EU Tax Observatory Seminar

Du 07/06/2024 de 12:00 à 13:00

Salle R2-01

BROCKMEYER Anne (World Bank)

Algorithms and Bureaucrats: Evidence from Tax Audit Selection in Senegal

Developing economies are characterized by limited compliance with government regulations, such as taxation. Resources for enforcement are scarce and audit cases are often selected by bureaucrats in a discretionary manner. We study whether an algorithm drawing on newly digitized data can help improve audit selection. Leveraging a nationwide field experiment in Senegal, we compare audits selected by tax inspectors to audits selected by a risk-scoring algorithm. We find that inspector-selected audits are more likely to be conducted, are similarly likely to detect evasion, and detect higher amounts of evasion. Inspectors prioritize auditing larger firms despite their lower evasion rates. This is consistent with the fact that the return on audits is increasing in firm size.