Can you help shape our future priorities? Take a five minute survey now. Survey closes on 8 July.

Working Paper

World Development 128

The Customer is King: Evidence on VAT Compliance in Tanzania

Published on 1 April 2020

Value Added Tax (VAT) has emerged as one of the main modes of raising tax revenue worldwide, but has significantly underperformed as a revenue source in African countries.

To improve compliance, Tanzania has introduced Electronic Fiscal Devices (EFDs), which automatically transmit information about business transactions to the tax administration. However, VAT collection has not improved as expected. In this paper, we examine EFD compliance and identify factors that influence it. An innovation in this study is the direct observation of EFD usage: our enumerators waited for customers departing from business premises, and then checked their receipts, interviewed them and interviewed the businesses. This design enabled us to observe each business’s actual compliance in issuing EFD receipts, thus mitigating the problem of dishonest reporting of compliance, which is common in self-reported survey data. We find that EFD compliance is associated not only with the business’s perception of other businesses’ compliance and its satisfaction with public services, but also, and more strongly, with the customer’s perception of detection and penalty risks.

Cite this publication

Fjeldstad, O-H.; Kagoma, C.; Mdee, E.; Hoem Sjursen, I. and Somville, V (2018) 'The Customer is King: Evidence on VAT Compliance in Tanzania', ICTD Working Paper 83, Brighton: IDS

Authors

Odd-Helge Fjeldstad

ICTD Senior Fellow

Cecilia Kagoma

Ephraim Mdee

Ingrid Hoem Sjursen

Publication details

published by
ICTD and IDS
isbn
978-1-78118-491-2
language
English

Share

About this publication

Region
Tanzania

Related content

Opinion

The power of communities during civic space closure in Central America

Rocío Elizabeth Ramírez Argueta, Oficial de programas y proyectos, COMCAVIS TRANS

& 3 others

24 June 2025

Opinion

El poder de las comunidades frente al cierre del espacio cívico en Centroamérica

Rocío Elizabeth Ramírez Argueta, Oficial de programas y proyectos, COMCAVIS TRANS

& 3 others

24 June 2025

Opinion

Shaping the future of AI: The role of non-binding agreements

23 June 2025

Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.