Modeling Corporate Tax Risk: Evidence from Portugal

40 Pages Posted: 25 Nov 2012

See all articles by João Batista

João Batista

Universidade do Porto - Faculdade de Economia (FEP)

António Cerqueira

Universidade do Porto - Faculdade de Economia (FEP)

Elisio Brandao

Universidade do Porto - Faculdade de Economia (FEP)

Date Written: November 21, 2012

Abstract

Given the current Portuguese economic and financial situation, it becomes increasingly necessary to safeguard the credits of the State. Thus, this study aims to analyze the risk of tax non-compliance, specifically in companies in the sector of real estate agencies. To achieve this goal, we use confidential data from the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira-AT) for the period from 2007 to 2009, as well as data on the AT major debtors, with debt amounts exceeding € 100,000. In this research, we use two of the methodologies that have been employed in studies of financial distress: Discriminant Analysis and Logistic Regression. After testing 28 financial indicators, five variables were selected to include in the empirical model: financial profitability, total asset turnover, liquidity, debt and tax burden. We were able to identify the profile of the companies with the highest risk of tax non-compliance.

Keywords: tax non-compliance, discriminant analysis, logit model

JEL Classification: H25, H26, M41

Suggested Citation

Batista, João and Cerqueira, António and Brandão, Elísio Fernando Moreira, Modeling Corporate Tax Risk: Evidence from Portugal (November 21, 2012). Available at SSRN: https://ssrn.com/abstract=2179068 or http://dx.doi.org/10.2139/ssrn.2179068

João Batista

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Porto
Portugal

António Cerqueira (Contact Author)

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Elísio Fernando Moreira Brandão

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

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