• Firms’ experiences with corruption outside tax authority have significant adverse spillovers on tax evasion. • Bribes for operating licenses raise firm tax evasion by up to 24.2 percentage points. • Bribes for government contracts increase tax evasion by 2.1 percentage points per contract value percent. • Working capital depletion mediates the corruption–tax evasion link in firms. • Anti-corruption in tax only is insufficient; multisectoral action is needed to curb tax evasion. This study examines the direct and spillover effects of corruption on firms’ tax evasion in sub-Saharan Africa (SSA), a region plagued by both phenomena. Firm-level data on 17 SSA economies spanning 2008–2014 were sourced from the World Bank’s Enterprise Survey. I instrument for endogeneity of corruption using five variables, namely the number of days it takes to (i) clear exports, (ii) clear imports, (iii) obtain an operating license, (iv) time spent by senior management on regulatory compliance, and (v) the extent to which business licenses and permits are an obstacle the firm’s operation. I implemented a battery of endogeneity-correcting estimators: traditional instrumental-variable two-stage least squares (2SLS), Lewbel’s 2SLS, Oster’s bounding analysis, propensity score matching, and Kinky Least Squares. I find that corruption of tax officials (i.e., bribe expected/requested in exchange for a favourable tax inspection) significantly increases tax evasion. More critically, this study challenges prevailing assumptions from European and Central Asian contexts by demonstrating that corruption outside tax authorities—specifically bribes expected/requested in exchange for operating licenses and government contracts—also exerts substantial adverse spillover effect on tax compliance. Firms that perceived/experienced bribe requests in exchange for obtaining operating licenses evaded taxes at rates 24.2 percentage points higher than their counterparts who did not perceive/experience bribe requests in exchange for obtaining operating licenses. In contrast, a percent increase in perceived bribe rates for government contracts corresponded to a 2.1 percentage-point increase in tax evasion. Mediation analysis identifies working capital depletion as a key transmission channel. These findings underscore the need for multisectoral anti-corruption strategies to effectively combat tax evasion and enhance domestic revenue mobilisation in SSA.

ABSTRACT This study examines the effects of taxation on the level of corruption using a panel data for 217 countries and territories during 1984–2023. The effects are also estimated based on economic categorization of countries both at the aggregated and disaggregated tax levels. The findings suggest that an imposition of tax proliferates corruption level in a country by incentivizing tax evasion, and the effect varies across the level of development. Moreover, different forms of taxation affect corruption in different ways. Overall, labor tax deducting from profit increases corruption unambiguously; however, income and export taxes observe some opposite effects across the level of development.

This study aims to examine gaps in the current AML framework related to cryptocurrency and digital assets. We focused on money laundering typologies involving the conversion of illicit funds into clean value through cryptocurrency-based purchases of vouchers, gift cards, and other non-traditional instruments. We examined the existing literature on cryptocurrency and digital assets to identify gaps in detection and classification by mapping platform features and transaction pathways using an original dataset. The work adopts the Placement Layering Integration model. It conceptualises a laundering pathway that operates outside regulated intermediaries via crypto acquisition, voucher purchases on low Know Your Customer (KYC) platforms, redemption into goods, and informal resale for cash. The analysis revealed that most platforms required minimal verification for transactions, and many supported privacy coins that can hide the flow of funds from standard detection techniques. These features create conditions for cross-border money transfers that may fall outside law enforcement oversight. Such mechanisms can lead to undeclared remittance and potential tax evasion. This study contributes to the understanding of cryptocurrency related financial crime within broader money laundering typologies. It contributes to AML frameworks by identifying a shadow payment architecture, proposing targeted reforms to extend AML coverage to voucher intermediaries, and highlights areas for future research and policy improvements.

This paper incorporates corruption in the tax administration in a Mirrleesian model of optimal income taxation. In a multi-type setting with a discrete ability distribution, we show that the marginal tax structure can be designed to fully offset the incentives to evade taxes. The optimal marginal tax rates reflect two key determinants: the welfare weight the government attaches to each ability type, and how the private cost of tax evasion varies across the income distribution. We also extend the analysis by examining how public expenditures on tax enforcement can serve as a complementary instrument.

