VAT Rates and Tax Evasion: Evidence from the Restaurant Industry in Greece

  title={VAT Rates and Tax Evasion: Evidence from the Restaurant Industry in Greece},
  author={Nikolaos T. Artavanis},
  journal={ERN: Tax Evasion (Topic)},
This paper examines the effect of value-added tax (VAT) rates on tax evasion in an environment of limited tax-shifting opportunities. I focus on the recent rate reduction in the Greek restaurant industry (August 2013) and implement a difference-in-difference methodology using large fast-food restaurants as the control sample, due to the fact that they exhibit high constraints on underreporting. I find that the rate reduction for non-alcoholic sales, from 23% to 13%, significantly increases… 
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