Authors: Antonios Sarantidis, Panagiotis Vlahos

Title: The impact of Fiscal Audits on the collectability of Direct and Indirect Taxes

Abstract

This paper focuses on the ralationship between taxes and fiscal audits. The aim is to analyze and to estimate the impact that fiscal audits have on the State's collectability of direct and indirect taxes. The sample is based on time series data with monthly observations, spanning from 2013 to 2015 for the single country of Greece. The empirical part utilizes Granger causality tests and OLS regressions. Furthermore, we analyzed the possible alterations that direct and indirect taxes have across six different business sectors. We defined fiscal audits as the monthly number of audits that were conducted by the Greek Ministry of Finance to various firms. The empirical results suggest that a possible increase on the fiscal audits of businesses by the Ministry of Finance leads to a collectability increase of direct and indirect taxes. The research contributes to the literature by providing to researchers and policy makers empirical evidence on the effect that fiscal audits have on taxes.