Description: The Informality Trap : Tax Evasion, Finance, and Productivity in Brazil

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The Informality Trap : Tax Evasion, Finance, and Productivity in Brazil

This Note highlights the adverse consequences of informality for private sector development and explains what governments can do about it. It uses new data from the World Bank's Investment Climate Survey in Brazil that show for the first time...

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Bibliographic Details
Main Authors:	Kapaz, Emerson, Kenyon, Thomas
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCURATE INFORMATION AFFILIATED ORGANIZATIONS COMPANY COMPETITORS CUSTOMS AUTHORITIES DEVICES ELECTRONICS EMPLOYMENT ENTREPRENEURS FEDERAL TAXES FIRM SIZE FIRMS GOVERNMENT REGULATIONS INNOVATIONS INTERNAL REVENUE INVESTMENT CLIMATE INVESTMENT CLIMATE ASSESSMENT LAWYERS MANUFACTURERS PROFITABILITY PUBLIC POLICY INNOVATIONS REGULATORY BURDEN SALES TAX SHOPS SMALL BUSINESS SMALL ENTERPRISES TAX ADMINISTRATION TAX AUTHORITIES TAX BANDS TAX BASE TAX BURDEN TAX COLLECTION TAX COMPLIANCE TAX ENFORCEMENT TAX EVASION TAX OBLIGATIONS TAX RATES TAX REFORM TAXATION TELECOMMUNICATIONS TRANSPARENCY
Online Access:	http://documents.worldbank.org/curated/en/2005/12/6567442/informality-trap-tax-evasion-finance-productivity-brazil http://hdl.handle.net/10986/11201

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Summary:	This Note highlights the adverse consequences of informality for private sector development and explains what governments can do about it. It uses new data from the World Bank's Investment Climate Survey in Brazil that show for the first time the extent of tax evasion and confirm that informal firms are less productive and less likely to access financial markets than other firms. It also provides some advice on how to tackle the problem-by emphasizing the benefits of regulatory compliance, reducing the costs of going formal, and tightening up enforcement.