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

Author

Listed:
  • Gábor Lovics

    (Központi Statisztikai Hivatal (Hungarian Central Statistical Office))

  • Katalin Szõke

    (Magyar Nemzeti Bank (Central Bank of Hungary))

  • Csaba G. Tóth

    (KSH Népességtudományi Kutatóintézet (Hungarian Demographic Research Institute))

  • Bálint Ván

    (Pénzügyminisztérium (Ministry of Finance))

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.

Suggested Citation

  • Gábor Lovics & Katalin Szõke & Csaba G. Tóth & Bálint Ván, 2019. "The Effect of the Introduction of Online Cash Registers on Reported Turnover in Hungary," MNB Occasional Papers 2019/137, Magyar Nemzeti Bank (Central Bank of Hungary).
  • Handle: RePEc:mnb:opaper:2019/137
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    File URL: https://www.mnb.hu/letoltes/mnb-op-137-final-1.pdf
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    References listed on IDEAS

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    1. Peter Casey & Patricio Castro, 2015. "Electronic Fiscal Devices (EFDs) An Empirical Study of their Impact on Taxpayer Compliance and Administrative Efficiency," IMF Working Papers 2015/073, International Monetary Fund.
    2. Qian, Nancy & Liu, Yu & Wen, Jaya & Fan, Haichao, 2018. "The Dynamic Effects of Computerized VAT Invoices on Chinese Manufacturing Firms," CEPR Discussion Papers 12786, C.E.P.R. Discussion Papers.
    3. Fjeldstad, Odd-Helge & Kagoma, Cecilia & Mdee, Ephraim & Sjursen, Ingrid Hoem & Somville, Vincent, 2020. "The customer is king: Evidence on VAT compliance in Tanzania," World Development, Elsevier, vol. 128(C).
    4. Hal R. Varian, 2010. "Computer Mediated Transactions," American Economic Review, American Economic Association, vol. 100(2), pages 1-10, May.
    5. Ali, Merima & Shifa, Abdulaziz & Shimeles, Abebe & Woldeyes, Firew, 2015. "Information Technology and Fiscal Capacity in a Developing Country: Evidence from Ethiopia," Working Papers 11180, Institute of Development Studies, International Centre for Tax and Development.
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    Cited by:

    1. Timiryanova, Venera, 2022. "Высокочастотные Данные, Характеризующие Розничную Торговлю: Интересы Государства, Предприятий И Научных Организаций [High-frequency retail data: the interests of the state, enterprises and scientif," MPRA Paper 115681, University Library of Munich, Germany.
    2. Svraka, András, 2021. "Recent trends in income inequalities in Hungary using administrative data," Taxation Working Papers 8, Ministry of Finance, Department of Tax Policy and International Taxation.

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    More about this item

    Keywords

    Value Added Tax; Tax Evasion; Shadow Economy;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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