“Please give me an invoice”: VAT evasion and the Portuguese tax lottery

Abstract

Purpose The Portuguese tax authority implemented a lottery to encourage citizens to request invoices as a strategy to fight value-added tax (VAT) evasion. As the law does not require citizens to request sales invoices with the consumers’ tax number, doing so is a form of voluntary cooperation in tracking down tax evaders. The purpose of this paper is to understand why ordinary citizens decide to join forces with tax authorities in the fight against VAT evasion by requesting invoices with their tax identification number. Design/methodology/approach An empirical study was conducted to explore the underlying motivation for Portuguese consumers to request sales invoices with their personal tax identification. The study combines quantitative and qualitative data. Findings The results from this study show that rewarding citizens is clearly a factor to be considered in any policy to maximize citizens’ cooperation in tracking down tax evaders. They indicate that fiscal benefits have a stronger effect on the request of invoices than the lottery and that it is necessary to promote good governance and justice. Practical implications Findings should be used to inform a cost-effective public policy that takes into account citizens’ concerns and combine deterrent measures and rewards in the form of tax benefits, rather than tax lotteries. Originality/value This paper provides new insights into VAT lotteries, which seem to be increasingly favored by policy makers but are an area under-researched. By recommending a course of action to maximize citizens’ cooperation in tracking down tax evaders, the paper provides useful practical implications and is a contribution for the study of VAT evasion policies.

Tax Compliance: Factors that Influence Taxpayer Invoice Requests in Portugal

“…lotteries) on requests for invoices with a TIN. Except for Wilks, Cruz, and Sousa (2019), the literature does not analyze the multiple factors that can influence these behaviors. A better understanding of taxpayer attitudes and behaviors is crucial for promoting cooperation between taxpayers and tax administrations (Mitu, 2016).…”

“…Recently, Wilks et al (2019) found that requests for invoices with a TIN in Portugal were due to the desire to obtain a tax benefit, perceptions of justice, and civic duty. However, the authors state that future studies should add other variables that allow the theme to be explored more deeply.…”

Curbing Tax Evasion through Taxpayer Identification Number (TIN) in Niger State, Nigeria

“…The findings of the case study revealed that the social marketing campaign really made issuing invoices with customer tax numbers a common practice with the subsequent consequence of reducing tax evasion. Wilks et al (2019) sought to understand why Portuguese citizens were cooperating with the government in demanding for invoices from traders containing their tax identification numbers as a strategy to combat VAT tax evasion; this study is closely related to Casais et al's (2019) study that examined the same invoice campaign in Portugal. A survey of 931 Portuguese citizens revealed that the incentives of tax deductions and a tax lottery were the main motivation for their voluntary participation in the invoice-request campaign to reduce VAT tax evasion.…”

Is the Value Added Tax System Sustainable? The Case of the Czech and Slovak Republics

“…Its citizens are encouraged or motivated to request sales invoices with their personal tax identification number so as to participate in a tax lottery. Wilks, Cruz and Sousa [25] claim that these fiscal benefits helped decrease the VAT gap from 16% in 2013 to 12% in 2014, when the lottery was introduced. Similarly, Brazil and China introduced a tax lottery with the aim to encourage VAT compliance [26,27].…”