Tax Evasion Research Articles

Estimation and Causes of Informal Economy in Pakistan

This study purposes to estimate the Pakistan’s informal economy by indirect methods and estimate the causes behind the informal economy. Ordinary least square is used for estimation of causes behind the informal economy. From GDP approach, conclude that informal economy is increasing while employment approach shows decreasing informal economy. The estimated result shows tax evasion is the main reason behind the informal economy in Pakistan. In our study, particular implications of the informal economy are identified. Informal economy plays a main role in income inequality and reducing the poverty. It limits implementing the operative public policy. The government should make such policies to control the informal economy and increasing tax evasion and corruption. If government formalize the informal economy by registering them at low cost, make the registration process easier and lower the amount of taxes imposed on them, the country’s growth will be doubled.

Estimation of Informal Economy in Pakistan through Monetary Approach

This study purposes to estimate Pakistan's informal economy by monetary methods. Ordinary least square is used for estimation. From the monetary approach, we conclude that the informal economy is increasing. In our study, particular implications of the informal economy are identified and conferred to accomplish and achieve the goal of continuous growth and progression of a country. The informal economy plays a main role in income inequality and reducing poverty. It limits the implementation of the operative public policy. The government should make such policies to control the informal economy and increase tax evasion.

An Investigation Into To The Use Of Artificial Intelligence In The Indian Tax System

Indian taxation is main source of public finance in developing economy. The Indian tax system has long been plagued by issues including tax evasion and ineffective administration. Tax administration systems must constantly be designed to reduce errors and speed up decision-making. The Indian tax system is beset by a shortage of workers to do labor-intensive duties including data input, return inspection, tax audits, etc. The Indian government recently announced the use of artificial intelligence and machine learning in the tax assessment system in order to handle the evolving tax landscape in conjunction with the use of analytics. In the field of taxes, artificial intelligence, or AI, is a relatively recent development.

MACHIAVELLIAN RELATIONSHIP MODEL, LOVE OF MONEY, RELIGIOSITY AND TAX EVASION: MULTI-GROUP ANALYSIS BASED ON GENDER

This study aims to test whether there is an influence of Machiavellian, love of money, and religiosity on tax evasion with gender as a moderating variable. The method in this study is quantitative explanatory type with a correlational approach. The data used is primary data by distributing questionnaires to taxpayers throughout Indonesia using purposive sampling and using the Issac and Michael formula so that 350 respondents were obtained. The analysis technique uses the Partial Least Square Multi-Group Analysis technique (PLS-MGA). The results of the study prove that, first, Machiavellian influences tax evasion, the higher the Machiavellian attitude, the greater the likelihood of tax evasion; Second, love of money influences tax evasion, the higher a person's love of money, tax evasion is considered reasonable. Third, religiosity has no effect. The high or low level of a person's religiosity has not been able to suppress tax evasion. Fourth, Machiavellian influences tax evasion moderated by gender. Machiavellian owned by the male gender is greater than that of the female gender. Love of money owned by men does not affect tax evasion, but becomes a motivation to pursue a career while love of money affects embezzlement moderated by female gender because women have very high needs compared to men. Religiosity affects tax evasion moderated by gender. This means that the higher the level of religiosity of a person, both men and women, are able to suppress tax evasion and people who are more religious tend to be more against tax evasion.

The Quiet Evolution in International Tax: Domestic Law and Double Taxation

This article describes the respective roles of international tax law (predominantly tax treaties) and domestic tax law and their relationship with each other. This is a complex and interdependent relationship, with treaties, as special law, generally overriding domestic law. The article discusses the founding principle of tax treaties preventing double taxation, reflecting the original purpose of tax treaties. Subsequent developments over time have vigorously established the second principle of treaties: that the purpose of tax conventions is also to prevent tax avoidance and evasion. Such an increasingly important principle heralds the rise of anti-avoidance rules, prevention of abuse and the preservation of domestic taxing rights. The thesis in this article is that domestic law has prevailed against the more specialized law of treaties and at an increasing rate. This evolution has occurred in situations where the special law of treaties is “watered down” by the principle that treaties should not be allowed to be abused or in situations where they facilitate tax avoidance. What are the implications of this trend on the development of international tax policy? The article reflects on the respective roles of international and domestic law and guides us to suggestions on how to preserve important international tax principles in good faith and limit expedient domestic tax law changes when they are not driven by taxpayers’ abusive actions.

