Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia

Using a panel of administrative data and regression discontinuity analysis, this paper examines how the introduction of preferential tax regimes for Georgian micro and small businesses in 2010 affects formal firm creation and tax compliance. The re...

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Main Authors:	Bruhn, Miriam, Loeprick, Jan
Format:	Publications & Research
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ACCOUNTING ADDED TAX ADMINISTRATIVE COSTS ADMINISTRATIVE REFORMS ASSISTANCE TO BUSINESSES BANK FINANCING BARRIER BUSINESS ACTIVITIES BUSINESS ACTIVITY BUSINESS COMMUNITY BUSINESS EXPENDITURES BUSINESS OWNERS BUSINESS PERFORMANCE BUSINESS TAX BUSINESS TAXES CAPITAL FORMATION CHECKS COMPLIANCE COST COMPLIANCE COSTS CORRUPTION DEMOCRACY DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DISCRIMINATION ECONOMIC POLICY EFFECTIVE TAX RATES ENTREPRENEURS EXCHANGE RATE EXCLUSION EXPENDITURES FIRM GROWTH FIRM PERFORMANCE FIRMS FORMAL ECONOMY GOVERNMENT POLICY GRAY ECONOMY GROUP OF FIRMS INCOME INCOME TAX INCOME TAXES INDIVIDUAL ENTREPRENEURS INFORMAL ECONOMIC ACTIVITY INFORMAL ECONOMIES INFORMAL ECONOMY INSTRUMENT INTERNATIONAL BANK INVESTMENT CLIMATE LACK OF INFORMATION LAND TITLE MEDIUM ENTERPRISES MICRO BUSINESS MISREPORTING OUTPUT OUTREACH POLICY DESIGN PRIVATE SECTOR DEVELOPMENT PROFIT MARGINS PROFITABILITY PUBLIC FINANCE PUBLIC POLICY REGISTRATION PROCESS REMOTE AREAS RETURN RETURNS SHADOW ECONOMIES SHOPS SINGLE TAX SMALL BUSINESS SMALL BUSINESS DEVELOPMENT SMALL BUSINESS TAXATION SMALL BUSINESSES SMALL ENTERPRISES SMALL FIRM SMALL FIRMS SME SOCIAL SECURITY START-UP TAX TAX ADMINISTRATION TAX BASE TAX BURDEN TAX BURDENS TAX CODE TAX COLLECTION TAX COMPLIANCE TAX COMPLIANCE COSTS TAX EVASION TAX LEGISLATION TAX LIABILITIES TAX OBLIGATIONS TAX POLICY TAX RATES TAX REFORM TAX REFORMS TAX REGIME TAX REGIMES TAX REGULATION TAX RETURN TAX RETURNS TAX REVENUES TAX SYSTEM TAX TREATMENT TAXATION TAXATION POLICY TAXPAYER COMPLIANCE TAXPAYERS THIRD WORLD TRADES TRANSITION COUNTRIES TRANSITION ECONOMIES TURNOVER TURNOVER TAX
Online Access:	http://documents.worldbank.org/curated/en/2014/08/20129053/small-business-tax-policy-informality-tax-evasion-evidence-georgia http://hdl.handle.net/10986/20359

