The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2009, December. Volume: 6 - Issue: 2

Bribes and Business Tax Evasion

by David Joulfaian

Start page: 227 - End page: 244

Keywords: Tax Evasion, Firm Behavior, Corruption

Jel code: H25; H26; H32; D73

Abstract:

This paper investigates the role of governance, in particular bribes to tax officials, in shaping business tax compliance behavior in transition economies. The empirical results show that business noncompliance rises with the frequency of tax related bribes. More specifically, the findings from 27 economies suggest that tax evasion thrives when bribes to tax officials are commonplace. These findings are robust to a number of specifications that control for firm and country attributes as well as address the potential endogeneity of bribes.

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