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Asatryan, Zareh; Peichl, Andreas (30. October 2017): Responses of Firms to Tax, Administrative and Accounting Rules. Evidence from Armenia. CESifo Working Paper No. 6754
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Abstract

Using panel data on the full population of corporate tax returns from Armenia, we study behavioral responses of firms to three size-dependent regulations. We find: i) a strong response to an accounting notch where IFRS becomes mandatory; ii) a moderate response to an administrative notch below which the frequency of filing taxes declines; and iii) no response to the VAT registration threshold notch. Exploiting tax audits, we provide evidence suggesting that income under-reporting drives the bunching response of firms. Additional evidence suggests that firms respond to audits by compensating additional reported income by a 0.90 dollar increase in deductions.