Lipatov, Vilen (2006): Compatibility in Tax Reporting.
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We consider corporate tax evasion when business partners have different attitudes towards aggressive tax accounting. There are costs of uncoordinated tax reports, both in terms of catching inspectors´ attention and running accounts. If these costs are small, there exist a unique stable Nash equilibrium of the game between the tax authority and a population of heterogeneous firms. In this equilibrium, the relation between compatibility costs and compliance is non-monotonic and depends on the curvature of auditing function. However, compatibility costs reduce non-compliance in low cheating regimes and may enhance it when many �firms are cheating. This provides one rationale for de veloping countries to be cautious with employing refined auditing schemes and for developed countries to promote complicated accounting procedures.
|Item Type:||MPRA Paper|
|Institution:||European University Institute|
|Original Title:||Compatibility in Tax Reporting|
|Keywords:||tax evasion, compatibility, coordination, business partners, tax ac- counting|
|Subjects:||H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H32 - Firm
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion
|Depositing User:||Vilen Lipatov|
|Date Deposited:||24. Mar 2010 06:14|
|Last Modified:||18. Feb 2013 21:09|
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Available Versions of this Item
Tax Evasion and Coordination. (deposited 24. Dec 2006)
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