Fiscal consolidation plans with underground economy

AbstractFiscal consolidation literature often neglects that there are economies characterized by sizable underground sectors, with their mechanisms of response to fiscal policy shocks. Therefore, reliable analyses of fiscal consolidation plans call for the decomposition of Gross Domestic Product in its regular and hidden components. We investigate fiscal consolidation effects in the context of tax evasion for the Italian economy. Results show that a temporary cut in public spending associated with a permanent drop in tax rate yet entails tax evasion reduction. The main underlying mechanism is the strong responsiveness of the underground sector, implying a reallocation of resources toward the regular sector.

UPI's Influence on India's Economic Transformation: Financial Inclusion

The UPI, since its inception in 2016, has revolutionized the financial industry of India. This paper discusses the all-encompassing and deep change brought by the UPI in the areas of economic growth, incorporation of finance, and cashless economy. Digital transactions have become fluent and real-time accessible under the UPI, thus empowering individuals and businesses to easily access previously untapped populations. The digital payments promoted through UPI reduce cash dependency, which controls tax evasion and circulation of black money along with possible operational inefficiencies. The paper focuses on the critical aspect on how the platform has supported economic growth through financing innovation in fintech, drives the expansion of SMEs, and increases overall transparency in transactions. Moreover, UPI has acted as a significant enabler to help the state achieve the government initiatives - Digital India, which helped boost the country's GDP through acceleration of digitalization with improvement in financial inclusion. Despite such a massive success story, the adoption of UPI continues to pose difficulties in rural areas primarily on account of lower degrees of digital literacy and infrastructure. With the prospects that the cross-border transaction will bring in the future, UPI can further establish economic growth. This research article is a reason for mixed feelings - with one hand, the revolutionary impact that UPI has on India's economy, and on the other hand, the challenges that must be overcome for it to reach its fullest potential.

Unconscious Crimes: Tax Evasion by Exploiting Shell Companies

Unconscious Crimes: Tax Evasion by Exploiting Shell Companies

Research trends in gambling tax dynamics: A bibliometric analysis

Gambling has been around for a long time and continues to evolve as it becomes integrated with video games. In its development, gambling continues to have negative impacts both economically and socially, such as unemployment, tax losses, divorce, and suicide. However, gambling can also have a positive impact, such as an increase in government revenue if taxed appropriately. This study aims to offer a thorough analysis of many publications from the last decade and monitor the progress of scientific research on gambling taxes as found in the Scopus database, utilizing VOSviewer and WordStat. In this study, the method used was bibliometric analysis. Between 2014 and 2023, a total of 132 scientific articles were dedicated to studying gambling taxes. There are a total of seven groups consisting of 111 keywords that are directly connected to gambling taxes. There are three groups of eight authors who are collaborating on a research project about gambling taxes. The study found that the University of Macau has affiliations with the majority of publications that impose gambling taxes. The United States has the biggest number of publications on the topic of gambling taxes. Studies on gambling taxes frequently confront issues of tax evasion and focus on a significant topic, namely the impact on public health and individuals. The study concluded that publications related to gambling taxes are dominated by articles from various multidisciplinary fields. This study recommends a wider range of publications and research from a more varied range of time and sources.

