Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333929 
Year of Publication: 
2025
Series/Report no.: 
ZEW Discussion Papers No. 25-067
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
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.
Subjects: 
Formalization
Tax Avoidance
VAT
Personal Income Tax
JEL: 
O17
H26
H24
H25
Document Type: 
Working Paper

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