Pavia, Risa
[UCL]
In this paper I examine whether firms report zero profits as a tax evasion strategy by testing the ffects on bunching at zero of an exogenous shock to the cost of evasion in Portugal. I develop a unique identification strategy by exploiting the targeting of the reform to only certain sectors of economic activity. The results suggest that firms’ reporting of zero profits is affected by the tax environment. However, the full effect of the reform is likely not observed in the empirical analysis because of firms’ additional option to evade taxes by operating on the informal market, as suggested by a greater observed decrease among foreign-owned firms.
Bibliographic reference |
Pavia, Risa. Tax evasion by domestic and foreign-owned Portuguese firms: a bunching analysis. CORE Discussion Paper ; 2017/20 (2017) 31 pages |
Permanent URL |
http://hdl.handle.net/2078.1/186599 |