The Impact of Gender on Tax Compliance in Southern Albania

Abstract

We examine whether gender influences formal tax compliance among self-employed taxpayers in Southern Albania—focusing on two observable behaviors: paying taxes on time and the amount of unpaid tax debt (arrears). The study does not examine tax evasion or tax avoidance, as these behaviors cannot be directly observed in the available data. Using administrative data on 500 taxpayers in Fier, Vlorë, Berat, Gjirokastër, and Sarandë (January 2022–March 2025), we estimate the likelihood of timely payment with logistic and probit models and study unpaid liabilities using linear regression. Female-led businesses are more likely to meet deadlines and hold lower unpaid debts than male-led firms. These differences persist across sectors after controlling for firm size, region, income, and time. A negative and significant Gender × Sector term indicates that sectoral composition does not offset women’s compliance advantage in these formal outcomes. The effect size is relatively large for an environment with imperfect monitoring, suggesting that moral norms, reputational concerns, and perceived control weigh more heavily where deterrence is limited. From a policy perspective, adding gender to compliance-risk models and tailoring taxpayer services may indirectly improve voluntary payments and reduce arrears by refining compliance-risk assessment and targeting. To our knowledge, this is the first study in Albania using official administrative microdata to analyze gendered formal tax behavior, addressing a clear empirical gap in Southeastern Europe and providing evidence relevant for discussions of fair and inclusive fiscal policy in an EU-harmonization context. While the findings are derived from Southern Albania, they offer indicative insights for comparable transition economies in Southeastern Europe, rather than direct generalization.

1. Introduction

Formal tax compliance—declaring one’s income and paying due taxes on time—stands at the core of public finance and increasingly of behavioral finance. In this study, we use the term formal tax compliance in an operational sense, focusing on observable administrative behaviors: (i) whether taxpayers meet statutory payment deadlines and (ii) the stock of unpaid tax liabilities (arrears). While the broader formal tax compliance literature often also examines tax evasion (e.g., underreporting income) and tax avoidance (legal strategies to reduce tax burdens) as deeper indicators of tax morale, these behaviors are not directly observable in the administrative payment dataset used here. Accordingly, the paper’s contribution is intentionally limited to formal compliance outcomes.

According to the classical deterrence theory, the taxpayer is a rational decision-maker who weighs expected penalties against the gains from evasion. However, many people comply even if audit probabilities are low and detection is virtually impossible. This empirical regularity pushed the field toward a broader perspective that includes psychology and social context: norms, emotions, risk preferences, and identity help explain why taxpayers follow—or do not follow—the rules. Further, recent studies have gone ahead to show how transient emotions and stable personality traits meaningfully shape compliance (Fochmann et al., 2025; Lukovszki et al., 2025).

Southern Albania’s economy is mainly characterized by services and trade, and in recent years, the number of businesswomen has been heavily increasing. However, the domestic literature has focused more on the features of institutional reforms, digitalization, and corruption (Hoxhaj & Kamolli, 2022; Muharremi et al., 2022) than micro-level behavior. Important as it is, this research leaves open whether risk, norms, and perceived control translate into gender differences in actual payment data. To the best of our knowledge, no previous study in Albania—or indeed in the wider Western Balkans—has examined gendered tax behavior using administrative microdata rather than surveys, thus leaving a clear empirical gap.

This study fills the gap by integrating behavioral finance with classical deterrence and the Theory of Planned Behavior. The basic premise is that intentions determined by attitudes, subjective norms, and perceived control (Ajzen, 1985), in addition to internal tax morale (Torgler, 2003), should materialize in observable compliance outcomes, especially where monitoring is imperfect. We draw on administrative data from 500 self-employed taxpayers in Fier, Vlorë, Berat, Gjirokastër, and Sarandë between January 2022 and March 2025 to test three hypotheses: H1: Gender predicts the probability of timely payment; H2: Gender predicts the level of unpaid tax debt; H3: The sectoral context moderates these effects through a Gender × Sector interaction. These hypotheses are grounded in the behavioral finance and tax compliance literature, which suggests that gender differences in risk preferences, reputational concerns, and social norms may translate into systematic differences in formal compliance behavior (Croson & Gneezy, 2009; Komatsu et al., 2024).

