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Productivity and Tax Evasion
Author: Ms. Era Dabla-Norris, Mr. Mark Gradstein, Fedor Miryugin, and Florian Misch
Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 260
Language:
English
Publication Date:
27 Nov 2019
DOI:
https://doi.org/10.5089/9781513518619.001
ISBN:
9781513518619
ISSN:
1018-5941
Pages:
33
Keywords:
WP; firm; firm level; tax evasion propensity; productivity indicator; productivity result; tax-evading firm; firm productivity; Productivity; Tax evasion; Labor productivity; Tax return filing compliance; Tax administration core functions; Middle East; North Africa; Central Asia; East Africa; Central and Eastern Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund