Can Tax Agents Support Tax Compliance in Low-income Countries? A Review of the Literature and some Preliminary Evidence from Uganda

Over the last 40 years there has been an increased focus on the role that tax agents play in ensuring or deterring compliance with tax obligations. While the literature on their role is not extensive, a variety of different topics have been explored. Some consistent evidence has emerged indicating when agents improve (or decrease) compliance, as well as the key drivers of their use by taxpayers. However, virtually all existing studies have focused on high- or upper-middle-income countries. Given that the tax systems of low-income countries present a unique set of compliance issues, a more in-depth analysis of the role that tax agents might play in these contexts is warranted. In this paper, we provide an extensive review of existing literature on tax agents, and present some preliminary evidence from two surveys on their use in Uganda. Our results show that tax agents seem to contribute to an improvement in the quality of filed returns and to lower audit adjustments, hence supporting improved compliance. The type of services more frequently requested by taxpayers seem to match those in high-income countries, as do their reasons for engaging tax agents in the first place.