Publication: Measuring True Sales and Underreporting with Matched Firm-Level Survey and Tax-Office Data
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Date
2011-04-01
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Published
2011-04-01
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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.
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“Zhou, Fujin; Oostendorp, Remco. 2011. Measuring True Sales and Underreporting with Matched Firm-Level Survey and Tax-Office Data. Policy Research working paper ; no. WPS 5628. © World Bank. http://hdl.handle.net/10986/3394 License: CC BY 3.0 IGO.”
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