Bribes and Business Tax Evasion

This paper investigates the role of governance, in particular tax related bribes, in shaping business tax compliance behavior. The empirical results show that business noncompliance rises with corruption. More specifically, the findings from 27 transition economies suggest that tax evasion thrives when bribes to tax officials are commonplace. These findings are robust to a number of specifications that control for firm and country attributes. They also highlight the potential endogeneity of bribes