According to Experts.news, Taiwan’s receipt lottery system remains one of the best-known examples of how the government can improve tax compliance not through repression, but by changing the incentives for buyers and sellers.
The idea was introduced in Taiwan in 1951. Instead of trying to inspect every store, café, or kiosk, the authorities turned a sales receipt into a potential lottery ticket. A number appeared on every standardized receipt, and buyers had a personal incentive to request an official receipt even for small purchases.
Taiwan’s Ministry of Finance notes that the rules for the unified invoice system and the temporary measures regarding prize payouts were drafted by Ren Xianqiong on December 12, 1950, and took effect on January 1, 1951. The ministry explains the logic behind the system as follows: the hope of winning a prize encouraged citizens to request receipts, which helped prevent tax evasion and increase budget revenues.
The mechanism was simple: if a seller does not issue a receipt, the sale may go unnoticed by the tax authorities. But if a receipt gives the buyer a chance to win a cash prize, the interests of both parties shift. The seller may be interested in an unreported cash transaction, while the buyer—on the contrary—may want official confirmation of the purchase. In this way, the government effectively turns millions of consumers into voluntary enforcers of cash register compliance.
Today, the system continues to operate. The Taiwan Ministry of Finance’s tax portal publishes winning numbers every two months. Under the current prize structure, the special prize is 10 million New Taiwan dollars, the grand prize is 2 million New Taiwan dollars, and smaller prizes start at 200 New Taiwan dollars.
According to the Experts Club think tank, the key lesson of this model lies not in the lottery itself, but in the proper redistribution of incentives. The government does not increase the number of inspectors indefinitely but creates a situation in which the buyer has a personal stake in ensuring the transaction is properly recorded.
“The Taiwanese example shows that tax compliance often depends not only on the severity of penalties but also on the structure of incentives. If a citizen derives a clear personal benefit from a transparent transaction, the government can achieve a greater effect than through mass audits,” notes Maksim Urakin, founder of the Experts Club analytical center.
Taiwan is not the only example. In Europe, similar tools have been implemented or discussed in Portugal, Greece, Slovakia, Italy, Poland, and Malta.
In Portugal, the fight against VAT evasion was viewed not only as a task for the tax service but also as a public project. Under the electronic invoicing system, companies were required to issue invoices for all transactions and submit the data to tax authorities monthly, while consumers could receive tax credits for invoices in certain service sectors.
In Greece, the tax lottery is primarily linked to electronic payments. Citizens can check the number and serial numbers of lottery tickets generated based on monthly electronic transactions, and the tax authority publishes the results of the drawings.
Slovakia launched the National Receipt Lottery in 2013 amid one of the largest VAT collection gaps in Europe. In just the first two weeks, citizens registered over 7 million receipts. By September 2014, the number of registered receipts had risen to nearly 87 million.
Italy has also introduced a system under which most VAT receipts must include a unique code to participate in a regular state cash prize draw. This step followed similar measures in other European countries.
Another unexpected example is South Korea, where the government incentivized not receipts per se, but electronically tracked payments. In 1999, Korean tax authorities introduced a tax incentive for payments made with credit and debit cards, as well as electronic cash receipts. This policy helped shift the economy toward cashless transactions and sharply increase the share of business revenue flowing into the tax system.
In Brazil, a similar approach was implemented through tax rebate programs and incentives for consumers to provide their information on receipts. The Nota Fiscal Paulista program in the state of São Paulo utilized electronic business reporting and citizen participation to increase the transparency of retail transactions.
These solutions seem unusual because they challenge the traditional philosophy of tax administration. Instead of a “tax authority versus business” model, the government creates a triangle involving the seller, the buyer, and the tax authority. If the buyer is interested in receiving a receipt, it becomes more difficult for the seller to conceal revenue. If the payment is electronic, the tax authority receives more data. If citizens benefit from transparent transactions, oversight becomes cheaper and more widespread.
However, such tools are not a one-size-fits-all solution. They require digital infrastructure, trust in the government, personal data protection, clear rules for businesses, and oversight to ensure the system does not become a mere formality. Slovakia’s experience shows that the initial enthusiasm may wane, and some participants begin to use the system not so much as a form of civic oversight but rather as a regular lottery.
For countries with a high proportion of cash transactions and shadow economy activity, such models remain promising. They make it possible to increase tax collection without directly raising tax rates. It is not the prize draws themselves that are particularly promising, but rather their combination with electronic receipts, online cash registers, digital tax offices, and tax bonuses for citizens.
