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The Impact of Establishing the Special Audit Office on the Tax Evasion

Mardan, Mohammad Ali | 2025

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 58400 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Vesal, Mohammad
  7. Abstract:
  8. This study aims to evaluate the impact of establishing the Special Audit Directorate (Large Taxpayers Unit) on the tax behavior of corporations in Iran. The research data were collected from corporate tax returns, covering all firms subject to the national tax system at the firm–year level during 2017–2023. Altogether, a large and comprehensive dataset was compiled, enabling a precise comparison of the pre- and post-policy periods. To identify the net effect of the policy, a quasi-experimental design was employed, combining the difference-in-differences approach with propensity score matching. Structural and financial characteristics of firms—including size, profitability, capital structure, and liquidity—along with time effects were controlled for in the models. The findings indicate that although the establishment of the Special Audit Directorate intensified the process of tax assessment and increased certain tax-related items linked to audit and determination, it did not lead to a statistically significant reduction in tax evasion. Furthermore, no persistent effect was observed on operating or net profitability indicators. In conclusion, the policy of concentrating audits on large taxpayers alone has not proven sufficient to reduce tax evasion, and its effectiveness depends on the quality of implementation as well as complementary reforms in informational and supervisory infrastructures
  9. Keywords:
  10. Difference-in-Difference Method ; Propensity Score Matching ; Tax Evasion ; Special Audit Directorate ; Large Taxpayers Unit

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