Methodologically, we estimate logistic and probit models for timely payments and use linear regression for unpaid liabilities, which allows us to capture both the extensive margin—whether a taxpayer pays on time—and the intensive margin—how much arrears accumulate (Horowitz & Savin, 2001; Chen et al., 2023). Using administrative data, the analysis shows that female-led businesses are more likely to meet deadlines and hold lower unpaid debts than male-led firms. These differences persist after controlling for firm size, income, region, and time and remain visible across all sectors. By recognizing gender as a behavioral determinant, revenue administrations can design targeted and gender-sensitive interventions—such as integrating gender into compliance risk models and service tailoring—that raise voluntary payments and reduce arrears without heavier auditing.

The results reinforce an emerging behavioral view of compliance that integrates deterrence with psychological and social channels, offering a replicable model for transition economies seeking to improve revenues without resorting to heavier audit burdens.

Translating these insights into practice—through risk assessment and targeted taxpayer services—provides a cost-effective path to enhance voluntary payments and reduce arrears, while simultaneously supporting gender-responsive public finance.

2. Theoretical Framework and Literature Review

Understanding taxpayer compliance and evasion has evolved from a narrow cost–benefit perspective to one that is broader and interdisciplinary, combining economics with psychology and sociology. We next review the principal theories and evidence on gendered compliance, focusing on insights relevant to Southern Albania.

2.1. From Deterrence to Behavioral Finance

The seminal reference frame of Allingham and Sandmo (1972) considers taxpayers to be expected-utility maximizers who compare the gain from evasion with the expected punishment. While being a foundational work, this approach cannot satisfactorily explain the usually high level of compliance that is observed in environments characterized by rather weak audit systems (Torgler & Schneider, 2009). Accordingly, specific aspects of behavioral economics and finance became part of later studies that focused on moral norms, perceived fairness, risk attitudes, and trust in institutions (Alm & Torgler, 2006).

In this way, compliance expresses values and expectations instilled within communities, in addition to incentives. The related concept here is one of tax morale—the internalized belief that paying taxes is a civic duty—which is more resilient where institutions are perceived as more legitimate (Torgler, 2003; Bobek et al., 2013). Ajzen’s (1985) Theory of Planned Behaviour further explains how attitudes, subjective norms, and perceived behavioral control create intentions and actions. In contexts where enforcement is uneven, these social and psychological levers could be more important than raw deterrence in explaining compliance even when risks of detection are low.

2.2. Gender and Formal Tax Compliance

Within this behavioral turn, gender is one of the most obvious dimensions to consider. Different studies show that systematic differences are found between males and females regarding risk tolerance, reputational concerns, and planning horizons (Croson & Gneezy, 2009; Barber & Odean, 2001). As women, on average, have higher risk aversion and sensitiveness to social norms, they also tend to display higher tax morale and probability of timely payment.

Observations from international research show a higher level of tax compliance in female-led firms in developing countries such as Rwanda (Twesige et al., 2024) and Ethiopia. Furthermore, research in Europe and America, as developed countries, shows a higher level of tax compliance and tax morale in women-led firms (D’Attoma et al., 2017, 2020). Very limited research can be found on this topic in Southeastern Europe based on administrative records.

Albania is a particularly good fit for studying these questions. The informal economy in Albania is estimated to account for approximately one third of GDP (World Economics, 2023; OECD, 2023)—and enforcement varies across region and industry.

3. Methodology

3.1. Data Source

We use administrative data from the Regional Directorate of Taxes of the Southern Region of Albania covering 500 self-employed taxpayers in Fier, Vlorë, Berat, Gjirokastër, and Sarandë for the period January 2022–March 2025. The sample size reflects the universe of active self-employed taxpayers whose complete payment histories are available under this data-sharing agreement. The period 2022–2025 has been selected as a continuous time frame to ensure uniformity in tax procedures in the aftermath of recent digitalization reforms and to avoid breaks in the series due to earlier institutional changes.

