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We evaluate a tax reform in Ecuador that introduced generous deductions from personal
income taxes (PIT), encouraging consumers to request receipts. The reform addresses tax
evasion by targeting small self-employed businesses that mainly sell goods or services not
subject to VAT but often evade income taxes. Exploiting plausibly exogenous variation
in receipt demand due to the distribution of taxpayers across regions and professions, we
find significant increases in reported profits among self-employed businesses exposed to the
reform. We document spillover effects on the VAT system. Our net-revenue impact analysis
suggests that the additional tax payments outweigh the foregone tax revenue.
