tax ling rate one year later by 6.5 p.p., over a control group average of 35.1%. The eect was even larger7.3 p.p. or 46%for rms not covered by third-party information, which received a presumably weaker email message in the treatment year. The emails also had a statistically signicant but economically small eect on payment rates one year later: 1.0 p.p. for rms with third-party information and 0.2 p.p. for rms without information. Finally, treated rms were more likely to le informative declarations in 2015, mostly to report a client. For information-covered rms, the emails generated a 2.3 p.p. increase in the third-party reporting rate, thus further expanding the tax authority's enforcement capacity.

Conversely, we do not detect any eect of the emails on rms' propensity to be the subject of third-party reports in a later year. Columns 4-5 in Table 7 display the eect of the two treatments on rms' likelihood of being reported by state institutions (D150), private sector clients or suppliers (D151), or card processing companies (D153) in 2015. Treated rms were no more or less likely to be the subject of these reports, even if they received the stronger information email, which provided them with examples of third-party information held by the tax authority. The result holds also when pooling the two treatments. Thus, the treatment thus does not seem to have distorted production networks by encouraging rms to reduce trade with state agencies or credit/debit card machine usage, or to change trading practices with other rms in an eort to avoid being covered by third-party reports.<sup>33</sup> Overall, these ndings suggest that one-time deterrence messages can have a signicant and positive impact on compliance in the medium term, including compliance with information reporting requirements. The strong medium-term eects in our experiment suggest that the email messages lead rms to update their beliefs regarding the tax authority's enforcement capacity, i.e. the capacity to identify and follow up on non-lers, and that the update was persistent over time, hence conrming the messages' credibility.<sup>34</sup> The emails thus did not just act as a reminder or nudge, nor as a temporary, yet ultimately empty, enforcement threat.

The positive treatment eect in the medium term also sheds some light on the size of potential real eects. By reducing (compliant) rms' after-tax protability, the treatment might have lowered

> 33We also examine potential compliance spillovers of treatment on rms' trading partners, as identied by the D151 information reports from clients and suppliers, but do not nd any spillover eects.

> 34It is possible that the treatment and subsequent consultations with tax ocers allowed rms to gain new information about the tax ling procedure, which would have reduced the cost of future tax ling. However, we consider this mechanism to be less important than the deterrence mechanism, as tax ling in Costa Rica is very simple, all the necessary information is available online, and rms in our sample are tax registered and have thus been in contact with the tax authority at some point, often through ling a previous income tax declaration.

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