Do Electronic Filing and Payment Increase Tax Compliance? Evidence from Large Taxpayers in Senegal

Governments in low-income countries have progressively introduced electronic tax filing and payment systems in the hope of reducing enforcement costs for tax administrations, compliance costs for taxpayers, and the risk of collusive in person interactions between the two. Combining high frequency administrative data with a dynamic difference-in-differences approach, we investigate the causal impact of a reform that made the use of these technologies mandatory for large taxpayers in Senegal. Our findings indicate no – or only limited – effects on key measures of tax compliance, such as the probability of declaring, the probability of paying, or tax payments. Nevertheless, online filing reduces the prevalence of missing values by more than 90 per cent, with important measurement implications. In particular, we show that aggregate formal employment is at least 20 per cent greater than suggested by the information obtained through paper filing.