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Revealing Tax Evasion : Experimental Evidence from a Representative Survey of Indonesian Firms

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  • Christopher Alexander Hoy
  • Filip Jolevski
  • Anthony Obeyesekere

Abstract

This paper examines the pervasiveness of tax evasion among firms in Indonesia and the characteristics associated with higher levels of noncompliance. Tax evasion is estimated through a randomized, double-list experiment embedded in a nationally representative survey of 2,955 registered firms. This revealed whether firms pay all the taxes they owe without them having to disclose this directly. Across both list experiments, around a quarter of the firms indirectly reveal that they have evaded taxes. Firms that do not export, face intense competition from informal firms, and believe tax administration is a major obstacle to their business are the most likely to evade taxes. These findings help to inform the enforcement activities of tax authorities in middle-income countries, which face substantial challenges in estimating levels of tax evasion and identifying noncompliant taxpayers.

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  • Christopher Alexander Hoy & Filip Jolevski & Anthony Obeyesekere, 2024. "Revealing Tax Evasion : Experimental Evidence from a Representative Survey of Indonesian Firms," Policy Research Working Paper Series 10857, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10857
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    References listed on IDEAS

    as
    1. Paul Carrillo & Dina Pomeranz & Monica Singhal, 2017. "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 144-164, April.
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