Findings of tax compliance cost surveys in developing countries

The World Bank Group (WBG) has carried out a number of tax compliance cost surveys (TCCS) for businesses in developing and transition countries in Africa, Asia, Latin America and the Middle East between 2006 and 2011. While there has long been plenty of evidence of regressivity in tax compliance costs in the developed world, the WBG has documented extremely regressive patterns in the developing world, with small businesses incurring tax compliance costs of up to 15% or more of turnover. Complex tax accounting requirements are associated with high tax compliance costs, while well-designed tax accounting software and e-filing in middle-income countries appear to yield significant reductions in such costs. The WBG surveys have also documented very high rates of tax inspections and audits (including all kinds of visits, official and unofficial, by tax authorities). While both tax evasion and corruption seem to be common issues in the majority of developing countries, some show more evidence of the problem than others, and in some countries, tax officials appear to have a significantly better reputation for competence, helpfulness and integrity than other government officials. Most surveys also include questions about tax morale and evasion, and questionnaires for informal businesses regarding their perceptions about tax compliance and likelihood of future registration. [PUBLICATION ABSTRACT]