Giulia Mascagni, Nara Monkam, Denis Mukama, Christopher Nell

1. Analysing
tax
compliance
with
administra5ve
data
in
Rwanda
Giulia
Mascagni,
Nara
Monkam,
Denis
Mukama,
Christopher
Nell
ICTD
Annual
Mee-ng
February
2016

2. Part
1
Ini5al
descrip5ve
results
2

3. Tax
types
in
Rwanda
• VAT
and
PAYE
largest
contributors
• Decline
in
interna-onal
trade
taxes
• Small
share
of
PIT
and
CIT:
compliance?
3

4. Tax
collec5ons
by
size
4
• 60%
PIT
(real)
collec-on
from
top
10%
• 85%
CIT
(real)
collec-on
from
top
10%

5. Tax
by
loca5on
5

6. Losses
and
nil-­‐filers
6

7. Audit
rates
• By
tax
types:
– VAT
about
10%
– PIT
about
3%
– CIT
about
2%
• Mostly
taxpayers
registered
in
Kigali
• Mostly
large
and
top-­‐medium
taxpayers
• Results
feed
into
Experiment
1
– Loca-on,
stra-fica-on,
…
7

8. Compliance
gap
• Range
of
compliance
based
on
audit
data
– Probably
closer
to
upper
bound
• Higher
compliance
gap
in
PIT,
then
CIT,
then
VAT,
lastly
PAYE
• Larger
for
small
and
medium
and
outside
of
Kigali
8

9. Effec5ve
tax
rates
• Calculated
as
tax
payable
/
overall
income
• Progressive
on
paper
but
regressive
in
prac-ce
• Lower
rate
in
the
real
regime
vs.
lump
sum
– Compliance
costs
– Enforcement
pressure
– Audit
probability
• More
work
to
be
done
9

10. Part
2
Overview
of
experiments

11. Overview
of
experiments
• Iden-fying
drivers
of
compliance
• Effec-veness
of
RRA
communica-ons
and
delivery
mode
• Pilot
of
possible
future
interven-on
• Possibility
of
scaling
up
if
successful
• Varia-ons
in:
– Informa-on
available
to
taxpayers
– Taxpayer’s
percep-ons
– Not
actual
tax
parameters
(e.g.
audit
rates)
11

12. Experiment
1
• Pilot
for
bigger
experiment
2
• Treatment
lecer
(1,000):
– Informa-on
about
sanc-ons:
higher
if
caught
by
audit,
lower
is
self
disclose
– In
3
languages
• Outcome:
revisions
(amount
and
probability)
• Data
being
analysed
–
no
results
yet
• Lessons
learned
– Taxpayers
reac-ons:
stories
– Process
of
lecer
prepara-on
and
dissemina-on
– Personalisa-on
12

13. Experiment
1
leNer
13

14. Experiment
2
• Treatment
lecers:
– Deterrence
message
– Public
service
and
self-­‐reliance
– Control:
reminder
of
deadlines
• Delivery
methods:
– Lecers
for
CIT
– Emails
for
CIT
– SMS
for
CIT
and
PIT
• Timeline:
tax
filing
period
• Outcome:
reported
income
in
2014
return
• Data
to
be
analysed
star-ng
in
April
2016
14

15. Deterrence
Do
you
know
that
if
you
do
not
declare
and
pay
your
taxes
on
6me,
RRA
can
fine
and
possibly
prosecute
you?
Pay
your
taxes
on
6me
and
avoid
fines
and
penal6es.
15

16. Public
services
message
By
paying
your
taxes
you
make
it
possible
to
educate
our
children,
fund
our
healthcare,
and
keep
us
safe.
Pay
taxes.
Build
Rwanda.
Be
proud.
16

17. Now
fully
implemented!!!
17

18. Final
reflec5ons
• Teamwork
• Mutual
learning
– Research
methods
– Context
and
prac-ce
of
tax
in
Rwanda
• Confiden-ality
18

19. Thank
you!