Implementation of Artificial Neural Networks as a Method for Early Detection of Tax Evasion Behavior in Indonesia

Research Aims: This study aims to analyze the ability of the Artificial Neural Network (ANN) model in early detection of tax evasion behavior in Indonesia. Design/methodology/approach: This study uses a qualitative method with a descriptive approach, the types of data used in this study are primary data and secondary data. Primary data is obtained from the results of interviews to obtain the information needed by the researcher. The interview informants came from the DGT sub-Directorate of Potential, Compliance and Tax Revenue with the initials K&H, tax consultants and taxpayers. while secondary data is collected through the DGT online website and through articles and journals on Artificial Intelligence (AI), Artificial Neural Networks (ANN), tax evasion, and financial information data on income, expenses, amount of assets, taxes payable) and behavioral indicators (tax compliance history, frequency of late reporting, significant changes in financial statements). The data analysis technique used is descriptive analysis, namely data collection, data reduction, data presentation and conclusion drawing Research Findings: The results of this study show that the use of a neural network model can be an effective tool to detect symptoms of tax evasion behavior early. This method allows tax authorities to monitor and identify suspicious activity more efficiently and effectively. Theoretical Contribution/Originality: This study makes a significant theoretical contribution by integrating the use of Artificial Neural Networks (ANN) in detecting tax evasion in Indonesia. The originality of this research lies in the application of ANN in the context of Indonesia's tax system, where the use of advanced technology such as ANN is still relatively new. The study also combines the pentagon's fraud theory, which adds elements of arrogance and competence in the analysis of tax evasion behavior, with a machine learning approach, creating a more holistic and innovative framework

Tax Aggressiveness and Earnings Management: Evidence from Listed Commercial Banks in Nigeria

This study examined the extents to which tax aggressiveness affects earnings management of listed commercial banks in Nigeria. Ex-post facto research design and panel data was obtained for twelve (12) listed commercial banks from 2014-2023. Tax aggressiveness was measured using cash effective rate while two earnings management models were employed namely, Chang and Jones models. Data collected were analyzed through descriptive, post-estimation and inferential statistical techniques. The fixed and random effects regression models showed that tax aggressiveness significantly affects earnings management models. In view of the findings, it recommends the needs for management of listed commercial banks to dampen earnings management practices since it is negatively influenced by the level of tax aggressiveness. Furthermore, management of publicly listed commercial banks needs to engage in aggressive tax planning to enhance their performance; however such level of tax aggressive planning should be kept minimal as possible to further discourage tax fraud and evasion.

Digitalization of Public Finances and Public Procurement in Morocco

This article explores the impact of the digitization of public finances and the dematerialization of public procurement on the business climate in Morocco. Through empirical analysis, we demonstrate how these technological initiatives contribute to improving efficiency, transparency and economic competitiveness in a Moroccan context. Drawing on a robust methodology and data collected from a wide range of stakeholders, the study reveals a direct positive effect of dematerializing public procurement on the business climate. This process simplifies administrative procedures, reduces processing times and minimizes the risk of corruption, thereby boosting investor confidence and stimulating economic activity. While the influence of the digitization of public finances, while positive, does not appear to be statistically significant, it does include initiatives such as integrated financial management and budget transparency. These measures improve the management of public resources and reduce tax fraud, although their impact is more diffuse.

The Case against compulsory vaccination: the failed arguments from risk imposition, tax evasion, ‘social liberty’, and the priority of life

Arguments for mandatory or compulsory vaccination must justify the coercive infringement of bodily integrity via the injection of chemicals that permanently affect a body’s inner constitution. Four arguments are considered. The allegedly libertarian argument declares unvaccinated persons a threat; accordingly, vaccination could take the form of justifiable defence of self and others. This argument conflates material and statistical threats. The harsh coercive measures permissible in defence against the former are not permissible in prevention of the latter. The argument from tax evasion claims that people can be permissibly coerced into bearing their fair financial burdens of community life and likens this to sharing burdens in the face of a viral threat. The argument fails to demonstrate that vaccination would be fair, permissible in spite of potential lethal side-effects, and sufficiently similar to taxation despite the categorical difference between temporary deprivation of money and permanent deprivation of one’s original inner bodily constitution. The argument from ‘social liberty’ claims that the loss of freedom due to mandatory vaccination is only apparent, namely outweighed by corresponding gains in freedom. This argument conflates freedom as the absence of coercion with freedom as the presence of options for action. It fails to give the former its due weight and to demonstrate that persons may be coerced into increasing the options of others. The argument from the priority of life elevates the protection of life to an absolute value. This is unwarranted and leads to counterintuitive implications. Without better arguments, mandatory vaccination must be rejected.

