Digital Shadow Economy – Literature Review

The virtual environment is a phenomenon that has grown exponentially in recent years, changing the way the economy evolves. Through e-commerce, social media platforms, online stores, or websites, financial resources are rolled both legally and illegally. Thus, some transactions are not accounted for or taxed, and also the concept of the digital shadow economy, defined as economic shadow activities conducted in electronic space, with no physical contact is increasingly present today. This paper aims to review and systematically analyze, through bibliometric analysis, using the Web of Science scientific platform and the VOSviewer software, the notion of digital shadow economy, determining the current state of knowledge in the field. Also, a comparative research was performed between digital shadow economy and the traditional shadow economy. The main findings reveal that digital shadow economy has a novelty character that refers to an economy based on digitized services and products, which escapes the official estimates of the GDP and the main research tendencies concern the conceptualization of the term and its main activity channels, aspects that distinguish it from traditional shadow economy. Furthermore, a thematic cluster, containing links to the digital shadow economy term can be noticed to be around cybercrimes.

Macroeconomic fundamentals, institutional quality and shadow economy in OIC and non-OIC countries

PurposeThe purpose of this paper is to analyze the relationship between macroeconomic fundamentals, intuitional quality and shadow economy.Design/methodology/approachBy utilizing data setspanning from 2004 to 2015 of 141 countries, the study has employed advanced panel technique, i.e. Generalized Method of Moments (GMM) method. In order to check consistency of the results, the study also used fixed effect and random effect for robustness.FindingsThe study finds that for the full sample, institutional quality has negative effect on shadow economy while macroeconomic fundaments effect shadow economy differently. After splitting the sample into Organization of Islamic Cooperation (OIC) and non-OIC countries subsamples, it observes same influence of macroeconomic fundaments and institutional quality on shadow economy, but the effect of macroeconomic fundaments and institutional quality on shadow economy is less observed for OIC countries. The results are found consistence by using different estimation methods.Originality/valueThe current literature has focused on estimating the size of shadow economy and literature linking the macroeconomic fundaments, institutional quality and shadow economy is scarce. Additionally, this study provides the evidence for cross comparison between OIC economies and non-OIC economies.

UNDERSTANDING THE ‘SHADOW ECONOMY’ IN SMES – A MALPRACTICE FROM INDONESIA, 2009-2020

<p>Concerns about the shadow economy in Indonesia, estimated to have hurt GDP by around 25% per year. We try to calculate the effect of the components involved in tax revenue caused by the shadow economy because we projected it to hinder the growth of SMEs. It aimed the orientation at Indonesia. We got data coverage from official institutions of national and international related to variable limits. We observe the development in the period 2009-2020, which requires linear regression analysis methods and non-linear logistic regression. The results confirm that among the six hypotheses we propose, five hypotheses are acceptable, i.e. FDI has a significant effect on the share of SMEs, corruption perceptions and control of corruption have a significant effect on income and profit taxes, then it also has a significant effect on the shadow economy, and the shadow economy also has an effect significant to tax revenue. From other findings, only the share of SMEs has no significant effect on income and profit taxes. The added value of this empirical finding can reduce the weaknesses of previous studies that predominantly consider financial (tax) and economic dimensions so that variables such as SMEs, corruption control, and public perceptions of corruption.</p>

The role of tax accounting as a tool in light of the problematic shadow economy in the Kingdom of Saudi Arabia

The increasing phenomenon of the shadow economy is progressing dramatically in the absence of State culture among officials, whether legislators or implementers, in the absence or ineffectiveness of an organized production sector. Non-compliance with tax accounting procedures is one of the first problems generated by the shadow economy and most difficult not to include it in national output. The lack of tax commitment in the shadow economy leads to an annual tax gap of billions of dollars, if there is no logical interest on the part of the taxing bodies in developing countries, and if domestic and international tax provisions and legislation are not amended to consider of these important economic developments, and how to keep up with this. The issue of the shadow economy is thorny, and the practical way to raise the revenue needed to finance government spending on the goods and services required by society lies in the local and international tax treatment at the technical and legislative levels. Consequently, the current tax systems and their related regulations must be prepared, whether at the technical or legislative level, especially in light of the flow rate of oil barrels and the alternative if it comes into force. The taxation processes allow time to study the tax accounting and tax and take what suits the Saudi environment from them - lessons for the Kingdom of Saudi Arabia, Critical terms for research/shadow economy, tax regulations and systems, tax gab, tax accounting.

DOES THE SHADOW ECONOMY AFFECT FOREIGN DIRECT INVESTMENT? CASE STUDY OF POLAND AND POLISH REGIONS

The main goal of the research was to identify the relationship between the level of shadow economy and Foreign Direct Investment. The research was carried in Poland and Polish regions during 1990-2020. MIMIC approach was employed to calculate the level of shadow economy as a % of Polish and regional GDP. Pearson correlation index and Kolmogrov-Smirnov test were applied as well. The study proved there is a sound negative correlation (-0,636) between the shadow economy and foreign direct investment in Poland, but regional associations between those two variables demonstrated different results. Unlike in other Polish provinces, in Opolskie and Podkarpackie the correlation index confirmed a positive association between the level of shadow economy and FDI flow.

ПРИЧИНЫ ВОЗНИКНОВЕНИЯ ТЕНЕВОЙ ЭКОНОМИКИ

Данная работа посвящена исследованию такой проблемы, как теневой сектор экономики, развитие теневой экономики, а также ее влияние на протекание основных экономических процессов: формирование и распределение дохода, торговлю, инвестирование и экономический роста в целом. This work is devoted to the study of such problems as the shadow sector of the economy, the development of the shadow economy, as well as its impact on the course of the main economic processes: the formation and distribution of income, trade, investment and economic growth in general.

Theoretical approaches to defining the shadow economy

Subject. This article explores the forms of the shadow economy. Objectives. The article aims to identify conceptual differences between approaches to defining the shadow economy notion. Methods. For the study, we used logical, comparative, and content analyses. Results. The article finds that the concept of the shadow economy includes both illegal activities, which contradict the spirit and letter of the law, and legal activities, through using illegal tools and methods to maximize profits or minimize costs. Conclusions. Social, legal, and economic factors determine the development of the shadow economy. Whether money comes back to the legal economy sector or not, it depends on the form of the shadow economy. To define the essence of the shadow economy, a comprehensive approach is required.