Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities

Cash transactions for goods and services in which no receipts are issued greatly increase the risk of tax evasion. Despite the availability of banking services and alternative payment, key sectors of the economy remain largely cash-based in almost...

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Main Authors:	Awasthi, Rajul, Engelschalk, Michael
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	SHADOW ECONOMY TAX ADMINISTRATION TAXATION FORMAL ECONOMY INFORMALITY TAX COMPLIANCE TAX POLICY TAX EVASION INFORMAL SECTOR
Online Access:	http://documents.worldbank.org/curated/en/497071522428886160/Taxation-and-the-shadow-economy-how-the-tax-system-can-stimulate-and-enforce-the-formalization-of-business-activities http://hdl.handle.net/10986/29603

id	okr-10986-29603
recordtype	oai_dc
spelling	okr-10986-296032022-09-19T12:16:40Z Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities Awasthi, Rajul Engelschalk, Michael SHADOW ECONOMY TAX ADMINISTRATION TAXATION FORMAL ECONOMY INFORMALITY TAX COMPLIANCE TAX POLICY TAX EVASION INFORMAL SECTOR Cash transactions for goods and services in which no receipts are issued greatly increase the risk of tax evasion. Despite the availability of banking services and alternative payment, key sectors of the economy remain largely cash-based in almost all developing countries. This paper shows the apparent strong negative correlation between the use of electronic or formal payments and the size of the shadow economy and reviews the approaches used by tax policy makers and administrators to achieve better control of cash transactions. It argues that the many new and sometimes innovative approaches developed to support the formalization of cash transactions will have little impact on the shadow economy if applied in isolation. A successful strategy to tax cash economy businesses and transactions requires a holistic approach to compliance management in which traditional monitoring and enforcement tools, such as enabling tax administrations to access taxpayer data and match information from various public and private sources, play a key role. 2018-04-03T14:20:53Z 2018-04-03T14:20:53Z 2018-03 Working Paper http://documents.worldbank.org/curated/en/497071522428886160/Taxation-and-the-shadow-economy-how-the-tax-system-can-stimulate-and-enforce-the-formalization-of-business-activities http://hdl.handle.net/10986/29603 English Policy Research Working Paper;No. 8391 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	SHADOW ECONOMY TAX ADMINISTRATION TAXATION FORMAL ECONOMY INFORMALITY TAX COMPLIANCE TAX POLICY TAX EVASION INFORMAL SECTOR
spellingShingle	SHADOW ECONOMY TAX ADMINISTRATION TAXATION FORMAL ECONOMY INFORMALITY TAX COMPLIANCE TAX POLICY TAX EVASION INFORMAL SECTOR Awasthi, Rajul Engelschalk, Michael Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
relation	Policy Research Working Paper;No. 8391
description	Cash transactions for goods and services in which no receipts are issued greatly increase the risk of tax evasion. Despite the availability of banking services and alternative payment, key sectors of the economy remain largely cash-based in almost all developing countries. This paper shows the apparent strong negative correlation between the use of electronic or formal payments and the size of the shadow economy and reviews the approaches used by tax policy makers and administrators to achieve better control of cash transactions. It argues that the many new and sometimes innovative approaches developed to support the formalization of cash transactions will have little impact on the shadow economy if applied in isolation. A successful strategy to tax cash economy businesses and transactions requires a holistic approach to compliance management in which traditional monitoring and enforcement tools, such as enabling tax administrations to access taxpayer data and match information from various public and private sources, play a key role.
format	Working Paper
author	Awasthi, Rajul Engelschalk, Michael
author_facet	Awasthi, Rajul Engelschalk, Michael
author_sort	Awasthi, Rajul
title	Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
title_short	Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
title_full	Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
title_fullStr	Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
title_full_unstemmed	Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities
title_sort	taxation and the shadow economy : how the tax system can stimulate and enforce the formalization of business activities
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/497071522428886160/Taxation-and-the-shadow-economy-how-the-tax-system-can-stimulate-and-enforce-the-formalization-of-business-activities http://hdl.handle.net/10986/29603
_version_	1764469786598703104

Taxation and the Shadow Economy : How the Tax System Can Stimulate and Enforce the Formalization of Business Activities

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