id	okr-10986-20359
recordtype	oai_dc
spelling	okr-10986-203592021-04-23T14:03:55Z Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia Bruhn, Miriam Loeprick, Jan ACCOUNTING ADDED TAX ADMINISTRATIVE COSTS ADMINISTRATIVE REFORMS ASSISTANCE TO BUSINESSES BANK FINANCING BARRIER BUSINESS ACTIVITIES BUSINESS ACTIVITY BUSINESS COMMUNITY BUSINESS EXPENDITURES BUSINESS OWNERS BUSINESS PERFORMANCE BUSINESS TAX BUSINESS TAXES CAPITAL FORMATION CHECKS COMPLIANCE COST COMPLIANCE COSTS CORRUPTION DEMOCRACY DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DISCRIMINATION ECONOMIC POLICY EFFECTIVE TAX RATES ENTREPRENEURS EXCHANGE RATE EXCLUSION EXPENDITURES FIRM GROWTH FIRM PERFORMANCE FIRMS FORMAL ECONOMY GOVERNMENT POLICY GRAY ECONOMY GROUP OF FIRMS INCOME INCOME TAX INCOME TAXES INDIVIDUAL ENTREPRENEURS INFORMAL ECONOMIC ACTIVITY INFORMAL ECONOMIES INFORMAL ECONOMY INSTRUMENT INTERNATIONAL BANK INVESTMENT CLIMATE LACK OF INFORMATION LAND TITLE MEDIUM ENTERPRISES MICRO BUSINESS MISREPORTING OUTPUT OUTREACH POLICY DESIGN PRIVATE SECTOR DEVELOPMENT PROFIT MARGINS PROFITABILITY PUBLIC FINANCE PUBLIC POLICY REGISTRATION PROCESS REMOTE AREAS RETURN RETURNS SHADOW ECONOMIES SHOPS SINGLE TAX SMALL BUSINESS SMALL BUSINESS DEVELOPMENT SMALL BUSINESS TAXATION SMALL BUSINESSES SMALL ENTERPRISES SMALL FIRM SMALL FIRMS SME SOCIAL SECURITY START-UP TAX TAX ADMINISTRATION TAX BASE TAX BURDEN TAX BURDENS TAX CODE TAX COLLECTION TAX COMPLIANCE TAX COMPLIANCE COSTS TAX EVASION TAX LEGISLATION TAX LIABILITIES TAX OBLIGATIONS TAX POLICY TAX RATES TAX REFORM TAX REFORMS TAX REGIME TAX REGIMES TAX REGULATION TAX RETURN TAX RETURNS TAX REVENUES TAX SYSTEM TAX TREATMENT TAXATION TAXATION POLICY TAXPAYER COMPLIANCE TAXPAYERS THIRD WORLD TRADES TRANSITION COUNTRIES TRANSITION ECONOMIES TURNOVER TURNOVER TAX Using a panel of administrative data and regression discontinuity analysis, this paper examines how the introduction of preferential tax regimes for Georgian micro and small businesses in 2010 affects formal firm creation and tax compliance. The results show that the new tax regime for micro businesses increased the number of newly registered formal firms by 18-30 percent below the eligibility threshold during the first year of the reform, but not in subsequent years. The analysis does not find an effect of the new tax regime for small businesses on formal firm creation in any year. Policy makers are often concerned about abuse risks stemming from differentiated tax treatment of micro and small businesses. The analysis in this paper reveals reduced tax compliance in 2010 around the micro business eligibility threshold, but does not find significant evidence of reduced compliance by Georgian firms in later years. The results also do not show any significant evidence of strategic sorting around the regime eligibility thresholds. 2014-10-06T19:40:10Z 2014-10-06T19:40:10Z 2014-08 http://documents.worldbank.org/curated/en/2014/08/20129053/small-business-tax-policy-informality-tax-evasion-evidence-georgia http://hdl.handle.net/10986/20359 English en_US Policy Research Working Paper;No. 7010 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Georgia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING ADDED TAX ADMINISTRATIVE COSTS ADMINISTRATIVE REFORMS ASSISTANCE TO BUSINESSES BANK FINANCING BARRIER BUSINESS ACTIVITIES BUSINESS ACTIVITY BUSINESS COMMUNITY BUSINESS EXPENDITURES BUSINESS OWNERS BUSINESS PERFORMANCE BUSINESS TAX BUSINESS TAXES CAPITAL FORMATION CHECKS COMPLIANCE COST COMPLIANCE COSTS CORRUPTION DEMOCRACY DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DISCRIMINATION ECONOMIC POLICY EFFECTIVE TAX RATES ENTREPRENEURS EXCHANGE RATE EXCLUSION EXPENDITURES FIRM GROWTH FIRM PERFORMANCE FIRMS FORMAL ECONOMY GOVERNMENT POLICY GRAY ECONOMY GROUP OF FIRMS INCOME INCOME TAX INCOME TAXES INDIVIDUAL ENTREPRENEURS INFORMAL ECONOMIC ACTIVITY INFORMAL ECONOMIES INFORMAL ECONOMY INSTRUMENT INTERNATIONAL BANK INVESTMENT CLIMATE LACK OF INFORMATION LAND TITLE MEDIUM ENTERPRISES MICRO BUSINESS MISREPORTING OUTPUT OUTREACH POLICY DESIGN PRIVATE SECTOR DEVELOPMENT PROFIT MARGINS PROFITABILITY PUBLIC FINANCE PUBLIC POLICY REGISTRATION PROCESS REMOTE AREAS RETURN RETURNS SHADOW ECONOMIES SHOPS SINGLE TAX SMALL BUSINESS SMALL BUSINESS DEVELOPMENT SMALL BUSINESS TAXATION SMALL BUSINESSES SMALL ENTERPRISES SMALL FIRM SMALL FIRMS SME SOCIAL SECURITY START-UP TAX TAX ADMINISTRATION TAX BASE TAX BURDEN TAX BURDENS TAX CODE TAX COLLECTION TAX COMPLIANCE TAX COMPLIANCE COSTS TAX EVASION TAX LEGISLATION TAX LIABILITIES TAX OBLIGATIONS TAX POLICY TAX RATES TAX REFORM TAX REFORMS TAX REGIME TAX REGIMES TAX REGULATION TAX RETURN TAX RETURNS TAX REVENUES TAX SYSTEM TAX TREATMENT TAXATION TAXATION POLICY TAXPAYER COMPLIANCE TAXPAYERS THIRD WORLD TRADES TRANSITION COUNTRIES TRANSITION ECONOMIES TURNOVER TURNOVER TAX
