Applying behavioral insights to increase tax compliance in Moldova

  • Status on-hold
  • Year 2017
  • Category Government to Citizen & Government to Government

Problem statement:

Poor tax collection significantly affects financing of public services and investments, the share of shadow economy in Moldova being gradually increasing up to 28% of GDP. Business entities do not issue the invoice/register a business transaction and hide the equivalent amount of VAT, overall the fiscal morality or real motivation of Moldovans to pay taxes is one the lowest in Eastern Europe.

MiLab innovative approach:

Foster tax compliance in Moldova, through the use of behavioral insights - tax lottery for citizens where fiscal receipt will serve as a lottery ticket.
Robust evaluation of the intervention applying difference-in-difference approach

Innovations for change outcomes:

  • Fast and cheap method to increase tax compliance through conducting tax lottery
  • A new method applied by Tax Office to M&E public policies ex ante