The Effect of Fiscal Decentralization on Tax Compliance Time: Evidence From the World Bank Doing Business Project

Nguyen Doan

Public Budgeting & Finance, 2026, vol. 46, issue 1, 40-57

Abstract: This paper investigates the impact of fiscal decentralization on tax compliance time. I postulate that fiscal decentralization is a means of inducing better targeting of public services and enhancing the efficiency of public service delivery because local governments respond to incentives to perform better and compete to attract a mobile tax base. This, in turn, reduces the level of tax administration burden, that is, businesses need less time to comply with taxes. Using panel data for 79 countries from 2006 to 2020, I find that fiscal decentralization is negatively associated with tax compliance time, particularly in developing countries.

Date: 2026
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