Authors: Stavroula Skiadopoulou, Evangelos Koumanakos

Title: E-filling of tax returns of legal entities with credit balance

Abstract

Using a sample of Greek confidential corporate tax return data combined with financial statements, we examine the impact of e-filling of tax returns on future compliance. By applying a difference-in-differences research design, we find that firms that had a credit balance in the period 2013-2016 where e-filing of tax returns with credit balance was first implemented, are less tax aggressive than firms that paid income taxes in the same period but had a credit balance in their tax returns in the previous period (2010-2012) (Panel A) or had not any credit balance in their tax returns throughout the period 2010-2016 (Panel B). This study contributes to the existing literature on tax compliance by documenting that the adoption of an electronic tax system for the submission of income tax returns of legal entities with a credit balance combined with the simultaneous operation of risk analysis criteria for the automated selection of tax returns for audit has a positive impact on the reduction of tax aggression.

JEL Classification: H26, L51, and M41