This paper explores fuel smuggling and tax evasion by analyzing discrepancies in fuel imports and identifying the factors influencing them. The study analyzes data from 28 European Union member countries and 7 candidate countries over the period 1996–2022, conducting a comparative analysis. The research methodology employs panel data estimation models. The empirical findings suggest that fuel smuggling is positively correlated with the shadow economy index, the nominal tax rate and the tax revenue from excise duties, while negatively correlated with the gap between nominal and effective tax rates, as well as GDP per capita in most specifications. A literature review reveals that no previous study has examined fuel smuggling in relation to crude oil imports while simultaneously integrating the impact of institutional informality. Furthermore, this study serves as a valuable resource for policymakers by providing insights to help reduce fuel smuggling, combat associated tax evasion and ultimately increase tax revenues.

Illicit cigarette trade has significant economic and public health implications. It leads to Governments' tax revenue losses due to the evasion of taxes, and often these cigarettes are cheaper than legal products, which can increase tobacco consumption and deter quit attempts. We aim to estimate the size of the illicit market and establish its associated factors in Zambia. A cross-sectional survey was used to collect empty cigarette packs from the retailers and street/bins in 10 Provinces of Zambia. The proportion of illicit cigarette packs was calculated. Logistic regression was used to model the factors associated with the presence of illicit cigarettes. Based on unweighted data, our study found that 12.2% of cigarettes sold on the Zambian market were illicit, including 10.1% that evaded taxation. Of the 118 344 empty cigarette packs collected (82.0% from the retailers and 18.0% the street/bins), 343 (0.3%) packs did not have a textual health warning in English, 1490 (1.3%) had duty-free stamps even though they were purchased from retail outlets that were not duty-free shops and, 11 939 did not have a Zambia Revenue Authority stamp. Factors associated with reduced odds of illicit cigarette sales were non-border [adjusted odds ratio 0.17 (CI = 0.13 to 0.23)] and local manufactured [adjusted odds ratio 0.44 (CI = 0.37 to 0.53)]. The scale of the illicit tobacco market in Zambia is significant. To help address the illicit tobacco trade, Zambia should ratify and implement the World Health Organization Protocol on Illicit Tobacco Trade to counter the supply of illicit cigarettes. This study presents the first national survey on illicit tobacco trade in Zambia. Although approximately one in ten cigarettes in Zambia are illicit, this prevalence is lower than in many neighboring countries. Nonetheless, securing the cigarette supply chain remains a critical priority to prevent further tax evasion and illicit trade. These findings highlight the need for Zambia to ratify and implement the World Health Organization Protocol on Illicit Tobacco Trade. The study also underscores the need to implement a track and trace system that would help customs officers detect counterfeit and smuggled cigarettes and intensifying border patrols.

The decentralized and pseudonymous nature of cryptocurrency has facilitated its extensive use in illicit activities, including money laundering, tax evasion, and ransomware. Limiting such activities requires a well-established forensic framework. However, a dedicated methodology for examining cryptocurrency wallets remains underdeveloped. This study presents a systematic forensic analysis of Electrum wallets installed on virtual machines running Windows 10, outlining the wallet taxonomy and meticulously listing all artifacts. This study primarily focuses on memory forensics, with most of the analysis devoted to memory-based artifacts extracted from five distinct memory dump scenarios. Artifacts extraction were performed using Volatility 3 plugins, in conjunction with Python-based analysis scripts, within a Kali Linux environment. Following the memory-based analysis, a limited disk examination was conducted after wallet inactivity or system shutdown to assess whether any residual Electrum artifacts persisted beyond memory. The research examines the artifacts retrievable from wallet files, both before and after backup, and compares these results with those obtained from other methods reported in the literature. The experimental outcomes demonstrate the impact of this research on the successful extraction of private keys, wallet addresses, extended public keys, wallet files, and transaction IDs. The extracted Electrum addresses and private keys provided access to critical wallet details, and unspent Bitcoin were successfully recovered using these keys, confirming the feasibility of forensic cryptocurrency recovery and revealing data of high evidentiary value to the digital forensic community.

