Report

Promoting Tax Compliance in Kosovo with Behavioral Insights

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collection.link.98
https://openknowledge.worldbank.org/handle/10986/2206
collection.name.98
Other Public Sector Study
dc.contributor.author
Hernandez, Marco
dc.contributor.author
Karver, Jonathan
dc.contributor.author
Negre, Mario
dc.contributor.author
Perng, Julie
dc.date.accessioned
2019-03-07T19:09:19Z
dc.date.available
2019-03-07T19:09:19Z
dc.date.issued
2019-03-01
dc.date.lastModified
2021-05-25T09:21:59Z
dc.description.abstract
As in many countries, tax collection is a development challenge in Kosovo. Kosovo is one of the poorest and youngest countries in Europe in terms of gross domestic product (GDP) per capita and both demographics and statehood. The lack of an independent monetary policy — given that Kosovo has adopted the euro as the national currency — means that ensuring the sustainability of fiscal policy is critical. However, limited tax revenues hamper the government's ability to address economic cycles. Between 2011 and 2017, total government revenue amounted to about 14 percent of GDP, below the average of 19 percent among countries in Europe and Central Asia. Unlike other countries, Kosovar government relies on taxes for more than 85 percent of its revenues. Mobilizing tax revenues is therefore critical. The Tax Administration of Kosovo (TAK) requested assistance from the World Bank and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to address this challenge using an evidence-based approach. To this end, the World Bank and GIZ applied behavioral insights to promote tax compliance among specific groups of taxpayers. Three experiments were designed, implemented, and evaluated in 2018 that involved sending behaviorally informed reminders using letters, e-mails, and short messaging service (SMS) messages to various groups of taxpayers to induce timely and honest declarations and payments. The short-term objective of these trials was to increase the number and timeliness of tax declarations. Simple, behaviorally designed messages were effective in inducing tax declaration. Messages helped raise the tax declaration rate by an average of around 3 percentage points during a period of between four and six weeks. Among personal income tax (PIT) declarations, this represents a 59 percent increase in compliance, equivalent to over 200 more annual tax declarations among participants. The likelihood of payment rose in many instances, and no significant difference was found in the amounts of taxes paid. Lessons from the tax experiments in Kosovo highlight the benefits of rigorous impact evaluation and the need to establish processes that help integrate tax collection functions and data systems.
en
dc.identifier
http://documents.worldbank.org/curated/en/747661551725011887/Promoting-Tax-Compliance-in-Kosovo-with-Behavioral-Insights
dc.identifier.uri
http://hdl.handle.net/10986/31357
dc.language
English
dc.publisher
World Bank, Washington, DC
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo
dc.subject
TAX ADMINISTRATION
dc.subject
TAX COMPLIANCE
dc.subject
TAX COLLECTION
dc.subject
TAX REGISTRY
dc.subject
POVERTY
dc.subject
VALUE ADDED TAX
dc.subject
TAXPAYERS
dc.title
Promoting Tax Compliance in Kosovo with Behavioral Insights
en
dc.type
Report
en
okr.crossref.title
Promoting Tax Compliance in Kosovo with Behavioral Insights
okr.date.disclosure
2019-03-04
okr.doctype
Economic & Sector Work
okr.doctype
Economic & Sector Work :: Other Public Sector Study
okr.docurl
http://documents.worldbank.org/curated/en/747661551725011887/Promoting-Tax-Compliance-in-Kosovo-with-Behavioral-Insights
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/31357
okr.identifier.externaldocumentum
090224b086a14352_1_0
okr.identifier.internaldocumentum
30876598
okr.identifier.report
135032
okr.imported
true
en
okr.language.supported
en
okr.pdfurl
http://documents.worldbank.org/curated/en/747661551725011887/pdf/135032-WP-PUBLIC-Kosovo-Tax-Compliance.pdf
en
okr.region.administrative
Europe and Central Asia
okr.region.country
Kosovo
okr.topic
Public Sector Development :: Tax Administration
okr.topic
Law and Development :: Tax Law
okr.unit
Poverty GP ECA (GPV03)

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