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Business tax evasion in transition economies: a cross-country panel investigation

ABDIXHIKU, Lumir, PUGH, Geoff and HASHI, Iraj (2018) Business tax evasion in transition economies: a cross-country panel investigation. European Journal of Comparative Economics, 15 (1). pp. 11-36. ISSN 1824-2979

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Abstract or description

This paper uses the Business Environment and Enterprise Performance Survey data for the years 1999, 2002 and 2005 to investigate business tax evasion in 24 transition economies. We use both conventional fixed effects estimation and the recently developed Fixed Effect Vector Decomposition approach. The most robust finding in our study is the importance of institutional factors. In particular, higher levels of corruption related to tax administration and slower transition reforms substantially reduce the amount of taxes paid by businesses in transition economies. In addition, we find a positive relationship between evasion and tax rate; and identify minor effects of the macroeconomic environment. We also find that social norms play a significant role in tax evasion. These findings inform policy recommendations intended to reduce either the possibility and/or the inclination to evade.

Item Type: Article
Faculty: School of Business, Leadership and Economics > Accounting, Finance and Economics
Depositing User: Geoff PUGH
Date Deposited: 27 Jan 2020 12:45
Last Modified: 24 Feb 2020 11:17
URI: http://eprints.staffs.ac.uk/id/eprint/6120

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