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Ghosting the tax authority: fake firms and tax fraud in Ecuador

Carrillo, Paul; Donaldson, Dave; Pomeranz, Dina; Singhal, Monica (2023). Ghosting the tax authority: fake firms and tax fraud in Ecuador. URPP Equality of Opportunity Discussion Paper Series 12, University of Zurich.

Abstract

An important but poorly understood form of firm tax evasion arises from “ghost firms” - fake firms that issue fraudulent receipts so that their clients can claim false deductions. We provide a unique window into this global phenomenon using transaction-level tax data from Ecuador. 5% of firms use ghost invoices annually and, among these firms, ghost transactions comprise 14% of purchases. Ghost transactions are particularly prevalent among large firms and firms with high-income owners, and exhibit suspicious patterns, such as bunching below financial system thresholds. An innovative enforcement intervention targeting ghost clients rather than ghosts themselves led to substantial tax recovery.

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > URPP Equality of Opportunity Discussion Paper Series
08 Research Priority Programs > Equality of Opportunity
Dewey Decimal Classification:330 Economics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:February 2023
Deposited On:05 Jan 2024 13:20
Last Modified:13 Mar 2024 14:53
Series Name:URPP Equality of Opportunity Discussion Paper Series
Number of Pages:22
OA Status:Green
Official URL:https://www.urpp-equality.uzh.ch/dam/jcr:5e1cd797-80c2-4091-994c-3c15b5ebc5ff/12_Ghosting_the_tax_authority.pdf
Related URLs:https://www.urpp-equality.uzh.ch/en/Discussion-Paper-Series.html
https://www.zora.uzh.ch/id/eprint/255427/
https://doi.org/10.1257/aeri.20220321
Other Identification Number:merlin-id:24222
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