The advantage of the administrative data is immediately apparent: they capture actual payment behavior and not perceptions, avoiding common survey problems such as response and recall bias. For example, the sample of active self-employed individuals has complete payment histories within the observation window, so each observation can be compared to all others.

All data were provided in anonymized form and analyzed under a data-sharing agreement with the authority.

3.2. Data Description

The empirical analysis is performed using administrative data available from the first quarter of 2022 until the first quarter of 2025. Selecting this time series allowed observing the implementation of the fiscalization reform in Albania, which took effect in 2021 and imposed mandatory real-time electronic invoicing and intensified control over tax administration. Researching this time series allowed observing a constant treatment in terms of treatment implementation and a lack of a structural break, opposite to previous reforms (Albanian Parliament, 2019; General Directorate of Taxation, 2021). All monetary values are reported in Albanian lek (ALL). The exchange rate between the Albanian lek and the euro remained broadly stable over the observation period (Bank of Albania, 2022–2025).

The dataset consists of a sample of 500 self-employed registered individual entrepreneurs in the following counties in the Southern Region of Albania: Fier, Vlorë, Berat, Sarandë, and Gjirokastër. The population of self-employed entrepreneurs is 94,406 active registered businesses, according to the records from January 2022 in the national tax register.

A stratified random sampling technique was used in this study to make sure all five counties are adequately represented in a way proportional to their size in terms of each sector of activity: trade, service, and production. The level of observations in each county corresponds to their relative influence in Southern Albania’s economy.

Data on tax payments and tax arrears for each quarter are available for all units in the sample over the observation period, making it possible to conduct a dynamic analysis of tax compliance behavior. Focusing on self-employed contributory taxpayers ensures a homogeneous institutional setting, making it easier to compare regions.

The empirical analysis focuses exclusively on self-employed taxpayers (Physical Entities), the dominant legal form among registered economic units in the South of Albania. In the Albanian institutional context, this legal form is widely adopted due to lower entry and exit barriers and reduced administrative complexity, rather than firm scale alone, and therefore encompasses a broad range of business sizes. Self-employed taxpayers may operate either with or without employees while retaining the same legal and fiscal status. This organizational form is particularly well suited for behavioral analysis, as financial and tax-related decisions and responsibilities are borne directly by the owner, ensuring a homogeneous decision-making framework for the study of formal tax compliance behavior (Republic of Albania, 1998, 2008). In addition, self-employed entities are the prevailing business structure in Albania, thereby qualifying them as a valid real-world environment for studying formal tax compliance behavior (INSTAT, 2023; Republic of Albania, 2008).

3.3. Description of Variables

Table 1. Definition of Variables.

Variable	Definition	Measurement/Notes
Timely Payment	Indicator of formal tax compliance	Binary variable equal to 1 if the taxpayer paid within the statutory deadline; 0 otherwise
Tax Debt (Arrears)	Outstanding unpaid tax liabilities	Continuous variable measured in Albanian lek (ALL)
Gender	Gender of the business owner	Dummy variable: 1 = female; 0 = male
Sector	Economic activity	Sectoral dummy variables based on NACE classification
Gender × Sector	Interaction term	Captures sectoral heterogeneity in gender effects
Firm Size	Scale of activity	Number of employees
Annual Income	Business revenue	Reported annual taxable income
Region	Geographic location	City fixed effects
Fiscal Year	Time dimension	Year fixed effects

summarizes the definition and measurement of the variables used in the empirical analysis.

We checked for sensitivity to outliers, looking at the upper tail of the distributions of income and arrears; trimming these variables leaves the conclusions unchanged.

