Tax evasion, tax avoidance and tax expenditures in developing countries: A review of the literature

Abstract

This report provides a survey of existing studies on tax avoidance and tax evasion as well as tax expenditures in developing countries. It focuses on quantitative studies and discusses the approaches and methods used and tries to relate and put into perspective the different estimates. The existing studies may broadly be divided into two groups. The first group of studies focuses on tax evasion and tax avoidance related to domestic economic activity. The second group of studies focuses on tax evasion and tax avoidance related to international economic activity. This document also identifies a number of areas where promising research on different aspects of tax revenue mobilisation in developing countries is possible. This applies, in particular, to the international component of tax evasion.

The structure of the report is as follows. Section 1 covers the motivation, scope, limitations and structure of the study. Section 2, covers the methods and findings of existing quantitative studies in tax avoidance and tax evasion and discusses tax gap analyses which are primarily used in developed countries to assess potentials for tax revenue mobilisation. Section 3 focuses on the question of how political and administrative contexts affect tax evasion and tax compliance. Section 4 deals with the specific issue of tax expenditures. Section 5 summarizes the findings, identifies possible areas for future research and concludes.

Citation

Oxford University Centre for Business Taxation, Oxford, UK, vi + 69 pp.

Tax evasion, tax avoidance and tax expenditures in developing countries: A review of the literature

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