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Factors Influencing Unincorporated Enterprises to Register under Value Added Tax (VAT): An Analysis with Enterprises Survey Data

Sacchidananda Mukherjee () and R. Kavita Rao ()
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R. Kavita Rao: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: Unincorporated enterprises often bypass formal regulations in general and taxation in particular. However, escaping formal regulations does not always favour business of unincorporated enterprises and attracts multiple sources of exploitation (e.g., paying bribe to local administration, police and politicians). In other words, the benefits of that enterprises could reap by becoming part of the formal regulatory system often exceeds the costs of becoming a formal entity. Bringing unincorporated enterprises under taxation system is a challenge often faces by tax administrators and it is in this regard the present study explores the factors which influence decision of unincorporated enterprises to get registered with State tax authority. However, registration with State tax authority does not imply that the enterprises have to pay taxes and/or file return if they are not active or annual turnover does not exceed the threshold level. The study throws up interesting results for policy makers and tax administrators.

Keywords: Tax Registration; Indirect Tax; Unincorporated Enterprises; State Sales Tax/VAT Registration; Partnership Firms; Proprietary Enterprises; Probit Model; India (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-iue and nep-pbe
Date: 2015-04
Note: Working Paper 145, 2015
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