Ghosting the tax authority fake firms and tax fraud in Ecuador by Paul Carrillo, Dave Donaldson, Dina Pomeranz and Monica Singhal
Contributor(s): Carrillo, Paul
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Material type: 
ArticleSubject(s): SOCIEDADES INTERPUESTAS | FRAUDE FISCAL | ELUSION FISCAL | ECUADOR
In:
The American Economic Review v. 5, n. 4, December 2023, p. 427-444Summary: An important but poorly understood form of firm tax evasion arises from "ghost firms"—fake firms that issue fraudulent receipts so that their clients can claim false deductions. We provide a unique window into this global phenomenon using transaction-level tax data from Ecuador. Five percent of firms use ghost invoices annually. Among these firms, ghost transactions comprise 14 percent of purchases. Ghost transactions are prevalent among large firms and firms with high-income owners and exhibit suspicious patterns, such as bunching below financial system thresholds. An innovative enforcement intervention targeting ghost clients rather than ghosts themselves led to substantial tax recovery.
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| OP 2145/2023/2-1 Should we tax capital income or wealth? | OP 2145/2023/3 The American Economic Review | OP 2145/2023/4 The American Economic Review | OP 2145/2023/4-1 Ghosting the tax authority | OP 2145/2024/1 The American Economic Review | OP 2145/2024/1-1 Interest rates and the spatial polarization of housing markets | OP 2145/2024/2 The American Economic Review |
Resumen.
Bibliografía.
An important but poorly understood form of firm tax evasion arises from "ghost firms"—fake firms that issue fraudulent receipts so that their clients can claim false deductions. We provide a unique window into this global phenomenon using transaction-level tax data from Ecuador. Five percent of firms use ghost invoices annually. Among these firms, ghost transactions comprise 14 percent of purchases. Ghost transactions are prevalent among large firms and firms with high-income owners and exhibit suspicious patterns, such as bunching below financial system thresholds. An innovative enforcement intervention targeting ghost clients rather than ghosts themselves led to substantial tax recovery.
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