nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒11‒20
four papers chosen by
Alexander Harin, Modern University for the Humanities

  1. Corporate Income Tax Gap Estimation by using Bottom-Up Techniques in Selected Countries: Revenue Administration Gap Analysis Program By Patricio A Barra; Mr. Eric Hutton; Polina Prokof'yeva
  2. Norms of Corruption in Politicians’ Malfeasance By Gustavo J. Bobonis; Anke Kessler; Xin Zhao
  3. Public disclosure and tax compliance: evidence from Uganda By Priya Manwaring; Tanner Regan
  4. Double taxation treaties and resource revenue mobilization in developing countries: A neural network approach By Harouna Kinda; Abrams M.E. Tagem

  1. By: Patricio A Barra; Mr. Eric Hutton; Polina Prokof'yeva
    Abstract: This technical note describes bottom-up CIT gap estimation techniques applied by revenue administrations in the following highly experienced countries in this approach: Australia, Brazil, Canada, Denmark, Sweden, the United Kingdom, and the United States. The main topics included in the descriptions are techniques applied, CIT gap results, advantages and disadvantages of different available options, and future developments and recommendations for any revenue administration interested in starting bottom-up CIT gap estimation programs having no prior experience.
    Keywords: Tax Administration; Tax Compliance; Corporate Income Tax; Tax Gap; Tax Evasion; Random Audit Program; Risk-Based Audits
    Date: 2023–10–31
  2. By: Gustavo J. Bobonis; Anke Kessler; Xin Zhao
    Abstract: To what extent can audits serve to limit patronage and corrupt networks effectively and sustainably in clientelist societies with a prevailing norm of corruption? We develop a political agency model in which office holders are motivated to reduce rent seeking behavior through re-election incentives operating via elections and audits (formal institutions), but also through reputational concerns that are influenced by the prevailing norm on corruption in their peer group (informal institutions). We show that, while the formal institutions of audits and elections have the desired direct effect of reducing corruption, they also affect informal rules of conduct, which can have unintended effects. We then apply this theoretical framework to evidence from Puerto Rico’s anti-corruption municipal audits program over the period 1987-2014, and argue that the interaction of elections, audits, and norms can help explain a peculiar pattern in the data. Using a quasi-experimental design based on the exogenous timing of audits relative to elections, we find that mayors respond positively to audits in their own community, but negatively to audits - and the corresponding reduction in corruption - in neighboring municipalities. Our estimates suggest a large negative spillover effect: communities where two-thirds of adjacent jurisdictions undergo a (timely) audit experience a 30 percent increase in reported corruption levels.
    Keywords: corruption; rent-seeking; public sector accounting and audits; social norms; institutional arrangements
    JEL: D72 H83 K42 O17
    Date: 2023–10–31
  3. By: Priya Manwaring; Tanner Regan
    Abstract: Public disclosure policies have potential to raise tax compliance where alternative enforcement capacity is limited. We study the effects of reporting delinquents and recognizing compliers and provide evidence on the social determinants of tax compliance. Our results are consistent with a model in which being publicly known as tax-eligible is costly but social sanctions for delinquency are limited. Further, disseminating information on tax behavior reduces the compliance of recipients by causing their beliefs to be updated down toward the true compliance rate. Overall, these policies are limited at raising revenue and less effective than simple enforcement reminder nudges.
    Keywords: property tax, tax morale, public disclosure, shaming
    Date: 2023–07–21
  4. By: Harouna Kinda; Abrams M.E. Tagem
    Abstract: Double taxation treaties, by assigning taxing rights to rival countries and thereby eradicating double taxation, aim to facilitate cross-border trade and investment. The eradication of double taxation is achieved through reductions in withholding tax rates on passive income in source countries, resulting in revenue losses. Multinational corporations structure their investments to benefit from treaty-reduced withholding tax rates, exacerbating the revenue losses.
    Keywords: Double taxation treaties, Entropy balancing weights, Resource revenues, Revenue mobilization, Taxes
    Date: 2023

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