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Digitalization against the shadow economy: evidence on the role of company size

Author

Listed:
  • Bálint Ván

    (Ministry of Finance)

  • Csaba G. Tóth

    (KRTK KTI and CIAS)

  • Gábor Lovics

    (Hungarian Central Statistical Office)

  • Katalin Szőke

    (Central Bank of Hungary)

Abstract

Online cash registers (OCRs) are important tools for reducing the size of the shadow economy. This paper analyzes the impact on reported turnover and tax liability of introducing OCRs in Hungary using a fixed-effects panel and event study model. We identify strong size-related heterogeneity in the retail and the accommodation and food services sectors: smaller companies increased their reported turnover more than larger ones. Since large companies pay the dominant part of value-added tax, the effects on the payment of this tax were mitigated. We find significant spillover effects in both sectors, which are slightly stronger among larger companies.

Suggested Citation

  • Bálint Ván & Csaba G. Tóth & Gábor Lovics & Katalin Szőke, 2022. "Digitalization against the shadow economy: evidence on the role of company size," CERS-IE WORKING PAPERS 2224, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2224
    as

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    File URL: https://kti.krtk.hu/wp-content/uploads/2022/12/CERSIEWP202224.pdf
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    References listed on IDEAS

    as
    1. Grzegorz Poniatowski & Adam Åšmietanka & Mikhail Bonch-Osmolovskiy, 2020. "Study and Reports on the VAT Gap in the EU-28 Member States: 2020 Final Report," CASE Reports 0503, CASE-Center for Social and Economic Research.
    2. Marta Jakubowska, 2019. "Tradiotional Fiscal Devices In Polnad And The Concept Of Their Modernization," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(1), pages 125-138.
    Full references (including those not matched with items on IDEAS)

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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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