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Risk on the Tax System of the E.U. from 2016 to 2022

Author

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  • Challoumis Constantinos

    (1 National and Kapodistrian University of Athens (N.K.U.A.), Greece)

Abstract

This paper discusses the risks that businesses face in the tax system from the point of view of the cycle of money. The current research is about the influence of companies that participate in global tax transactions on the tax revenue. The results show that controlled transactions have a negative impact on the GDP and tax revenue, discouraging any uncontrolled investments. The diminished risk increases the tax revenue. The objective of this research is to show that a tax policy of a low tax rate increases uncontrolled transactions, leading to a growth of GDP and tax revenue. This work complies with the theory of the Cycle of Money. The impact of risk on tax revenue has been determined by comparing results with and without this factor. The Q.E. method uses mathematics and programming, allowing the determination of an appropriate equation by a feedback procedure. An econometric analysis is applied to check the results of the model. A special technique is introduced, for the first time, to identify the risk by the sensitivity impact of one factor to another one. Sensitivity is determined as the ability of one factor to counteract instantly the changes of another one. If the counteract is instant, it is considered that the sensitivity is high. If the counteract delays, it is determined that the sensitivity is low. For high sensitivity, the risk is low, and the adjustment is the appropriate one. For low sensitivity, the risk is high, as the adjustment is not adequate.

Suggested Citation

  • Challoumis Constantinos, 2023. "Risk on the Tax System of the E.U. from 2016 to 2022," Economics, Sciendo, vol. 11(s1), pages 55-72, December.
    • Handle: RePEc:vrs:econom:v:11:y:2023:i:s1:p:55-72:n:10
    DOI: 10.2478/eoik-2023-0058
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    References listed on IDEAS

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    1. Dain C. Donelson & Jennifer L. Glenn & Christopher G. Yust, 2022. "Is tax aggressiveness associated with tax litigation risk? Evidence from D&O Insurance," Review of Accounting Studies, Springer, vol. 27(2), pages 519-569, June.
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    More about this item

    Keywords

    risks; tax system; the cycle of money; sensitivity;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • H1 - Public Economics - - Structure and Scope of Government

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