Technology and Tax: Adoption and Impacts of E-services in Rwanda

Abstract

Many low-income countries are increasingly digitising their tax services, which can bring a range of benefits, from reducing compliance costs and improving record-keeping, to limiting opportunities for corruption and increasing fairness in the tax system. However, the success of these benefits depends on adequate levels of awareness and adoption of e-services among taxpayers; where these levels are suboptimal, tax e-services may produce only partial benefits. This paper examines the extent of awareness and uptake of tax e-services in Rwanda from a pre-pandemic situation up to two years into the COVID-19 crisis. The country has increasingly digitalised its tax administration, even more so during the pandemic. Electronic filing and payment of taxes have been mandatory since 2015, and two different e-services are available: E-tax, a free web-based platform designed to be used on computers and smartphones, and M-declaration, a feature phone-based application which enables mobile money payments and a simpler process for filing a return. This allows us to run a comparative analysis of the two solutions. We apply a mixed methods approach, using a nationally representative panel survey of 2,000 corporate (CIT) and personal (PIT) income taxpayers, with baseline information collected pre-COVID-19 and four follow-up rounds carried out after the pandemic hit, and focus group discussions (FGDs) with 24 e-services users. Summary of Working Paper 153.