Tax Evasion and Company Survival: A Brazilian Case Study

Enterprises face significant growth and survival challenges in highly competitive markets. Many companies fail to meet their tax obligations, which deprives society of essential resources and often results in tax penalties. This article examines whether companies that receive tax fines for evasion have a longer or shorter life expectancy compared to those that consistently comply with tax regulations. To analyze survival rates, the Kaplan–Meier estimator and Cox regression model were applied, considering factors such company size, sector, location, and tax evasion fines. The study included data from 11,297 firms established in 2017, in Rio Grande do Sul, Brazil. The findings indicate that companies fined for tax evasion had a higher survival rate (69%) compared to those without fines (38%) by 2023. This suggests that fines might serve as a corrective measure, helping companies realign and improve their chances of survival. Additionally, the study shows that medium-sized enterprises face significant challenges, possibly due to exceeding the limits of a simplified tax regime. This study highlights the importance of continued research across different regions and countries to validate these findings and enhance tax administration strategies.

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Publication Details

Journal
Economies
Published
2024-10-25
DOI
https://doi.org/10.3390/economies12110286
Citations
3
Primary Topic
Taxation and Compliance Studies
Type
article
Field-Weighted Citation Impact
3.39
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article

Tax Evasion and Company Survival: A Brazilian Case Study

Jorge Luis Tonetto, Josep Miquel Piqué, Adelar Fochezatto, Carina Rapetti
3 citations
Economies
Taxation and Compliance Studies
3.39
article

Tax Evasion and Company Survival: A Brazilian Case Study

Jorge Luis Tonetto, Josep Miquel Piqué, Adelar Fochezatto, Carina Rapetti
article en
3 citations

Abstract

Enterprises face significant growth and survival challenges in highly competitive markets. Many companies fail to meet their tax obligations, which deprives society of essential resources and often results in tax penalties. This article examines whether companies that receive tax fines for evasion have a longer or shorter life expectancy compared to those that consistently comply with tax regulations. To analyze survival rates, the Kaplan–Meier estimator and Cox regression model were applied, considering factors such company size, sector, location, and tax evasion fines. The study included data from 11,297 firms established in 2017, in Rio Grande do Sul, Brazil. The findings indicate that companies fined for tax evasion had a higher survival rate (69%) compared to those without fines (38%) by 2023. This suggests that fines might serve as a corrective measure, helping companies realign and improve their chances of survival. Additionally, the study shows that medium-sized enterprises face significant challenges, possibly due to exceeding the limits of a simplified tax regime. This study highlights the importance of continued research across different regions and countries to validate these findings and enhance tax administration strategies.

EconomiesVol. 12(11)
Pontifícia Universidade Católica do Rio Grande do Sul (BR), Universitat Ramon Llull (ES)
Openalex Percentile: Top 6%
Taxation and Compliance Studies
3.39
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