نمو العمليات الإلكترونية مقابل تراجع النقد المتداول في السوق السعودي

The study aimed to identify the main factors contributing to the increased adoption of electronic transactions, examine the impact of electronic transaction growth on the decline of cash usage, analyze the benefits and challenges associated with the shift towards electronic transactions, assess the role of governments and central banks in promoting this shift, and explore the expected future of financial operations as this trend continues. The study adopted the descriptive-analytical approach, which was deemed suitable for the nature of the study, utilizing a questionnaire tool. The study sample consisted of 180 individuals. The study concluded that technological innovations and developments in digital payment infrastructure significantly contribute to the increased adoption of electronic transactions, with a response average of 3.55, underscoring the importance of electronic payment reliance. Electronic transactions provide multiple benefits, such as security and speed, while the growth of electronic transactions noticeably reduces dependency on cash. Continued growth in electronic transactions is expected to lead to fundamental changes in financial systems, enhancing transparency and reducing tax evasion. Moreover, reliance on electronic payments contributes to improving the quality of life, and electronic payments enhance economic efficiency and reduce costs associated with cash. The study recommended enhancing digital infrastructure, raising awareness of the benefits of electronic payments, and encouraging digital transformation policies in the financial sector.

Tax Evasion and Company Survival: A Brazilian Case Study

Enterprises face significant growth and survival challenges in highly competitive markets. Many companies fail to meet their tax obligations, which deprives society of essential resources and often results in tax penalties. This article examines whether companies that receive tax fines for evasion have a longer or shorter life expectancy compared to those that consistently comply with tax regulations. To analyze survival rates, the Kaplan–Meier estimator and Cox regression model were applied, considering factors such company size, sector, location, and tax evasion fines. The study included data from 11,297 firms established in 2017, in Rio Grande do Sul, Brazil. The findings indicate that companies fined for tax evasion had a higher survival rate (69%) compared to those without fines (38%) by 2023. This suggests that fines might serve as a corrective measure, helping companies realign and improve their chances of survival. Additionally, the study shows that medium-sized enterprises face significant challenges, possibly due to exceeding the limits of a simplified tax regime. This study highlights the importance of continued research across different regions and countries to validate these findings and enhance tax administration strategies.

Harnessing network power: Weaponised interdependence in global tax policy

AbstractFor decades, global tax policy has grappled with the challenge of mobile capital, failing to harness the regulatory potential of network power. This oversight has allowed tax havens to flourish, and multinational corporations and wealthy elites to circumvent state authority, undermining national fiscal policies and democratic capacity to meet grand societal challenges, such as climate change and inequality. But recent regulatory innovations pave a different way forward. This article spotlights the dynamics of ‘weaponized interdependence’, suggesting a critical role for strategically targeting global corporate and financial networks in reinvigorating action against tax havens, tax avoidance and tax evasion. Identifying and exploiting network chokepoints – financial institutions, corporate subsidiaries and expert intermediaries – can empower states to reassert their sovereignty and counterbalance the structural advantages of global capital. This approach helps us understand how and why recent regulatory measures have effectively countered financial secrecy, profit shifting and sanctions evasion, repairing public finances and restoring democratic integrity. In an age where weaponised interdependence is predominantly linked to national security, this recasting of global tax policy highlights a progressive path for using network power to develop effective global economic frameworks, strengthen democratic capacity and address contemporary challenges.

