The Impact of the Size of Enterprises on Tax Evasion in the Forestry Industry of Russia

Abstract

The problem of low tax revenues and a large shadow sector is relevant to many countries and industries, and the forestry industry in Russia is no exception. This study examines the forms of tax evasion in various segments of the forestry industry to evaluate the impact of the size of businesses and the level of tax audit risk on the frequency of same-type tax responses. The hypothesis is that same-type tax responses in the form of tax evasion are observed in businesses of all sizes of the forestry industry. The frequency of these tax responses correlates with the level of tax audit risk. The representative sample of micro-, small and mid-sized businesses comprises 7,910 enterprises. For each enterprise included in the sample we calculated the level of tax audit risk for the period of 2017-2020. Audit risk was calculated as a cumulative indicator of the incidence of non-compliance, which was detected by comparing the calculated and normative values of the criteria described in the Federal Tax Service’s Concept of the System of Planning of On-Site Tax Audits. The study found that the businesses of all sizes from all sectors of the forestry industry resorted to tax evasion. The specific forms and structural elements of their responses were described. The correlation and regression analysis has shown that there is a strong direct relationship between the level of tax audit risk and the frequency of same-type tax responses. The occurrence of same-type tax responses points to the weaker impact of economic factors within the traditional model of tax behaviour. These findings can be of interest to the tax authorities and policy-makers seeking to raise tax revenues collected from enterprises of the Russian forestry industry.

Social and Economic Importance of Forest Companies in Asian Russia: Evidence from Corporate Financial Reporting

“…This paper contributes to the literature about Russian forestry in several ways. Following Labunets and Maiburov [29], we analyze the company-level reporting statistics of timber companies in Russia. The main result of this study is a database of 9081 forestry companies operating in the Asian part of Russia.…”

“…The behavioral pattern of tax evasion is not related to the scale of the business. At the same time, there is a strong correlation between the frequency of tax evasion attempts and the scores on the criteria that the Russian tax authorities consider as the basis for audit [29]. It was also shown that the level of collection of value-added tax (VAT) in the timber industry in Russia is 6 times lower than in the Scandinavian countries.…”

Impact of Corporate Social Responsibility, Profitability, Leverage, and Capital Intensity on Tax Aggressiveness: The Moderating Role of Firm Size in Indonesian Manufacturing Sector

“…Companies may choose to implement assertive tax strategies in an effort to diminish their income tax obligations to the federal government (Fitriani & Indrati, 2023). One of the most substantial barriers to augmenting state revenue is characterized by this (Labunets & Mayburov, 2022). The majority of businesses engage in tax aggressiveness through the implementation of accounting practices that reduce tax liability in an indirect manner.…”

Impact of Trade Restrictions on the Russian Forest Industry: Evidence from Siberian Timber Producers

“…In a series of articles devoted to Russian forest companies, a significant difference between the rationality of tax and economic behavior was revealed. In addition, it was shown that the level of collection of value added tax in the Russian timber industry is six times lower than in the Scandinavian countries [11,12]. A number of studies have been devoted to assessing the effectiveness of state support for investment projects in the field of forest development [13,14].…”