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Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda

Almunia, Miguel; Hjort, Jonas; Knebelmann, Justine; Tian, Lin; (2022) Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda. The Review of Economics and Statistics pp. 1-35. 10.1162/rest_a_01180. (In press). Green open access

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Abstract

Are firms sophisticated maximizers, or do they appear to make mistakes? Using transactions data from Ugandan value-added tax returns, we show that sellers and buyers report different amounts 79% of the time, despite invoices being easily cross-checked. Our estimates suggest that most firms are “advantageous misreporters“, but that 25% are “disadvantageous misreporters” who systematically overreport own sales minus purchases such that their tax liability increases. Similarly, many firms—especially disadvantageous misreporters—fail to VAT-report imported inputs they themselves reported at Customs, increasing their liability. On net, unilateral VAT misreporting cost Uganda about US$384 million in foregone 2013-2016 tax revenue.

Type: Article
Title: Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda
Open access status: An open access version is available from UCL Discovery
DOI: 10.1162/rest_a_01180
Publisher version: https://doi.org/10.1162/rest_a_01180
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: O1, H2, D2, D9
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10178056
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