Tax compliance among SMEs remains a challenge in developing countries like Kenya. Kenya Revenue Authority (KRA) has experienced significant revenue losses due to weak enforcement mechanisms, loopholes in tax policies, and widespread corruption, which allowed tax evasion and fraud to thrive. Tax enforcement mechanisms are one of the initiatives being implemented by KRA to address this problem. Hence, the study objective was to establish the effects of tax enforcement mechanisms on SMEs' tax compliance levels in Dagoreti North Sub-County. The research was founded on economic deterrence theory. An explanatory research design was employed. The population was 6174 owners of licensed SMES in Dagoreti North Sub-County. A sample of 141 SME owners in Dagoreti North Sub-County was selected using stratified sampling. Primary data was collected using questionnaires. Qualitative data were analyzed through thematic analysis. Quantitative data were analyzed through descriptive and inferential statistics. The study established that tax enforcement mechanisms (β = 0.667; p = 0.000) significantly affected tax compliance levels. The study concluded that tax enforcement mechanisms are a significant determinant of tax compliance level among SMEs in Dagoreti North Sub-County. This can be done by leveraging the emerging AI tools to reduce the need for extensive manpower. This will enhance compliance and revenue collection, and encourage SMEs to maintain accurate financial records and consistently uphold tax obligations.

This study explores how digitalization has influenced direct and indirect tax collection in India. Over the past few years, the Government of India has introduced several digital initiatives such as GST, e-filing systems, and digital payment platforms to modernize the taxation system. These reforms have played a significant role in making tax administration more efficient, transparent, and accessible. The study is based on secondary data collected from government reports, official publications, and academic sources. The findings suggest that digitalization has helped reduce manual errors, curb tax evasion, widen the tax base, and enable real-time tracking of financial transactions. It has also simplified the tax filing process, making it quicker and more convenient for taxpayers. At the same time, certain challenges still remain. Issues like technical glitches, cybersecurity concerns, lack of digital literacy, and inadequate infrastructure can limit the full potential of digital systems. Overall, the study concludes that digitalization has brought a positive transformation in India’s taxation system and has supported economic growth. However, continued efforts in improving infrastructure, spreading awareness, and strengthening policies are necessary to make the system more effective. Keywords: Digitalization, GST, E-filing, Tax Compliance, Direct Tax, Indirect Tax, Revenue Collection, Transparency, India.

As artificial intelligence algorithms become more prevalent in high-stakes risk assessment, policymakers have increasingly relied on explainability tools for interpretability. Despite growing mandates that AI-based decisions include explanations, there remains little empirical evidence demonstrating the effectiveness of these techniques in real-world applications. This gap often stems from the absence of a clear ground truth for evaluating explanations. In this work, we present an empirical evaluation of explanation techniques in collaboration with the United States Internal Revenue Service (IRS). Using real, line-by-line IRS audits from randomly-selected taxpayers, we decompose one component of aggregate tax under-reporting into its constituent line-item misreporting and apply explainability techniques to recover these risks; the aggregate risk is a function of the constituent risk. Our study makes three contributions. First, we empirically evaluate how well local explanation models recover true constituent risks. Second, we compare local explanation models to estimating constituent risks directly. Finally, we situate these findings in a practical setting where explanations are critical not only for transparency but also as guidance for the users of the model's predictions. Our analysis reveals that the quality of local explanations is tied to the quality of the underlying model. Yet even with a theoretically perfect underlying model, local explanations still fail to accurately capture the true risk. While directly estimating constituent risks may yield more accurate results, simplistic rule-based heuristics often overlook the complexity of risk. These findings highlight the need for thoughtful application of explanation techniques in high-risk domains, where errors can have significant consequences.

While exploring socio-economic growth and property jurisprudence, the concepts that would strike our knowledge are benami ownership and the real estate business. Owning property in the name of another person for the benefit of the person paying consideration is termed a sham transaction. The judicial requirement forced the legislative assembly to design a separate law for benamidar ownerships from the Transfer of Property Act 1882, which resulted in the Benami Transactions (Prohibition) Act, 1988. It is pertinent to note that sham transactions were not prohibited per se; many past legislations and judicial decisions have upheld the validity of these transactions, considering the intention of the parties. The ostensible transaction was needed for promoting business growth, where the actual owner of the property cannot deal with all the business property alienation, which helped in economic growth. The power was misused by a few people with wicked intent, in the form of sham transactions resulting in significant financial losses through tax evasion, defrauding creditors, and violations of land ceiling laws. This ultimately gained the attention of the legislation to curb its further growth. This paper has attempted to evaluate the impact of this act on the Real Estate business, which serves as the primary source for capital investment through Parallel Economy Funds (black money). In India, it is easy to invest unofficial money in the real estate business as this Act does not apply to properties owned abroad. When this anti-socio act combines with benami transactions, the government is defrauded with immense effect. Though various factors affect the real estate sector post 2016, this paper aims to clarify the impact of the Benami Act on this sector. The vital research objective is to suggest a mechanism to curb this anti-social act and promote economic growth. Changing from Presumptive Title System (PTS) to the Conclusive Title System would help in maintaining transparency in the title deed. The findings of this paper could be used for future research purposes.

