nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2016‒06‒18
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The concept of tax gaps - Report on VAT Gap Estimations By Fiscalis Tax Gap Project Group
  2. Study to quantify and analyse the VAT Gap in the EU Member States - 2015 Report By CASE, CPB, CAPP, CEPII, ETLA, IFO, IFS, IHS
  3. Implementing the ‘destination principle’ to intra-EU B2B supplies of goods By EY
  4. Economic Transition and the Determinants of Self-employment in Urban China: 2007-2013 By Ma, Xinxin; Li, Shi
  5. Remittances of foreign workers in Italy: an estimation of invisible flows in the "informal channel" By Giacomo Oddo; Maurizio Magnani; Riccardo Settimo; Simonetta Zappa
  6. Using administrative data to assess the impact and sustainability of Rwanda's land tenure regularization By Ali,Daniel Ayalew; Deininger,Klaus W.; Duponchel,Marguerite Felicienne

  1. By: Fiscalis Tax Gap Project Group
    Abstract: Effective collection of taxes is a cornerstone of a fair taxation system. Taxes that remain unpaid cause revenue loss in the budget of Member States and may lead to an excessive burden on the honest taxpayers who correctly fulfil their tax obligations. Furthermore, effective collection of taxes is essential for level playing field and avoids economic distortions. Tackling the issue of unpaid taxes is therefore a collective responsibility which starts with understanding the scale and the scope of the issue. Tax gap estimations are rough indicators of revenue loss. In the past decades several methods have been developed by national (tax) administrations and international institutions to estimate revenue loss. In order to pool knowledge and share experience in existing tax gap estimations, the Tax Gap Project Group (TGPG) was established under the Fiscalis 2020 Program. The TGPG consisted of national experts of 15 Member States and its work was coordinated by the European Commission.
    Keywords: European Union, VAt gap, tax gap, Member states, VAT, tax revenue
    Date: 2016–03
    Abstract: This report provides estimates of the VAT Gap for 26 EU Member States for 2013, as well as revised estimates for the period 2009-2012. It is a follow-up to the report “Study to quantify and analyse the VAT Gap in the EU-27 Member States”1, published in September 2013, and to the report “2012 Update Report to the Study to Quantify and Analyse the VAT Gap in the EU-27 Member States” 2, published in October 2014
    Keywords: European Union, VAT, VAT gap, reveniu loss, fraud, tax evasion
    Date: 2015–10
  3. By: EY
    Abstract: The European Commission has identified two fundamental issues with the current model of taxation: namely the additional compliance costs borne by businesses that conduct cross-border trade when compared to those businesses that only trade domestically and the occurrence of VAT fraud. The European Commission has commissioned EY to conduct a study of five policy options designed to enable the implementation of a destination based VAT system across the EU that to some extent addresses these issues. As part of the study, EY has gathered information from businesses, tax experts, Member States’ Tax Authorities and additional sources in order to make a comparison against the current “As Is” taxation model and also determine the impact of the implementation of each of the five proposed policy options. This information aims to assess the impact of the five policy options from both a qualitative and quantitative perspective. To this end, information has been obtained on business compliance costs, tax administration costs, cash flow costs, VAT fraud implications, legislative implications and aspects of practical implementation for each of the five proposed policies. In addition to the collection and analysis of this information, EY has provided a conclusion as to whether the policy options have a potential to address the two fundamental issues and what (if any) impact there will be on the European economy as a whole
    Keywords: European Union, taxation, VAT, VAT fraud, compliance cost
    Date: 2015–07
  4. By: Ma, Xinxin; Li, Shi
    Abstract: This paper conducts two hypotheses testing and provides evidence on the determinants of self-employment for local urban residents and migrants in urban China. Using CHIP2007 and CHIP2013, the employment status is divided into four categories— self-employed employers, own-account workers, employees, and the unemployed. Several major conclusions emerge. First, utilizing the imputed wage premiums, the business creation hypothesis is rejected for both the local urban residents and migrants groups in 2007. However, in 2013, the business creation hypothesis is supported when a worker choice to become a self-employed employer. Whereas the influences of wage premiums on the probability of becoming an own-account worker are negatively significant for both the local urban residents group and the migrants group, so the business creation hypothesis is rejected when a worker choice to become an own-account worker. Second, the choice to become a self-employed employer for the local urban residents group, and the choice to become an own-account worker for the migrants group in the initial economy reform period can gain more benefit, so the business creation hypothesis is supported for older generation group, whereas this hypothesis is rejected for the younger generation group for both the local urban residents and migrants groups.
    Keywords: self-employed employer, own-account worker, business creation hypothesis, disguised unemployment hypothesis, urban China
    JEL: J23 J31 O17
    Date: 2016–05
  5. By: Giacomo Oddo (Banca d'Italia); Maurizio Magnani (Banca d'Italia); Riccardo Settimo (Banca d'Italia); Simonetta Zappa (Banca d'Italia)
    Abstract: This paper examines the determinants of outgoing remittances from Italy and presents a methodology for quantifying the share of remittances not sent via official intermediaries (money transfer operators, banks, post offices) but transferred through informal channels and hence not measured and not included in official data. The existence of invisible flows can be inferred from the positive and statistically significant empirical relation between distance of the recipient country and average per capita remittance, after controlling for all other relevant explanatory variables. Such a relation should be null or non-significant if flows were observed in their entirety. Exploiting this empirical relation and relying on the detailed geographical breakdown of the data collected by the Bank of Italy, our proposed methodology estimates the informal channel to account for between 10 and 30 per cent of total outflows, mostly directed to countries closer to Italy. Our analysis shows a reduction in the share of informal remittances on total outflows: over the ten-year observation period it has shrunk by about 20 per cent.
    Keywords: remittances, immigration, balance of payments
    JEL: F22 F24 O15
    Date: 2016–06
  6. By: Ali,Daniel Ayalew; Deininger,Klaus W.; Duponchel,Marguerite Felicienne
    Abstract: Rwanda's completion, in 2012/13, of a land tenure regularization program covering the entire country allows the use of administrative data to describe initial performance and combine the data with household surveys to quantify to what extent and why subsequent transfers remain informal, and how to address this. In 2014/15, annual volumes of registered sales ranged between 5.6 percent for residential land in Kigali and 0.1 percent for agricultural land in the rest of the country; and US$2.6 billion worth of mortgages were secured against land and property. Yet, informality of transfers in rural areas remains high. Decentralized service provision and information campaigns help reduce but not eliminate the extent of informality. A strategy to test the efficacy of different approaches to ensure full registration, scale up promising ones, and rigorously monitor the effect of doing so is described.
    Keywords: Rural Land Policies for Poverty Reduction,Land Use and Policies,Municipal Housing and Land,Common Property Resource Development,Land and Real Estate Development
    Date: 2016–06–16

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