spellingShingle	ACCOUNTING ADDED TAX ADMINISTRATIVE COSTS ADMINISTRATIVE REFORMS ASSISTANCE TO BUSINESSES BANK FINANCING BARRIER BUSINESS ACTIVITIES BUSINESS ACTIVITY BUSINESS COMMUNITY BUSINESS EXPENDITURES BUSINESS OWNERS BUSINESS PERFORMANCE BUSINESS TAX BUSINESS TAXES CAPITAL FORMATION CHECKS COMPLIANCE COST COMPLIANCE COSTS CORRUPTION DEMOCRACY DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING ECONOMIES DISCRIMINATION ECONOMIC POLICY EFFECTIVE TAX RATES ENTREPRENEURS EXCHANGE RATE EXCLUSION EXPENDITURES FIRM GROWTH FIRM PERFORMANCE FIRMS FORMAL ECONOMY GOVERNMENT POLICY GRAY ECONOMY GROUP OF FIRMS INCOME INCOME TAX INCOME TAXES INDIVIDUAL ENTREPRENEURS INFORMAL ECONOMIC ACTIVITY INFORMAL ECONOMIES INFORMAL ECONOMY INSTRUMENT INTERNATIONAL BANK INVESTMENT CLIMATE LACK OF INFORMATION LAND TITLE MEDIUM ENTERPRISES MICRO BUSINESS MISREPORTING OUTPUT OUTREACH POLICY DESIGN PRIVATE SECTOR DEVELOPMENT PROFIT MARGINS PROFITABILITY PUBLIC FINANCE PUBLIC POLICY REGISTRATION PROCESS REMOTE AREAS RETURN RETURNS SHADOW ECONOMIES SHOPS SINGLE TAX SMALL BUSINESS SMALL BUSINESS DEVELOPMENT SMALL BUSINESS TAXATION SMALL BUSINESSES SMALL ENTERPRISES SMALL FIRM SMALL FIRMS SME SOCIAL SECURITY START-UP TAX TAX ADMINISTRATION TAX BASE TAX BURDEN TAX BURDENS TAX CODE TAX COLLECTION TAX COMPLIANCE TAX COMPLIANCE COSTS TAX EVASION TAX LEGISLATION TAX LIABILITIES TAX OBLIGATIONS TAX POLICY TAX RATES TAX REFORM TAX REFORMS TAX REGIME TAX REGIMES TAX REGULATION TAX RETURN TAX RETURNS TAX REVENUES TAX SYSTEM TAX TREATMENT TAXATION TAXATION POLICY TAXPAYER COMPLIANCE TAXPAYERS THIRD WORLD TRADES TRANSITION COUNTRIES TRANSITION ECONOMIES TURNOVER TURNOVER TAX Bruhn, Miriam Loeprick, Jan Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
geographic_facet	Europe and Central Asia Georgia
relation	Policy Research Working Paper;No. 7010
description	Using a panel of administrative data and regression discontinuity analysis, this paper examines how the introduction of preferential tax regimes for Georgian micro and small businesses in 2010 affects formal firm creation and tax compliance. The results show that the new tax regime for micro businesses increased the number of newly registered formal firms by 18-30 percent below the eligibility threshold during the first year of the reform, but not in subsequent years. The analysis does not find an effect of the new tax regime for small businesses on formal firm creation in any year. Policy makers are often concerned about abuse risks stemming from differentiated tax treatment of micro and small businesses. The analysis in this paper reveals reduced tax compliance in 2010 around the micro business eligibility threshold, but does not find significant evidence of reduced compliance by Georgian firms in later years. The results also do not show any significant evidence of strategic sorting around the regime eligibility thresholds.
format	Publications & Research
author	Bruhn, Miriam Loeprick, Jan
author_facet	Bruhn, Miriam Loeprick, Jan
author_sort	Bruhn, Miriam
title	Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
title_short	Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
title_full	Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
title_fullStr	Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
title_full_unstemmed	Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia
title_sort	small business tax policy, informality, and tax evasion : evidence from georgia
publisher	World Bank Group, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/08/20129053/small-business-tax-policy-informality-tax-evasion-evidence-georgia http://hdl.handle.net/10986/20359
_version_	1764445109583085568

Small Business Tax Policy, Informality, and Tax Evasion : Evidence from Georgia

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