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Are Politically Connected Firms More Likely to Evade Taxes? Evidence from Tunisia

Author

Listed:
  • Bob Rijkersb
  • Hassen Arouri
  • Leila Baghdadi

Abstract

Are politically connected firms more likely to evade taxes? Using tax, social security, and customs records from Tunisia in which firms owned by former president Ben Ali and his family are identified, this paper demonstrates that connected firms were more likely to evade taxes. Ceteris paribus, connected firms are 4.6% more likely not to submit a tax declaration in spite of registering workers and/or customs transactions and 8.4% more likely to report anomalously low sales when submitting a tax declaration.

Suggested Citation

  • Bob Rijkersb & Hassen Arouri & Leila Baghdadi, 2017. "Are Politically Connected Firms More Likely to Evade Taxes? Evidence from Tunisia," The World Bank Economic Review, World Bank, vol. 30(Supplemen), pages 166-175.
    • Handle: RePEc:oup:wbecrv:v:30:y:2017:i:supplement_1:p:s166-s175.
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    File URL: http://hdl.handle.net/10.1093/wber/lhw018
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    Citations

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    Cited by:

    1. Razafindrakoto, Mireille & Roubaud, François & Rua, Linda, 2021. "Hyper-elites and network: Capturing the powerful upper tail in Madagascar," World Development, Elsevier, vol. 147(C).
    2. Hallward-Driemeier,Mary C. & Kochanova,Anna & Rijkers,Bob, 2020. "Does Democratization Promote Competition? : Indonesian Manufacturing Pre and Post Suharto," Policy Research Working Paper Series 9112, The World Bank.
    3. Aboushady, Nora & Zaki, Chahir, 2023. "Are global value chains for sale? On business-state relations in the MENA region," IDOS Discussion Papers 17/2023, German Institute of Development and Sustainability (IDOS).
    4. Chuah,Lay Lian & Loayza,Norman V. & Myers,C. Bernard, 2020. "The Fight against Corruption : Taming Tigers and Swatting Flies," Research and Policy Briefs 145050, The World Bank.
    5. Sebastian Beer & Jan Loeprick, 2021. "Too high a price? Tax treaties with investment hubs in Sub-Saharan Africa," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 113-153, February.
    6. Leila Baghdadi & Sonia Ben Kheder & Hassen Arouri, 2017. "In Search of A New Development Model For Tunisia: Assessing the Performance of the Offshore Regime," Working Papers 1118, Economic Research Forum, revised 07 Jun 2017.
    7. El-Haddad, Amirah, 2020. "Redefining the social contract in the wake of the Arab Spring: The experiences of Egypt, Morocco and Tunisia," World Development, Elsevier, vol. 127(C).

    More about this item

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy

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