3.4. Econometric Models

We combine binary response and linear models in a way that captures both extensive and intensive margins of compliance. Logit model for timely payment: logit {P(Y_i = 1)} = β₀ + β₁ Gender_i + β₂ Sector_i + β₃ (Gender × Sector)_i + β_k Controls_i + ε_i. The subscript i denotes the individual taxpayer, which is the unit of observation in the empirical analysis. We report odds ratios for interpretability. Probit model: employed for the purpose of specification testing. Though the average marginal effects were calculated for interpretation of results, the empirical analysis uses the probit coefficients to retain the sign, significance levels, and magnitude of the estimated parameters. OLS model for unpaid tax debt: TaxDebt = α₀ + α₁ Gender + α₂ Sector + α₃ (Gender × Sector) + α_k Controls + u_i All models include fixed effects for city and year to absorb any spatial and temporal heterogeneity. In all specifications, we compute heteroskedasticity-robust standard errors. While the methodology discusses average marginal effects (AME) for interpretative purposes, the empirical discussion focuses on odds ratios and probit coefficients, which preserve the direction, significance, and relative magnitude of effects.

3.5. Research Hypotheses

We test three related claims about formal tax compliance outcomes:

H1: 

Gender affects the probability of timely payment (formal compliance).

H2: 

Gender affects the level of unpaid tax debt (arrears).

H3: 

The Gender × Sector interaction moderates these formal compliance relationships.

The hypotheses are tested empirically using administrative data and econometric models that capture both timely payment behavior and the accumulation of tax arrears. The three hypotheses assess the direction of the gender impact on formal tax compliance outcomes (female advantage) as well as its contextual dependence across sectors.

3.6. Analytical Procedures

The analysis proceeds in two steps.

First, we present descriptive statistics by gender, sector, and region. Second, we estimate the above models and conduct standard diagnostics:

• VIF for multicollinearity
• Breusch–Pagan test for heteroskedasticity
• Pseudo-R² for logit/probit model fit

We also re-estimate after excluding extreme delays and under alternative sectoral aggregations; the main effects remain robust. All computations are performed in R 4.4.3.

4. Results

Descriptive views already show a strong gender pattern. Timely fulfillment of obligations is 81.5% for women versus 61.2% for men—a substantial gap that is later confirmed by the regression results. Average unpaid liabilities are also notably lower for women (93,000 lek) than for men (156,000 lek).

Women run slightly smaller firms (2.8 versus 3.2 employees) and report somewhat lower annual income, but the main differences concern deadlines and arrears—two outcomes directly tied to compliance behavior rather than just business scale.

The positive relationship between being female-led and paying on time is confirmed by both the logit (odds ratios) and probit (coefficients/marginal effects). Translated into probability terms, the estimated effect represents a roughly 30% higher likelihood of timely payment for female-led businesses.

Firm size is near neutral in these specifications, while higher annual income is associated with a modest increase in on-time payment. Regional fixed effects absorb spatial differences in administration and local business conditions, and pseudo-R² values indicate that this is a good fit for a behavioral compliance model at this level of aggregation.

From a comparative perspective, this female advantage lies near the upper bound of effects documented in higher-income settings, consistent with compliance driven by moral norms and reputational concerns where deterrence is less decisive.

OLS estimates mirror the binary results on the intensive margin. Female-led firms have, on average, about 58,000 lek less in unpaid liabilities than male-led firms—a difference that is both economically and statistically significant.

The Gender × Sector term is negative and significant, showing that women’s superiority in terms of minimizing unpaid tax debt is more pronounced when set against the specific sectoral backdrop and is particularly important in customer contact activities. When interpreting the results relative to the specific category classified in the NACE-based sector classification, it appears that customer contact and reputation-building in the trade and service sectors promote more prudent payment patterns for women-owned enterprises.

Taken together, the models show that gender differences emerge along both compliance margins. At the extensive margin, businesses led by females are more likely to meet statutory payment deadlines. At the intensive margin, conditional on non-compliance, businesses led by females accumulate lower levels of unpaid tax debt. This pattern is precisely what one would expect if gender captures behavioral traits—risk attitudes, sensitivity to norms, and perceived control—operating simultaneously in deadlines and in delay management.

4.1. Interpretation of the Results

4.1.1. Descriptive Patterns (Table 2)

The descriptive gap—81.5% versus 61.2% on-time compliance—aligns with a behavioral reading: under imperfect monitoring, internal norms and reputational concerns may dominate, and these appear stronger on average among female-led firms (Torgler & Schneider, 2009; Junttila et al., 2024).

