The effect of tax auditing in the fight against the informaleconomy

The informal economy is that individuals who are engaged in economic and commercial activities do not record officially their activities and keep their income from the control of the state. The existence of an informal economy in a country prevents the accurate calculation of economic indicators such as gross national product in that country. In order to ensure that the applied economic and fiscal policies are effective and efficient, the rate of informal economy must be reduced. In order to reduce the rates of informal economy firstly, the factors causing the informal economy should be identified and solutions should be sought to eliminate these factors. Tax auding is an effective method in the fight against the informal economy. While tax revenues that are deprived of the state during the audit are collected, the cost of tax evasion is increased by creating a dissuasive effect on other taxpayers who are concerned about being audited. In this study, definition of informal economy, the factors that cause the informal economy and the situation in Turkey, measurement methods of informal economy are explained, informal economy rates in OECD countries and the performance of tax auditing in combating informal economy in some of OECD countries is evaluated.