Responses of firms to tax, administrative and accounting rules: Evidence from Armenia

Arbeitspapier

Using panel data on the full population of corporate tax returns of Armenian firms, we study the behavioral response of firms to three size-dependent regulations. We find: i) a strong response to an accounting notch where International Financial Reporting Standards become mandatory; ii) a moderate response to an administrative notch below which the frequency of filing and paying taxes declines from monthly to quarterly; and iii) no response to a tax notch created by the registration threshold of the value added tax. Exploiting tax audits, we provide evidence suggesting that income under-reporting drives the bunching response of firms by between 60 and 100 percent. Additional evidence suggests that firms respond to tax audits by compensating every additional dollar of audit driven increase in reported income by a 0.7-0.8 dollar increase in reported deductions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 16-065

Classification and Topics

• Classification: Wirtschaft ; Business Taxes and Subsidies including sales and value-added (VAT) ; Tax Evasion and Avoidance ; Microeconomic Analyses of Economic Development
• Subject: small and medium enterprises ; size-dependent regulation ; value added tax ; tax administration ; tax accounting ; tax evasion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Asatryan, Zareh ; Peichl, Andreas
• Event: Veröffentlichung
• (who): Zentrum für Europäische Wirtschaftsforschung (ZEW)
• (where): Mannheim
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/146953
• URN: urn:nbn:de:bsz:180-madoc-415095
• Last update: 10.03.2025, 11:43 AM CET