Tax Evasion and Coordination

Vilen Lipatov

MPRA Paper from University Library of Munich, Germany

Abstract: We consider corporate tax evasion as a decision affecting business partners. There are costs of uncoordinated tax reports, both in terms of catching inspectors' attention and running accounts. If these costs are small, there exist a unique Nash equilibrium of the game between the tax authority and a population of heterogenous firms. In this equilibrium, the miscoordination costs enhance non-compliance if and only if more than 50% of the firms are cheating. This provides one rationale for developing countries to be cautious with employing refined auditing schemes and for developed countries to promote complicated accounting procedures.

Keywords: tax evasion; coordination; business partners (search for similar items in EconPapers)
JEL-codes: H26 H32 (search for similar items in EconPapers)
Date: 2006-02, Revised 2006-12
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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https://mpra.ub.uni-muenchen.de/1251/1/MPRA_paper_1251.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/21542/3/MPRA_paper_21542.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1251

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