeta) from July to October 2022. To evaluate its effects, we use a difference-in-difference event study estimator comparing the outcomes in the region with the lottery (treated) to the regions without a lottery (control).
Experimental Design Details
Randomization Method
The intervention is not randomized. But we nonetheless want to pre-specify how we will estimate the effects of the intervention.
Randomization Unit
Tax region.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
31
Sample size: planned number of observations
130 000 businesses
Sample size (or number of clusters) by treatment arms
Treatment: 4 000 businesses
Control: 126 000 businesses
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
NHH IRB Board
IRB Approval Date
2022-08-16
IRB Approval Number
NHH-IRB 45/22
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials