Tax Compliance Incentives in a New Digital Tax Platform in Zambia

In collaboration with the Zambia Revenue Authority (ZRA) and the International Growth Center, our team is building on years of joint research to improve VAT compliance and domestic revenue mobilization in Zambia. Building on an RCT with Lusaka retailers that demonstrated strong responsiveness to invoice-request incentives and increased upstream VAT remittances, we now aim to scale these consumer rewards through Zambia’s new digital tax platform, Smart Invoicing. This system enables real-time tax data collection and opens new possibilities for incentive design and monitoring. With strong policy interest, we propose to design and experimentally test consumer engagement mechanisms for a national VAT rewards program. A key challenge is reaching consumers without taxpayer IDs; we propose a USSD/SMS-based registration system using phone numbers to enroll and track participation. Funding will support the development, piloting, and evaluation of scalable solutions to maximize program effectiveness and sustainability, with the goal of improving tax compliance and state capacity in a low-fiscal-capacity setting.