The role of tax intermediaries in encouraging or hindering compliance with tax obligations in low-income countries has received little attention in the literature. A rare example are two small-scale surveys carried out in Uganda, which suggest that tax agents might have a broadly positive impact on taxpayers’ compliance.
This study builds on that exploratory evidence through the analysis of all corporate income tax (CIT) and value added tax (VAT) returns submitted in Uganda between 2019 and 2023. The impact of tax agents, proxied by the presence of audit expenses in CIT returns, and audit or tax preparation VAT input claims, is confirmed as broadly positive. Returns prepared with agents’ support show no difference in declared liabilities in the aggregate, and higher declared CIT liabilities for small and medium taxpayers. They also carry forward higher losses. Significant but small increases in total VAT declared are mediated by the impact of agents on reporting behaviour for both input and output VAT, both of which increase. Taxpayers seeking agents’ services are also less likely to nil-file, and slightly more likely to file late. A higher likelihood of being subject to audit does not lead to significant differences in audit adjustments. These results are robust to different specifications, and an alternative definition of the use of agents.
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This paper provides an extensive review of existing literature on tax agents, and presents some preliminary evidence from two surveys on their use in Uganda.
