on the roughlysales tax return, as shown in table VI. The table reports the pre-reform mean in the treatment group, and the coecient _β_ for dierent specications, either using the raw data, or winsorizing by the 99.9th, 99th and 95th percentile, in addition to the rst percentile. As several outcome variables take value zero for a large share of observations, we use levels rather than logs, and report the treatment eect as marginal eect on the pre-reform average. However, the results are qualitively similar when using log(outcome+1) or a dummy variable indicating if the outcome is non-zero.

To visualize the identifying assumption and treatment eect on total tax payment, Figure VIII plots the month-on-month change in total tax payment for the treatment and control group, together with the DiD coecient estimates from Equation 2. For the purpose of this gure, the data is winsorized by the 99th percentile. Total tax payment is the sum of the tax withheld and the taxpayer's payment. Despite seasonal uctuations with peaks during the December shopping season, the two groups exhibit parallel pre-reform trends, which conrms the suitability of the control group. At the time of the reform, tax payments in the treatment group increase sharply by about 33% and remain at this higher level for the next 15 months.<sup>50</sup> As there is no corresponding decrease in tax payment in the control group, and the treatment group represents a substantial share of total sales, the withholding rate reform increased aggregate sales tax revenue by 8.4%. Figure IX illustrates this results, using a simple linear regression discontinuity design on demeaned semester-wise revenue data (from ocial government statistics). We display the evolution of revenue from the quarterly simplied regime tax as a counterfactual, to show that the discontiuity at reform time is not driven by business cycle uctuations.<sup>51</sup> A concern is that taxpayers may have countered the eect of the withholding rate reform by changing their behavior on other margins. The last three rows in table VI show that this is not the case. Where tax has been withheld in excess of liabilities, taxpayers can either request a refund of the excess amount, or substract it as compensation from their income tax liability. However, this applies to a very small number of taxpayers.<sup>52</sup> We nd that the main treatment eect barely changes when considering as outcome total sales tax payments net of any refunds requests and income tax compensations. Furthermore, the last row shows that the withholding rate reform was not met by a decrease in income tax payment. When using the sum of total income and sales tax

> 50There is an additional increase over time during the post-reform period, but this parallels a qualitatively similar development in the control group.

> 51The results are similar when running the estimation on the un-demeaned data, or aggregating at the quarter or month-level. See footnote 19 for details on the simplied tax regime.

> 52In the raw data, the number and total amount of the refund requests increased slightly at the time of the reform (results available upon request). However, there are usually less than 300 refund requests per month, compared to about 6000 treated rms in our balanced panel, and less than half of the refund requests are led by sales tax payers. The delay in receiving a refund is reportedly several months, and the request procedure is cumbersome and thus undertaken primarily by large and sophisticated rms.

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