Financial Economics
Ahmadreza Ahmadi; Mohammad Boushehri
Abstract
The expansion and deepening of the financial sector as one of the most important sectors of the economy of any country can affect tax evasion. In the present study, first, the relative size of tax evasion was calculated using the MIMIC method, which indicates an average of 8.1% in Iran's economy. Then, ...
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The expansion and deepening of the financial sector as one of the most important sectors of the economy of any country can affect tax evasion. In the present study, first, the relative size of tax evasion was calculated using the MIMIC method, which indicates an average of 8.1% in Iran's economy. Then, using the ARDL approach, the effect of the deepening of institutions and financial markets on tax evasion was investigated and tested separately using the indicators published by the International Monetary Fund (IMF) in the period from 1980 to 2022. The results of long-run estimates show that both the deepening of financial institutions and the deepening of financial markets have a negative effect on tax evasion. Second, in terms of size (absolute value), the inverse effect of the deepening of financial institutions on tax evasion is more than the deepening of financial markets. Among the control variables of the model, the tax burden has an inverted U shape and oil rent has a positive effect on tax evasion. Another finding is that in the period after the JCPOA (2017-2022) the amount of tax evasion has significantly decreased.
Mahdieh Rezagholizadeh; Amirhossein Alami
Abstract
Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development ...
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Tax evasion constitutes a major component of underground activities and development of financial sector -as one of the most important sectors in every country can affect its size. Considering the importance of this issue, this study tries to investigate the relationship between financial development and tax evasion and provide an answer to this question: can financial development in Iran reduce tax evasion? This study estimates the volume of tax evasion in Iran by using multiple-indicators -multiple causes (MIMIC) model and maximum likelihood method in AMOS software, for the period of 1978-2016. Then the effect of financial development on tax evasion is investigated by using ARDL Bounds test method. The results show that despite some fluctuations, volume of tax evasion has been generally increasing over the underlying period. The results of the estimation of the effect of financial development on the tax evasion indicate that financial development in Iran in long-run and short-run (with one lag) has a negative and significant impact on the tax evasion. Also, findings show that an increase in inflation, increases tax evasion and increase in GDP reduces tax evasion.
Mahnoush Abdollah Milani; Javid Bahrami; Hossein Tavakolian; Narges Akbarpur
Abstract
The aim of this study is to estimate the amount of underground economy as well as to determine the effect of tax policy on it in Iran. For this purpose, a Dynamic Stochastic General Equilibrium (DSGE) model is developed incorporating the underground economy. Quarterly data for 1360-1393 in Iran are used ...
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The aim of this study is to estimate the amount of underground economy as well as to determine the effect of tax policy on it in Iran. For this purpose, a Dynamic Stochastic General Equilibrium (DSGE) model is developed incorporating the underground economy. Quarterly data for 1360-1393 in Iran are used for estimation. The results show that on the average 23 percent of household consumption during the examined period is from underground goods, and about 17 percent of these goods are imported into the country through underground import or smuggling. Real average amount of smuggling and underground production in Iran during the considered period is estimated as 29023 and 141702.5 billion Rials, respectively. In addition, the results show that the average share of underground employment in total employment over the period is about 18 percent. The average tax evasion of consumption tax, import tax and wage tax is estimated about 17.8 percent of average government tax revenue during this period. Comparing the effects of four different tax shocks on underground economy also shows that the profit tax shock has the largest effect on underground economy, and after that is import tax shock. The effects of tax shocks show that the severity and duration of the impact of tax shocks on underground production is more than that of the formal economy.
