The Effect of the Introduction of Online Cash Registers on Reported Turnover in Hungary

Gábor Lovics (), Katalin Szõke (), Csaba Tóth and Bálint Ván ()
Additional contact information
Gábor Lovics: Központi Statisztikai Hivatal (Hungarian Central Statistical Office)
Katalin Szõke: Magyar Nemzeti Bank (Central Bank of Hungary)
Bálint Ván: Pénzügyminisztérium (Ministry of Finance)

No 2019/137, MNB Occasional Papers from Magyar Nemzeti Bank (Central Bank of Hungary)

Abstract: In order to reduce the shadow economy, in 2013 and 2014 the Hungarian government introduced mandatory online cash registers (OCR) in some sectors. As a result, almost 200,000 OCRs have been installed by 100,000 enterprises. In this paper we use micro data to estimate the effect of OCR introduction on reported turnover in the most affected sectors: retail, and accommodation and food services (AFS). We assume that OCR installation does not change a company’s operating model, so the increase in reported turnover around the installation date reflects a reduction in the shadow economy. We identify a remarkable effect of OCR introduction on reported turnover in both sectors. For small enterprises, reported turnover increased by 23 percent and 35.1 percent in the retail and AFS sector, respectively. We also find significant but smaller effects for medium-sized enterprises in both sectors. For large companies, we only observe a significant impact in the AFS sector.

Keywords: Value Added Tax; Tax Evasion; Shadow Economy (search for similar items in EconPapers)
JEL-codes: E26 H25 H26 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019
New Economics Papers: this item is included in nep-iue, nep-mac and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mnb:opaper:2019/137

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