Data and Code for: Ghosting the Tax Authority: Fake Firms and Tax Fraud in Ecuador

Principal Investigator(s): View help for Principal Investigator(s) Paul Carrillo, George Washington University; Dave Donaldson, Massachusetts Institute of Technology and NBER; Dina Pomeranz, University of Zurich and CEPR; Monica Singhal, University of California, Davis, and NBER

Version: View help for Version V1

Name	File Type	Size	Last Modified
2_shared			07/21/2023 08:54:AM
Codebook.pdf	application/pdf	35.9 KB	05/19/2023 06:30:AM
Log_File.pdf	application/pdf	3.2 MB	03/27/2023 06:24:AM
ReadMe.pdf	application/pdf	497.4 KB	07/31/2023 07:15:AM

Project Citation:

Carrillo, Paul , Donaldson, Dave , Pomeranz, Dina , and Singhal, Monica . Data and Code for: Ghosting the Tax Authority: Fake Firms and Tax Fraud in Ecuador. Nashville, TN: American Economic Association [publisher], 2023. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2023-11-27. https://doi.org/10.3886/E183084V1

Project Description

Summary:

Code repository for: Carrillo, P., Donaldson, D., Pomeranz, D. and Singhal, M., 2022. Ghosting the Tax Authority: Fake Firms and Tax Fraud.

Contents: Contains the data creation and analysis code for the project.

Abstract: 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. 5% of firms use ghost invoices annually and, among these firms, ghost transactions comprise 14% of purchases. Ghost transactions are particularly 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.

Funding Sources: Swiss National Science Foundation and the European Research Council; University Research Priority Program (URPP Equality of Opportunity) of the University of Zurich

Scope of Project

Subject Terms: tax fraud; tax evasion; ghost firms

JEL Classification:
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H26 Tax Evasion and Avoidance
      H32 Fiscal Policies and Behavior of Economic Agents: Firm

Geographic Coverage: Ecuador

Time Period(s): 2010 – 2015

Collection Date(s): 6/1/2010 – 6/1/2018 (The administrative data was received in several rounds between 2010 and 2018.)

Universe: Economically active firms that are required to file purchase annexes in Ecuador.

Data Type(s): administrative records data

Collection Notes: N/A

Methodology

Response Rate: N/A

Sampling: In Ecuador, corporations file the corporate income tax form (F101), while sole proprietorships file a combined business and individual income tax return (long form F102). The sample includes these, and also smaller sole proprietorships that file purchase annexes because they want to deduct itemized costs (short form F102). Most of the analyses restrict the sample to F101 and F102-long-form filers, the only exception being part of the distributional analysis (Figures 1, A1, A4, A5 and A7), which also includes the short-form F102 filers. Furthermore, the sample is restricted to economically active firms. This results in a list of 216, 578 unique economically active firms for the entire 2010–2015 period.

Data Source: The administrative data for this project is owned by the Ecuadorian Internal Revenue Service (SRI) and it was made available to the authors for the purpose of this project.

Collection Mode(s): other

Scales: N/A

Weights: N/A

Unit(s) of Observation: Economically active firms

Geographic Unit: Ecuador

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Published Versions

V1 [2023-11-27]

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