Active Ghosts: Nil-filing in Rwanda

Giulia Mascagni, Fabrizio Santoro, Denis Mukama, John Karangwa and Napthal Hakizimana

World Development, 2022, vol. 152, issue C

Abstract: Nil-filing refers to taxpayers reporting zero in all fields of their tax declaration. It is a largely ignored phenomenon in the public finance literature, despite being well known to tax administrators and widespread: half of all registered corporations in Rwanda file nil. This paper sheds light on this issue, using descriptive analysis of administrative data, a randomised controlled trial (RCT), and qualitative interviews with taxpayers and tax officials. We argue that a major reason for nil-filing lies at the intersection between aggressive recruitment campaigns by the Rwanda Revenue Authority (RRA) and taxpayers’ response to a complex and often confusing tax system. Through the lens of nil-filing, we also shed some light on the practical challenges of public administration in low-income countries more generally. By doing this, we challenge the prevailing narrative that governments should always expand the tax base to small and yet unregistered firms, showing some previously undocumented – and unintended – consequences of such a strategy.

Keywords: Tax compliance; Tax administration; RCT; Nil-filing; Taxpayer behaviour (search for similar items in EconPapers)
JEL-codes: D22 H25 H26 H32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:152:y:2022:i:c:s0305750x21004216

DOI: 10.1016/j.worlddev.2021.105806

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