Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241066 
Year of Publication: 
2019
Series/Report no.: 
MNB Occasional Papers No. 137
Publisher: 
Magyar Nemzeti Bank, Budapest
Abstract: 
In order to reduce the shadow economy, in 2013 and 2014 the Hungarian government introduced mandatory online cash registers (OCR) in some sectors. As a result, almost 200,000 OCRs have been installed by 100,000 enterprises. In this paper we use micro data to estimate the effect of OCR introduction on reported turnover in the most affected sectors: retail, and accommodation and food services (AFS). We assume that OCR installation does not change a company's operating model, so the increase in reported turnover around the installation date reflects a reduction in the shadow economy. We identify a remarkable effect of OCR introduction on reported turnover in both sectors. For small enterprises, reported turnover increased by 23 percent and 35.1 percent in the retail and AFS sector, respectively. We also find significant but smaller effects for medium-sized enterprises in both sectors. For large companies, we only observe a significant impact in the AFS sector.
Subjects: 
Value Added Tax
Tax Evasion
Shadow Economy
JEL: 
E26
H25
H26
Document Type: 
Working Paper

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