Authors: Evangelos Koumanakos, Stavroula Skiadopoulou

Title: Enforcement actions and corporate tax avoidance

Abstract

How do corporations respond to enforcement actions? Although the literature on the effectiveness of enforcement initiatives has recently expanded, empirical evidence from businesses remains limited. Given the rampant tax avoidance and evasion in Greece, in this paper we investigate the ex post consequences of tax authorities’ audits on Greek firms behavior. To do so we combine two unique datasets: administrative corporate tax-return data with the outcomes of actual tax audits over the period 2006-2014. Rather surprisingly, applying an event study design, we find that firms significantly increase their tax aggressiveness after being audited.

Keywords: Tax enforcement; corporate tax avoidance

Jel: H26 Tax avoidance and evasion