Effects of supervision on tax compliance: Evidence from a field experiment in Austria (2013)

The tax compliance literature has mainly focused on individual tax evasionrather than firm tax evasion. In general, there is a lack of field experiments on the topic, and measuring tax compliance is challenging. To address this shortcoming in the literature, we conduct a field experiment on firm tax compliance looking at newly founded firms. As a novelty we explore how firms react to closer supervision by the tax administration, looking at timely paying which has no measurement biases. Interestingly, we observe a crowding-out effect of supervision on timely paying of taxes. On the other hand, for those who were non-compliant, supervision reduced the tax amount that was due.

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Gangl Katharina, Hofmann Eva, Kirchler Erich, Torgler Benno