The purpose of this research is to determine which ownership structure, for the years 2019-2023, has the greatest impact on tax evasion by ESG-indexed businesses. This study uses quantitative methodology with purposive sampling as the sampling technique. Ownership structure is measured through three categories: concentrated ownership structure, family ownership structure, and the presence of women on the board of directors. In addition, financial constraints are used to examine tax avoidance. ESG Score is used as a moderating variable and only taken from the last year of observation to explain the impact of ownership structure and financial constraints on tax savings. When faced with financial constraints, ESG-indexed enterprises with concentrated ownership structures, family ownership structures, and the participation of women on the board of directors did not affect tax-saving strategies, according to the study findings. ESG-indexed corporations fulfill environmental, social, and governance obligations to uphold public and investor confidence. The ownership structure and financial restrictions are not metrics that can ascertain whether a corporation engages in tax-saving strategies.

This article investigates whether China's fully digitalized electronic invoicing reform has improved tax compliance, using a staggered difference-in-differences approach. The results show that: (1) The e-invoicing reform has significantly improved firms' effective tax rate by 0.91 percentage points on average. This finding remains robust after controlling for firm-level and regional confounders and across a range of robustness checks, including alternative measures of tax compliance and alternative clustering of standard errors. (2) Mechanism analyses indicate that the reform reshapes firms' reporting behavior on both the revenue and cost sides of the production process. Firms adjust reported revenues and reported costs jointly, with a stronger contraction in reported costs than in reported revenues, leading to an overall reduction in tax evasion. (3) Heterogeneity analyses reveal that the compliance-enhancing effect of the reform is more pronounced among non-state-owned enterprises, firms operating outside key industries under intense tax authority scrutiny, and those located in regions with lower tax enforcement capacity. This study provides micro-level evidence on the effectiveness of digital tax reforms and offers practical implications for tax governance policy.

This study aims to analyze the regulation of criminal sanctions against tax evaders from the perspective of legal certainty and to formulate future criminal law policies that are more effective in protecting state revenue. This research employs a normative juridical method with conceptual, statutory, and case approaches, relying on primary, secondary, and tertiary legal materials analyzed through inventory, systematization, and interpretation techniques. The findings indicate that the regulation of criminal sanctions in Indonesian tax law still faces issues of normative ambiguity, particularly in distinguishing between administrative violations and criminal offenses, as well as the absence of explicit regulation on tax avoidance practices. Furthermore, the application of the ultimum remedium principle weakens the deterrent effect, as administrative settlements are prioritized over criminal enforcement. This condition results in suboptimal protection of state revenue and undermines legal certainty. Therefore, a reformulation of tax criminal law policy is necessary to clarify legal norms, strengthen the repressive function of criminal sanctions, and ensure consistent law enforcement to support fiscal stability.

ABSTRACT We analyze the major challenges for the Ukrainian tax system for the post‐war recovery of Ukraine. We identify the main areas of concern related to low compliance and high tax evasion and avoidance. Drawing on the recent economic literature and other countries' experiences, we propose realistic reforms to increase tax compliance and support the post‐war reconstruction and economic development of Ukraine.

