USING BENFORD’S LAW TO DETECT TAX EVASION IN MICRO-ENTERPRISES IN SERBIA
Abstract:
The subject matter of this paper is to analyse the tax evasion by micro-enterprises in Serbia in respect of income tax. By applying Benford’s law, we will empirically determine the degree of authenticity of the revenues disclosed by micro-enterprises in their financial statements and whether the tax base to which income tax is paid is disclosed realistically. The research was conducted on a sample of 45 microcompanies and analysis of their financial statements for the period from 2017 to 2019. The research results show that micro-enterprises in Serbia, for the most part, disclose their net income realistically and in accordance with Benford’s law, meaning they don’t show the tendency to underestimate their income with the aim to pay lower taxes or avoid paying them entirely. However the worrying results were obtained when the operating profit was tested. The findings of this research may yield great benefits both to auditors and tax authorities.
CITATION:
IEEE format
M. Milojević, I. Terzić, S. Stanišić, “Using Benford’S Law to Detect Tax Evasion in Micro-Enterprises in Serbia,” in FINIZ 2020 - People in the focus of process automation, Belgrade, Singidunum University, Serbia, 2020, pp. 32-38. doi: 10.15308/finiz-2020-32-38
APA format
Milojević, M., Terzić, I., Stanišić, S. (2020). Using Benford’S Law to Detect Tax Evasion in Micro-Enterprises in Serbia. Paper presented at FINIZ 2020 - People in the focus of process automation. doi:10.15308/finiz-2020-32-38
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