Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement

Carrillo, Paul E.; Pomeranz, Dina; Singhal, Monica

doi:10.1257/app.20140495

Cited by 173 publications

(171 citation statements)

References 20 publications

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“…In line with the conclusion reached by Carrillo et al (2017), Slemrod et al (2017) provide evidence that US companies respond to third-party information increasing both the reported income and expenses, thereby reducing the overall impact on reported net taxable income. In particular, the authors investigate the overall impact of the introduction in the United States, in 2011, of the Form 1099-K, an information report providing the Internal Revenue Service with information about small business sales made by payment cards and other electronic means.…”

Section: Assessment Through Third-party Reporting Informationsupporting

confidence: 73%

“…The global revolution in information technology has strongly encouraged the adoption of indirect tax assessments based on third-party reporting information in both advanced (Kleven et al, 2011;Slemrod et al, 2017) and developing economies (Pomeranz, 2015;Carrillo et al, 2017). In such a field, the fiscal authority verifies the accuracy of taxpayer reports using information reported by a third party.…”

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

“…The efficiency of such a tool changes strongly depending on who the reporters are, which information has been reported, and how much information they have to include (Lederman, 2010). The third parties that the fiscal authority can address to obtain information are employers (reporting the value of wages and salaries), banks, investment funds, pension funds, or companies' trading partners (Kleven et al, 2011;Carrillo et al, 2017).…”

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

“…As mentioned above, fiscal authorities can resort to third parties to obtain information regarding only a single component of taxable income, such as the value of revenues earned by the taxpayers. Carrillo et al (2017) investigate the effect of the adoption of third-party information on the behavior of incorporated companies operating in Ecuador in 2011 and 2012. The Ecuadorian fiscal authority checks the value of revenues reported by companies against third-party reported revenues, defined as the sum of purchases reported by client companies, credit card sales data, exports, and records provided by financial institutions (i.e., bank interests).…”

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

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Presumptive Taxation Methods: A Review of the Empirical Literature

Bucci

2019

Journal of Economic Surveys

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This paper reviews the empirical literature studying the effect of the introduction of presumptive taxation methods on taxpayers’ behavior. Although the concept of presumptive taxation entails numerous alternative methods to determine tax liabilities, I survey two main areas of the literature: indirect tax assessment methods and presumptive minimum taxes. The review investigates efficiency and equity implications of presumptive taxation methods. Conflicting conclusions emerge about the effectiveness of presumptive policy tools in achieving different goals, such as the increase of voluntary tax compliance, the growth of tax revenues, and the reduction of shadow economy and fiscal evasion.

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Section: Assessment Through Third-party Reporting Informationsupporting

confidence: 73%

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

Section: Assessment Through Third-party Reporting Informationmentioning

confidence: 99%

See 2 more Smart Citations

Presumptive Taxation Methods: A Review of the Empirical Literature

Bucci

2019

Journal of Economic Surveys

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“…Pomeranz (2015) focuses on the VAT and analyses two large-scale randomized field experiments in Chile. However, Carrillo et al (2014) also empirically show that enhancing third-party reporting in one dimension induces firms to exploit other dimensions to evade taxes. 6 The assumption of an increasing hazard rate is a standard assumption in contract theory and the theory of industrial organization; see Fudenberg and Tirole (1991, p. 267) and Tirole (1998, p. 156).…”

Section: A Simple Model Of Business Tax Evasionmentioning

confidence: 93%

Tax Evasion, Corruption and Market Entry

Seidel

Thum

2015

Scottish J Political Eco

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We analyze the impact of tax policy on the market entry of firms in the presence of corruption and tax evasion. In a world with corruption, firms must bribe corrupt officials to enter the market. For a given level of bribes, higher tax rates and stricter enforcement of taxation decrease tax evasion but typically reduce market entry. However, when the level of bribes reacts to tax policy, higher taxes and stricter enforcement of taxation can have a double benefit. Up to a certain threshold, for which we develop a simple rule, stricter enforcement increases market entry and reduces tax evasion.

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Offshore FDI, tax havens, and productivity: A network analysis

Jha

Awate

2022

Global Strategy Journal

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Research summaryMultinational enterprises (MNEs) use tax havens to benefit from international tax arbitrage and increase their capital efficiency. These activities are purported to distort global financial markets, erode national corporate tax bases, and are singularly targeted in the media. Despite this, MNEs continue to increase the dispersion of their tax haven activities by investing in multiple tax havens. We study how this dispersion affects home and host country productivity. We model the inward and outward offshore foreign direct investment (FDI) networks using longitudinal data on 212 countries. We find that increasing dispersion leads to productivity losses at home but productivity gains in the host country. Further, increasing the prominence of home and host countries in the offshore network, by connecting with central, well‐developed tax havens, improves their productivity.Managerial summaryIs offshore FDI routed through tax havens always unproductive to the MNEs' home and host countries? While governments attempt to contain such investments, MNE managers disperse them into multiple tax havens and continue benefitting from tax arbitrage. We show that all offshore FDI is not unproductive. As managers route their investments through multiple tax havens, their home countries may experience productivity losses, but the host countries receive productivity gains. Further, using central, well‐established tax havens bring productivity gains to both home and host countries. We thus show that MNEs' home countries need to reassess their offshore FDI policies since several of them also host these investments. Our paper extends a multilateral perspective on offshore FDI and possible benefits attainable, particularly from central tax havens.

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Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement

Cited by 173 publications

References 20 publications

Presumptive Taxation Methods: A Review of the Empirical Literature

Presumptive Taxation Methods: A Review of the Empirical Literature

Tax Evasion, Corruption and Market Entry

Offshore FDI, tax havens, and productivity: A network analysis

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