Tax Evasion in Iran: its Causes, Effects and Estimation

The main objective of the present study is to estimate the size of tax evasion in the economy of Iran. The present study applies the multiple indicators; multiple causes (MIMIC) methodology in Iran economy for the period between 1970 and 2007. The results show that the size of tax evasion has fluctuations during 1970 and 2007 and the size of tax evasion is increasing. The results show that tax burden، the size of government، taxpayers’ income، inflation rate and unemployment rate are the main causes of extension of tax evasion in Iran. The most important causes of tax evasion، which lead to the high extension of tax evasion، are the size of government، tax burden and taxpayers’ income.