Determinants of Corporate Tax Evasion in Latin America

This paper investigates the determinants of tax evasion by exporting firms in a sample of Latin American countries. After a review of the selected literature, the paper presents the results of the estimation of equations that explain this type of tax evasion in terms of variables related to corruption and business climate. Among the most outstanding results are that tax evasion decreases with the government’s capacity to control corruption and with economic growth, while it increases with the opening of the economy, inflation, and the expansion of credit to the private sector. The paper also discusses other aspects of tax evasion, such as its role in the homicide rate and remittances. The paper concludes with a series of conclusions and recommendations.