Measuring true sales and underreporting with matched firm-level survey and tax-office data [electronic resource] / Fujin Zhou
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TextPublication details: Washington, D.C., The World Bank, 2011Description: 1 online resource (48 p.)Subject(s): Debt Markets | Economic Theory & Research | Emerging Markets | Investment Climate | Macroeconomics and Economic Growth | Microfinance | Mimic | Poverty Reduction | Tax Compliance Model | Taxation & Subsidies | UnderreportingAdditional physical formats: Zhou, Fujin.: Measuring true sales and underreporting with matched firm-level survey and tax-office data.Online resources: Click here to access online Abstract: This paper uses firm-level survey data matched with official tax records to estimate the unobserved true sales of formal firms in Mongolia. Taking into account firm-level incentives to comply with taxes and a production function technology linking unobserved true sales with observable firm-level production characteristics, the authors derive a multiple-indicators, multiple-causes model predicting unobserved true sales. Comparing predicted true sales with sales reported to the tax office, the analysis finds that 38.6 percent of firm-level sales are underreported. It also finds evidence that firm-level survey data suffer from significant underreporting. Finally, the paper compares this approach with two alternative approaches to measuring underreporting by firms.
This paper uses firm-level survey data matched with official tax records to estimate the unobserved true sales of formal firms in Mongolia. Taking into account firm-level incentives to comply with taxes and a production function technology linking unobserved true sales with observable firm-level production characteristics, the authors derive a multiple-indicators, multiple-causes model predicting unobserved true sales. Comparing predicted true sales with sales reported to the tax office, the analysis finds that 38.6 percent of firm-level sales are underreported. It also finds evidence that firm-level survey data suffer from significant underreporting. Finally, the paper compares this approach with two alternative approaches to measuring underreporting by firms.
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