We develop a heterogeneous-firm macroeconomic model to investigate how tax evasion affects the productivity distribution in general equilibrium. In our model, entrepreneurs choose capital and labor to produce with their firms, invest in bonds, and evade taxes to maximize their intertemporal utility, derived from dividends. Firms face leverage constraints and uninsurable productivity shocks. The results reveal that tax evasion redistributes capital toward low-productivity firms, relaxing their leverage constraints. It also increases public debt, raising the cost of capital and crowding out firms at the margin. As a result of these forces, we demonstrate that (i) the decline in high-productivity firms’ average productivity drives the negative correlation between the size of the shadow economy and aggregate productivity, and (ii) the productivity gains from reduced tax evasion are smaller in economies with higher public debt and stricter leverage constraints. • Tax evasion redistributes capital from high- to low-productivity firms. • Tax evasion raises public debt and debt crowding-out hits firms at the margin. • High-productivity firms drive shadow economy impact on Total Factor Productivity. • TFP gains from reduced evasion are smaller in financially underdeveloped economies.

Survey dataset on key drivers of tax evasion.

ABSTRACT Third-party verification rules are intended to increase compliance and can split taxpayers’ evasion decision into two stages. First, taxpayers must decide to commit to full tax compliance or search for ways to avoid third-party verification. Second, taxpayers make their tax compliance decisions when filing their tax returns. We expect new rules for third-party verification will increase the use of methods that avoid third-party verification, as taxpayers want to keep their compliance options open. The choice to avoid third-party verification itself may not be unethical, but it has ethical undertones and can start taxpayers down a slippery slope of unethical decision-making. We conduct a series of experiments showing the introduction of third-party verification rules significantly increases the use of methods that avoid verification. Among those using these methods, tax evasion significantly increases. We find no evidence that overall tax evasion decreases when new third-party verification is implemented, despite regulators’ intentions. Data Availability: Data are available upon request.

This study explores the association between financial crisis and business tax avoidance, utilizing profitability as a moderating variable and audit committee effectiveness as a governance device. There is conflicting evidence in previous research about whether financially troubled companies act aggressively when it comes to taxes. This study uses a random effect regression model to examine the suggested associations using panel data from 121 listed businesses throughout the 2022–2024 period. The effective tax rate measures corporate tax evasion, whereas financial distress indicators and return on assets measure financial distress and profitability. The data show that financial difficulty does not affect corporation tax evasion. However, profitability considerably moderates the link between financial distress and tax avoidance, showing that financially distressed firms with higher profitability are more likely to dodge taxes. Furthermore, tax evasion is significantly impacted negatively by audit committee effectiveness, underscoring the importance of internal governance in preventing opportunistic tax conduct. These data imply that business tax avoidance is driven by financial capacity and governance supervision rather than financial pressure alone.

Introduction: The use of nominee accounts is an increasingly prevalent phenomenon in the practice of financial crimes, such as money laundering, tax evasion, and the financing of other criminal acts. The nominee account is basically used to disguise the identity of the actual beneficial owner, thus posing a serious challenge in the enforcement of criminal responsibility.Purposes of the Research: This study aims to analyze the concepts and foundations of legal philosophy, especially justice, legal certainty, and usefulness in the enforcement of criminal liability for the use of nominee accounts in Indonesia and Pakistan, as well as compare the positive legal arrangements that apply in the two countries.Methods of the Research: This research uses normative legal research methods with approaches to legal philosophy, legislation, and comparative law.Results Main Findings of the Research: The findings of the study show that philosophically, the enforcement of criminal liability against nominee accounts in Indonesia and Pakistan is based on efforts to realize substantive justice by penetrating the formalities of legal ownership to reveal the true beneficial owners. From the perspective of legal certainty, both Indonesia and Pakistan still face challenges due to the lack of an explicit and comprehensive regulation of nominee accounts, so law enforcement often relies on the interpretation of other criminal norms, such as money laundering and banking crimes. Meanwhile, from the aspect of utility, regulation and law enforcement of nominee accounts are directed to maintain financial system stability, prevent abuse of the banking system, and protect the interests of the community and the state. Legally positive, Indonesia regulates criminal liability related to nominee accounts indirectly through the Money Laundering Act, banking regulations, and policies related to beneficial ownership, while Pakistan regulates it through an anti-money laundering legal framework and financial sector regulations that emphasize ownership transparency and due diligence obligations. This comparison shows that although the two countries have similar normative approaches, the difference lies in the explicit level of regulation and effectiveness of their implementation. Therefore, it is necessary to strengthen the philosophical foundation and harmonize legal arrangements to ensure the enforcement of fair, definite, and beneficial criminal liability for the practice of using nominee accounts.