Identifying money laundering risk indicators: Evidence from Bulgaria

The study of the fight against money laundering in Bulgaria takes on a heightened significance due to the country's unique geopolitical and economic context. As a member of the European Union and a key regional player, Bulgaria assumes a pivotal role in preventing cross-border crimes, including money laundering. The present study aims to analyze how modern technologies can bolster this crucial role, facilitating monitoring and analysis processes to enhance the effectiveness of audit and tax inspections in the country. The research applied practical methods involving digital tools and technological solutions such as artificial intelligence and machine learning. These tools were used to identify risk patterns and anomalies in transaction data, demonstrating their real-world application and effectiveness. They enable fast and accurate analysis of large volumes of data, which is particularly important in the context of sophisticated money laundering schemes. The results of the study underscore the potential benefits of technological innovation in the field of financial audits. With the aid of digital technologies, supervisory authorities in Bulgaria stand to significantly enhance their ability to detect financial abuses, including money laundering and tax evasion. In conclusion, the study reiterates the pressing need for further integration of modern technological solutions in the practices of audit and tax services in Bulgaria. This integration is crucial to ensure the effectiveness of control mechanisms and the country's ability to respond to current and future challenges in the fight against crimes in the financial sphere, underscoring the urgency of this matter.

Effects of royalty payment on petroleum profit tax evasion: evidence from the Nigerian non-renewable energy sector

AbstractThe impact of the tax regime on the non-renewable energy sector has been neglected in the current literature. The sector is reported to be at the heart of most oil and gas producing economies. Considering the immense contributions of this sector, the present study investigated the effects of royalty payments on petroleum profit tax evasion in Nigeria’s non-renewable energy sector. A survey, in the form of a questionnaire, was used to collect data from 312 oil and gas companies; while SPSS and PLS software were used to analyze the data. The results indicate that there is positive and significant relationship between tax rate, detection probability, and penalty, and petroleum profit tax evasion. Additionally, the result shows that there is a significantly negative relationship between royalty payment and petroleum profit tax evasion. The findings have significant policy implications for the non-renewable energy sector across the globe. The findings confirm the fact that higher tax rate, detection probability, and penalty, have a direct impact on petroleum tax evasion. The findings also call on policymakers to reconsider the level of royalty rates to a more reasonable level so as to reduce the extent of petroleum tax evasion among the oil and gas companies.

Effectiveness of ex ante honesty oaths in reducing dishonesty depends on content.

Dishonest behaviours such as tax evasion impose significant societal costs. Ex ante honesty oaths-commitments to honesty before action-have been proposed as interventions to counteract dishonest behaviour, but the heterogeneity in findings across operationalizations calls their effectiveness into question. We tested 21 honesty oaths (including a baseline oath)-proposed, evaluated and selected by 44 expert researchers-and a no-oath condition in a megastudy involving 21,506 UK and US participants from Prolific.com who played an incentivized tax evasion game online. Of the 21 interventions, 10 significantly improved tax compliance by 4.5 to 8.5 percentage points, with the most successful nearly halving tax evasion. Limited evidence for moderators was found. Experts and laypeople failed to predict the most effective interventions, though experts' predictions were more accurate. In conclusion, honesty oaths were effective in curbing dishonesty, but their effectiveness varied depending on content. These findings can help design impactful interventions to curb dishonesty.

Do Transfer Pricing, Capital Intensity, Institutional Ownership and Managerial Ownership Affect Tax Avoidance: Case Study on the Mining Industry Listed on the Indonesia Stock Exchange (IDX) for 2019-2022 Period

This study aims to analyze the impact of institutional ownership, managerial ownership, capital intensity, and transfer pricing on tax evasion. This study applies a quantitative method with an associative approach. The data used are secondary data obtained through the analysis of financial statements of mining companies that were active during the period 2019 to 2022 and listed on the Indonesia Stock Exchange (IDX), with data collection techniques through internet searches. Purposive sampling was used to select the sample, and all mining companies listed on the IDX during that time period are included in the study population. Panel data regression of Eviews 10 statistical software was used to analyze the data. The results of the study show that simultaneously, Transfer Pricing, Capital Intensity, Institutional Ownership, and Managerial Ownership have a significant influence on tax avoidance in the mining sector listed on the IDX for the period 2019-2022. Specifically, Transfer Pricing and Institutional Ownership have a negative influence on tax avoidance, while Capital Intensity and Managerial Ownership do not show a significant influence on tax avoidance in the sector.