How are the Underground Economy Levels in Indonesia?

DOI

10.2991/aebmr.k.210311.054How to use a DOI?

Keywords

Tax Burden, Inflation, Tax Potential, Underground Economy

Abstract

This study aims to analyze the value of the underground economy in Indonesia and the potential lost taxes due to the underground economy. The method in this study uses a monetary approach by using the variable amount of currency demand, tax burden, opportunity cost, inflation, financial innovation and GDP. The data used in this study are secondary data from quarterly time series for the period 2016 - 2019. The analysis technique used is multiple linear regression with the Ordinary Least Square (OLS) method and also the underground economy measurement equation. The results showed that the factors that have a significant influence are tax burden, financial innovation and also GDP. Meanwhile, the inflation and interest rate variables do not have a significant effect. The nominal value of underground economy in Indonesia during the 2016-2019 period is in the range of 475,634 billion to 750,839 billion or an average of 627,541 billion per quarter or equivalent to 17.65% of nominal GDP. The potential for lost taxes due to underground economic activities in Indonesia during the 2016-2019 period shows an increasing trend. In 2016, the potential tax loss was around 1,229,514 billion to 1,395,872 billion. This value continues to increase until the end of 2019, which means that the potential for state revenue is also reduced due to underground economic activities. These findings indicate that there are still many economic activities that are not detected by the government so that the potential for lost taxes is still high.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Marhamah
AU  - Zulaikha
PY  - 2021
DA  - 2021/03/13
TI  - How are the Underground Economy Levels in Indonesia?
BT  - Proceedings of the 3rd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2020)
PB  - Atlantis Press
SP  - 273
EP  - 278
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.210311.054
DO  - 10.2991/aebmr.k.210311.054
ID  - 2021
ER  -