Table 2. Descriptive statistics by gender (formal tax compliance indicators).

Variable	Male (n = 260)	Female (n = 240)	Total (n = 500)
On-time compliance (%)	61.2	81.5	70.9
Average unpaid tax debt (ALL, period average)	156,000	93,000	125,000
Share with unpaid tax debt during the period (%)	69.6	56.7	63.4
Average firm size (number of workers)	3.2	2.8	3.0
Average annual income (ALL)	2.9 mil.	2.6 mil.	2.8 mil.

Source: Authors’ calculations Notes: Unpaid tax debt is defined as arrears, i.e., tax liabilities outstanding beyond statutory deadlines. The reported value of unpaid tax debt is an average stock of arrears over the observation period; the latter is quarterly data from 2022Q1 to 2025Q1. The share with unpaid tax debt is calculated as the proportion of taxpayers who recorded positive arrears in at least one quarter during the period.

Table 2. Descriptive statistics by gender (formal tax compliance indicators).

Variable	Male (n = 260)	Female (n = 240)	Total (n = 500)
On-time compliance (%)	61.2	81.5	70.9
Average unpaid tax debt (ALL, period average)	156,000	93,000	125,000
Share with unpaid tax debt during the period (%)	69.6	56.7	63.4
Average firm size (number of workers)	3.2	2.8	3.0
Average annual income (ALL)	2.9 mil.	2.6 mil.	2.8 mil.

Source: Authors’ calculations Notes: Unpaid tax debt is defined as arrears, i.e., tax liabilities outstanding beyond statutory deadlines. The reported value of unpaid tax debt is an average stock of arrears over the observation period; the latter is quarterly data from 2022Q1 to 2025Q1. The share with unpaid tax debt is calculated as the proportion of taxpayers who recorded positive arrears in at least one quarter during the period.

The lower mean arrears—93,000 lek versus 156,000 lek—imply tighter liquidity discipline and a clearer prioritization of payments, not simply differences in business size or income.

4.1.2. Binary Models (Table 3)

About 30% higher odds of timely payment for women persist after controls and across alternative link functions (logit/probit). This persistence strengthens confidence that the effect is not an artifact of sector composition, city differences, or firm scale. The result also resonates with prior evidence that women display higher tax morale and stronger prosocial orientation (Croson & Gneezy, 2009; Torgler & Valev, 2010), consistent with the Theory of Planned Behaviour’s pathway from attitudes and norms to observed action.

Table 3. Logit and probit models of tax compliance.

Key Variables	Logit (OR)	Probit (Coeff.)
Gender (Female = 1)	1.32 *	0.29 *
Firm size (employees)	0.98	–0.04
Annual income	1.05 **	0.07 **
Region (data dummies)	Yes	Yes
Observations (N)	500	500
Pseudo R2	0.21	0.20

Source: Authors’ calculations. Notes: Robust standard errors in parentheses. ** p < 0.05, * p < 0.10. Odds ratios are reported for the Logit model and coefficients for the Probit model. Average marginal effects are available upon request.

Table 3. Logit and probit models of tax compliance.

Key Variables	Logit (OR)	Probit (Coeff.)
Gender (Female = 1)	1.32 *	0.29 *
Firm size (employees)	0.98	–0.04
Annual income	1.05 **	0.07 **
Region (data dummies)	Yes	Yes
Observations (N)	500	500
Pseudo R2	0.21	0.20

Source: Authors’ calculations. Notes: Robust standard errors in parentheses. ** p < 0.05, * p < 0.10. Odds ratios are reported for the Logit model and coefficients for the Probit model. Average marginal effects are available upon request.

4.1.3. Continuous Model (Table 4)

On the intensive margin, female-led firms have lower debt stocks when delays occur. Likewise, the Gender × Sector interaction implies that the advantage is context-sensitive: it is largest where reputational feedback is most immediate (services, retail) and weakens where cash intensity and subcontracting reduce visibility.

Table 4. OLS model of unpaid tax debt.

