An Empirical Analysis of Tax Evasion among Companies Engaged in Stablecoin Transactions

Rubens Moura de Carvalho (), Helena Coelho Inácio and Rui Pedro Marques
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Rubens Moura de Carvalho: Institute of Accounting and Administration, University of Aveiro, 3810-193 Aveiro, Portugal
Helena Coelho Inácio: Higher Institute for Accountancy and Administration, University of Aveiro, 3810-193 Aveiro, Portugal
Rui Pedro Marques: Higher Institute for Accountancy and Administration, University of Aveiro, 3810-193 Aveiro, Portugal

JRFM, 2024, vol. 17, issue 9, 1-18

Abstract: This research investigates the relationship between stablecoin usage and tax evasion. We present a model that includes variables related to transactions such as intensity, frequency, environment on-chain (P2P) vs. off-chain (IntraVasp), and company characteristics such as age, sector, and size. Our model was empirically tested using a logistic regression based on data from the Brazilian Federal Revenue Service (Receita Federal do Brasil (RFB)) in 2021. This novel approach aims to understand the tax behaviours associated with stablecoin use in corporate financial practices. Our results indicate that the intensity, frequency, environment of transactions (specifically IntraVasp and P2P transactions), age, sector, and size are factors significantly associated with tax evasion behaviour. However, we found no evidence to suggest that firms engaging in only P2P transactions have a higher propensity for tax evasion than those engaging only in IntraVasp transactions. Our findings reveal that younger and medium-sized companies with intensive use of stablecoin, with high stablecoin transaction frequency, engaging in IntraVasp and P2P transactions, and belonging to the service sector are more likely to evade tax. Therefore, our research provides a detailed understanding of how digital financial practices with crypto assets (blockchain-based technology) intersect with corporate tax strategies, which can offer valuable insights for regulators, industry practitioners, and policymakers.

Keywords: stablecoin; tax evasion; Vasp; CARF; digital economy; IN 1888 (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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