Document Type : Research Paper

Authors

• Ahmadreza Ahmadi ¹
• Mohammad Boushehri ²

¹ PhD student in Econometrics, Faculty of Economics, Allameh Tabatabai University, Tehran, Iran.

² PhD student in Econometrics, Faculty of Economics, University of Tehran, Tehran, Iran.

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, 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.

Keywords

• Tax Evasion
• Financial Deepening
• ARDL
• MIMIC
• Iran

Main Subjects

• Tax