An Empirical Analysis of Tax Evasion among Companies Engaged in Stablecoin Transactions

This research investigates the relationship between stablecoin usage and tax evasion. We present a model that includes variables related to transactions such as intensity, frequency, environment on-chain (P2P) vs. off-chain (IntraVasp), and company characteristics such as age, sector, and size. Our...

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Bibliographic Details
Published in:Journal of risk and financial management 2024-09, Vol.17 (9), p.400
Main Authors: Moura de Carvalho, Rubens, Inácio, Helena Coelho, Marques, Rui Pedro
Format: Article
Language:English
Subjects:
Behavior
Blockchain
Compliance
Digital currencies
Peer to peer computing
Services industry
Small & medium sized enterprises-SME
Tax administration and procedure
Tax evasion
Taxes
Transition economies
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Summary:This research investigates the relationship between stablecoin usage and tax evasion. We present a model that includes variables related to transactions such as intensity, frequency, environment on-chain (P2P) vs. off-chain (IntraVasp), and company characteristics such as age, sector, and size. Our model was empirically tested using a logistic regression based on data from the Brazilian Federal Revenue Service (Receita Federal do Brasil (RFB)) in 2021. This novel approach aims to understand the tax behaviours associated with stablecoin use in corporate financial practices. Our results indicate that the intensity, frequency, environment of transactions (specifically IntraVasp and P2P transactions), age, sector, and size are factors significantly associated with tax evasion behaviour. However, we found no evidence to suggest that firms engaging in only P2P transactions have a higher propensity for tax evasion than those engaging only in IntraVasp transactions. Our findings reveal that younger and medium-sized companies with intensive use of stablecoin, with high stablecoin transaction frequency, engaging in IntraVasp and P2P transactions, and belonging to the service sector are more likely to evade tax. Therefore, our research provides a detailed understanding of how digital financial practices with crypto assets (blockchain-based technology) intersect with corporate tax strategies, which can offer valuable insights for regulators, industry practitioners, and policymakers.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm17090400