During the period 1996-2000, the coverage of VAT in Pakistan rose by twenty times in terms of the number of firms in the tax net and by ten times in terms of the volume of transactions subject to it. This paper leverages this staggered introduction of VAT in the country to estimate its...

We examine two Pakistani programs to see if the public disclosure of tax information and social recognition of top taxpayers promote tax compliance. Pakistan began revealing income tax paid by every taxpayer in the country from 2012. Simultaneously, another program began recognizing and...

Using Ramadan fasting as a natural experiment, we estimate the long-run impacts of in-utero health and nutrition shocks on adult outcomes. We exploit administrative tax return data comprising the universe of income tax returns filed in Pakistan during 2007–2009. The data allow us to link...

This paper analyzes the design of tax systems under imperfect enforcement. A common policy in developing countries is to impose minimum tax schemes whereby firms are taxed either on profits or on turnover, depending on which tax liability is larger. This production inefficient tax policy has...

This paper analyzes the effects of personal income taxation on earnings, formality and business organization choices of agents. I use a tax reform introduced in Pakistan in 2009, which increased taxation of partnership firms substantially relative to other unincorporated firms, as a natural...

The central attraction of value-added tax relative to its alternatives is that it facilitates tax enforcement. By allowing the adjustment of tax paid on inputs, VAT reduces a firm’s incentive and ability to evade. The mechanism makes good sense in theory but remains largely untested...

Aggressive profit shifting by multinational enterprises (MNEs) is a growing concern for domestic resource mobilization in developing economies. This paper evaluates the revenue and welfare consequences of a flagship tax avoidance rule that has been implemented in more than 45 countries to...

We develop a framework for nonparametrically identifying optimization frictions and structural elasticities using notches--discontinuities in the choice sets of agents--introduced by tax and transfer policies. Notches create excess bunching on the low-tax side and missing mass on the high-tax...

We examine two Pakistani programs to explore the role of deterrence as well as social and psychological factors in the tax compliance behavior of agents. In the first of these programs, the government began revealing income tax paid by every taxpayer in the country. The second program publicly...

Using quasi-experimental variation created by a Pakistani tax reform and administrative data, I estimate behavioral responses to taxation in a low tax capacity environment. I find that taxpayers engage in tax evasion, move into informality, and shift earnings to tax-favored business forms in...