Redesigning tax debt collection process in Brazil: process automation & nudging for tax compliance

Abstract

Purpose This paper aims to contribute to the knowledge regarding the problem of tax compliance in Brazil by testing whether business process management (BPM) and nudging can help improve tax debt collection. The aim is to evaluate whether this mixed approach is effective and whether it can implement lasting transformation in the Brazilian tax administration. Design/methodology/approach This study presents a practice-oriented case study which uses business process transformation (BPT) methodology to redesign and automate a tax debt collection process applying nudge theory insights and then tests its effectiveness using controlled experimentation, or A/B testing. Findings By customizing parameters for automated messaging with taxpayers based on behavioural design and A/B testing the groups, the authors were able to identify a 2.90% compliance behaviour augment alongside a U$ 4 million estimated revenue increase (P = 0.01). Later evaluation showed the new practices to be enduring, hinting to the success of the adopted methods. Originality/value This study adds new knowledge in the effectiveness of business process transformation for the Brazilian tax administration, reasserts how nudging can support tax compliance in this context and offers insight on the combination of these different fields of knowledge.