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Tax Evasion Strategies in Congo’s Democratic Republic of

Kananga, Kasai Central Province - In a bid to boost tax revenues and promote economic development, the Democratic Republic of Congo’s Kasai Central Provincial government has been grappling with the issue of tax evasion among large enterprises.

Tax Compliance: A Major Challenge

According to official figures, only 22% of firms in Kananga, the capital city, have been paying their corporate taxes on time. This trend is a major challenge for the government, which relies heavily on taxes as a source of revenue.

Research Findings

To combat this trend, a researcher partnered with the Provincial Ministry of Taxation to conduct a randomized evaluation of two tax enforcement campaigns aimed at increasing compliance and reducing bribery. The study found that governments with low capacity may struggle to enforce tax policy, but by providing incentives and community monitoring, they can promote economic development through improved tax compliance.

Study Methodology

The research focused on 3,000 registered firms in Central Kananga, randomly assigning them to one of three groups:

• Partial tax enforcement: Firms received an additional visit from a tax collector two weeks before the payment deadline.
• Full tax enforcement: Firms received multiple visits and sanctions for non-compliance.
• Comparison group: No special treatment was provided.

Expected Outcomes

The study found that the results are still pending, but it is expected to provide valuable insights into the effectiveness of different tax enforcement strategies in raising revenues in lower and middle-income countries. The findings are likely to inform policy decisions on how best to promote economic development through improved tax compliance.

Addressing Tax Evasion Challenges

Tax evasion is a major challenge for many governments worldwide, particularly in low-capacity jurisdictions where revenue collection is often weak. In Congo’s Democratic Republic of, the situation is exacerbated by corruption and leakages, which can limit the government’s ability to provide public goods and services to its citizens.

Conclusion

The Kasai Central Provincial government has been working to address these challenges through initiatives aimed at promoting tax compliance and reducing bribery. The research project is an important step in this direction, providing valuable insights into the most effective strategies for achieving these goals.

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