Key Variables	Coefficient (ALL)
Gender (Female = 1)	−58,200 (p < 0.05)
Firm size	+5300 (ns)
Annual income	−12,500 (p < 0.10)
Gender × Sector	−24,800 (p < 0.05)
Observations (N)	500
R2	0.17

Source: Authors’ calculations

Table 4. OLS model of unpaid tax debt.

Key Variables	Coefficient (ALL)
Gender (Female = 1)	−58,200 (p < 0.05)
Firm size	+5300 (ns)
Annual income	−12,500 (p < 0.10)
Gender × Sector	−24,800 (p < 0.05)
Observations (N)	500
R2	0.17

Source: Authors’ calculations

This is precisely the heterogeneity expected from a behavioral mechanism relying on peer expectations and client relationships to sustain rule-following.

4.1.4. Synthesis

Taken together, the descriptive and multivariate evidence along both margins is consistent with a coherent behavioral story: in Southern Albania, where monitoring is uneven, gender captures differences in risk attitude, social norms, and perceived control that translate into earlier payments and smaller arrears.

5. Discussion

The results document a clear and robust gender gradient in formal tax compliance: female-led businesses are more likely to meet statutory deadlines and less likely to accumulate significant arrears. The pattern survives controls for firm size, income, region, and time, and remains evident across all sectors.

This fits comfortably within the literature on behavioral finance, which has long emphasized gender differences in risk tolerance, reputational sensitivity, and long-term orientation (Barber & Odean, 2001; Croson & Gneezy, 2009). In sectors where client contact is frequent and visibility is high, reputational mechanisms are likely to raise the perceived cost of non-compliance for female owners. In more cash-intensive and subcontracted environments, these pressures may be weaker, which helps explain the smaller Gender × Sector effect observed there.

Together, the findings suggest that gender is not merely a demographic correlate, but a behavioral correlate of formal fiscal compliance outcomes in this environment.

6. Limitations and Future Research

Administrative data are a strength because they observe actual behavior rather than self-reported intention. At the same time, they do not capture perceptions—such as fairness, trust, or service quality—that could help unpack behavioral mechanisms more directly.

A natural next step is to link surveys or experiments with payment data to test how tax morale and perceived control relate to formal tax compliance indicators, namely payment timing and arrears. Future work could also explore heterogeneity by firm age, liquidity constraints, and local enforcement intensity, as well as track whether the observed gender gaps narrow or widen as digitalization and service improvements advance.

Importantly, the study does not extend to tax compliance in the broader tax morale sense, encompassing tax avoidance and tax evasion. The impact of taxpayer gender on these important aspects of tax compliance remains unexplored in the institutional environment examined here.

7. Policy Implications

The evidence points to practical and low-cost tools for revenue administration.

• Incorporating gender indicators into compliance-risk assessment to identify cases where supportive outreach (rather than heavier audits) may quickly reduce arrears. These approaches are consistent with European policy initiatives that aim to support female entrepreneurship and improve access to finance and public services (European Investment Bank, 2022).
• Tailoring taxpayer services, for example: peer mentoring for new female entrepreneurs, transparent installment plans, proactive digital reminders, and helplines responsive to taxpayers’ needs, all of which leverage existing tax morale and reduce frictions causing delays.
• Sector-conscious messaging and service design in construction and transport, where the gender advantage in formal compliance is weaker and informality risks are higher.

8. Conclusions

This evidence concerns formal tax compliance—specifically timely payment behavior and the accumulation of tax arrears—and does not measure gender differences in tax evasion or tax avoidance.

To our knowledge, this is the first Albanian study using administrative microdata to analyze the impact of gender on formal compliance behavior. We find that female-led firms are more punctual and accumulate smaller arrears, with the advantage strongest in reputation-intensive sectors (D’Attoma et al., 2020; López-Luzuriaga & Scartascini, 2023).

The results reinforce an emerging behavioral vision of formal tax compliance which combines deterrence with other psychological and social channels, providing a replicable model for transition economies on how to improve revenue without falling into heavier audit work. Implementing these lessons learned into practice in terms of risk analysis and tax-payer services may provide a cost-effective way to improve voluntary payments and reduce backlog while at the same time strengthening gender-responsive public finance.