Journal of Tax Reform | 2026
Authors: Sisay M.A.; Mayburov I.A.
DOI: 10.15826/jtr.2026.12.2.257
Journal: Journal of Tax Reform
Year: 2026
Publisher: Ural Federal University
Document Type: Article
Open Access: All Open Access; Gold Open Access
Cited by: 0
Improving tax compliance among small and medium-sized enterprises remains a critical challenge for fiscal sustainability in developing economies, where administrative capacity is limited and traditional enforcement mechanisms are costly. Although behavioral interventions based on “nudge” theory have demonstrated promising results in tax compliance research, rigorous experimental evidence for business taxpayers in Sub-Saharan Africa remains scarce. This study examines the effectiveness of low-cost behavioral interventions in improving small and medium-sized enterprises tax compliance at the municipal level in Ethiopia. A randomized controlled trial was conducted in Woldia Town using a stratified random sample of 120 formally registered small and medium-sized enterprises. Firms were randomly assigned to one of four groups: a control group, a reminder intervention group, a social norm intervention group, and a combined intervention group. Tax compliance was measured as a binary outcome based on timely filing and payment using administrative tax records. Treatment effects were estimated under an intention-to-treat framework using logistic regression and average marginal effects. The results indicate that all behavioral interventions significantly improve tax compliance relative to the control group. Reminder messages produce the strongest individual effect, increasing the probability of compliance by 54 percentage points, while social norm messages increase compliance by 27 percentage points. The combined intervention yields the largest overall effect, increasing compliance probability by 68 percentage points, although the effect is not strictly additive. Firm-level characteristics and owner demographics are not statistically significant predictors of compliance, suggesting that behavioral interventions outweigh structural determinants in this context. This study contributes to the tax compliance literature by providing rare causal evidence from Sub-Saharan Africa and demonstrating that simple, scalable reminder systems constitute an effective and cost-efficient policy instrument for improving SME tax compliance in resource-constrained settings. © Sisay M.A., Mayburov I.A., 2026.
behavioral interventions; Ethiopia; municipal taxation; randomized controlled trial; reminders; social norms; tax compliance