Clearing the bar: Improving tax compliance for small firms through target setting

We use a new dataset of the universe Greek corporate tax returns to study voluntary compliance program for small firms. This “self-assessment” prescribed target taxable profit margins (the ratio profits revenues) different types activities. Firms that reported above these targets in given year were exempt from audits year. find firms take up report significantly larger than non-eligible firms, with some evidence longer-lasting effects on reporting. more years exhibit stronger effects. also can easily and substantially manipulate revenue (decreasing it by 40%) help meet without paying taxes. Overall, increased revenues collected but points very large level baseline under-reporting ease manipulating revenues.