Code and Replication Information for: "Harnessing Deductions to Increase Tax Compliance and Formalization"

Principal Investigator(s): View help for Principal Investigator(s) Albrecht Bohne, ZEW - Leibniz Centre for European Economic Research; Jan Sebastian Nimczik, ESMT Berlin

Version: View help for Version V1

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Project Citation:

Bohne, Albrecht, and Nimczik, Jan Sebastian. Code and Replication Information for: “Harnessing Deductions to Increase Tax Compliance and Formalization.” Nashville, TN: American Economic Association [publisher], 2026. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2026-03-24. https://doi.org/10.3886/E235602V1

Project Description

Summary:

Code, Replication Information and Data for "Harnessing Deductions to Increase Tax Compliance and Formalization".

Abstract: We evaluate a tax reform in Ecuador that introduced generous deductions from personal income taxes (PIT), encouraging consumers to request receipts. The reform addresses tax evasion by targeting small self-employed businesses that mainly sell goods or services not subject to VAT but often evade income taxes. Exploiting plausibly exogenous variation in receipt demand due to the distribution of taxpayers across regions and professions, we find significant increases in reported profits among self-employed businesses exposed to the reform. We document spillover effects on the VAT system. Our net-revenue impact analysis suggests that the additional tax payments outweigh the foregone tax revenue.

Funding Sources: Karin-Islinger Stiftung, Universität Mannheim; Deutsche Forschungsgemeinschaft (DFG) (BO 5782/1)

Scope of Project

Subject Terms: administrative data; Taxation

JEL Classification:
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H26 Tax Evasion and Avoidance
      O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

Geographic Coverage: Ecuador

Time Period(s): 1/1/2006 – 12/31/2015

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Published Versions

V1 [2026-03-24]

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