Solving the tax evasion problem by co-opting the public: the Korean cash receipts system

Namryoung Lee and Charles Swenson

Asia-Pacific Journal of Accounting & Economics, 2019, vol. 26, issue 4, 362-381

Abstract: In 2005 the Korean government instituted a mandatory cash receipts system to curb tax evasion by cash-based companies in the retail sector. We estimate that the system significantly decreased business tax evasion, and was cost-effective. Because it was a significant intervention, the system also had unintended consequences, including increased prices in the retail industry, firms exiting the market, and asymmetric wealth transfers across classes of individual taxpayers. The results have important policy implications for countries and/or subnational governments which consider adopting similar systems.

Date: 2019
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DOI: 10.1080/16081625.2017.1302348

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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