1 A survey for measuring underreporting of data based on tax inspectors - Tajikistan - Joint UNECE/Eurostat/OECD Meeting on National Accounts and Working Group on the Impact of Globalisation on National Accounts (Geneva, April 2008) Anders Nordin Agenda item 1a Paper no. 7

2 Content of presentation Approaches for measuring underreporting of data Setting up of a survey for measuring underreporting of data in Tajikistan Conclusions and recommendations

3 Underreporting of data: approach 1 To undertake a survey based on the opinion of company managers including companies with few employees Inclusion of a variety of branches of activity including those related to services Requires a sufficient number of companies

4 Underreporting of data: approach 1 Limitation: Surveys based on managers’ opinions are unlikely to give fully satisfactory results of underreporting of production or profits even if anonymity is guaranteed.

5 Underreporting of data: approach 2 Option 1 (tax audit data): Tax audit data often give quite successful results when estimating underreporting as audited enterprises can not refuse to respond questions about underground activity (and obliged to provide complete set of accounts)..

6 Underreporting of data: approach 2 Option 1(tax audit data): But rarely conducted on a random basis as tax officers generally target their fiscal controls towards enterprises where risks of underground activities are the largest and towards certain activity sectors or geographical areas.

7 Underreporting of data: approach 2 Option 2 ( Survey based directly on tax inspectors): Register tax inspectors in order to build the frame. Then decide if one carries out a census survey (including all the tax inspectors) or a sampling survey including only some of the tax inspectors.

8 Underreporting of data: approach 2 The most appropriate solution to ask a set of question directly to the tax inspectors. The types of questions would be broadly similar to the set of questions asked to company managers.

9 A survey for measuring underreporting of data in Tajikistan The State Committee on Statistics of the Republic of Tajikistan proposed an approach for carrying out a sample survey of tax inspectors to estimate for the underreporting of data in four regions.

10 A survey for measuring underreporting of data in Tajikistan Totally 1277 tax inspectors in Tajikistan. Out of these a sample of 10% (128 inspectors) has been selected. The survey was conducted in four regions: 1.Dushanbe (4 sub-regions) 2.Kurgantube 3.Tursunzade 4.Rudaki

11 A survey for measuring underreporting of data in Tajikistan General questions in the survey: Number and share of enterprises controlled Proportion of tax returns controlled? Amounts of taxable income of the tax returns controlled? Control of tax declarations presented by unincorporated enterprises (physical persons)?

12 A survey for measuring underreporting of data in Tajikistan Specific questions relating to National Accounts: Amount of conducted works and services not declared? What is the share of fake purchases of goods and services included in the operating cost and services in order to increase the de ductible VAT?

13 Setting up of a survey for measuring underreporting of data in Tajikistan Specific questions on National Accounts according to controls: What is the share of salaries hidden from taxation? Opinion about non-paid taxes by type of tax? (VAT, income taxes, property taxes, land taxes and social taxes)

14 Conclusions and recommendations A direct method with company managers is likely to have few correspondents and biased results An indirect method directed to tax officers A set of similar questions as those directed to company managers

15 Conclusions and recommendations Although the result might not be extrapolated to Tajikistan as a whole, it will nevertheless be a good indicator of the scope of underreporting in the country. For a comparison purpose it would be also interesting to work directly on the tax audits to be able to establish coefficient corrections based on quantitative data and not anymore on “rather” subjective answers.

16 Conclusions and recommendations The results of the tax officer survey may give additional information that may serve other purposes than just for adjusting National Accounts, e.g.: Efficiency of the tax system Proportion of expected taxes actually collected The survey may also be used for scientific purposes.