Using household budget expenditure approach to evaluate tax evasion of Self-employment groups in Iran

We use budget expenditure approach to evaluate tax evasion of Self-employments in Iran. As Self-employment guilds covers various jobs, we choose dentists a sample. Facing limited data access, we use household budget expenditure in2016. Although it is impossible to explain tax evasion and potential of one expert, we use household budget expenditure approach for the first time to evaluate tax evasion in Iran. At first, income of dentists’ society has been calculated; then using the rule of tax law, we evaluate the income tax they should pay. Finally, we compare real income tax paid with calculated income tax to extract the tax evasion. As there is not a unique data for the number of dentists in Iran, and two national responsible institutions have two different data, we define two scenarios. The numbers of dentists are considered 20405 and 26301 persons in the first and the second scenarios, respectively. We found that in both scenarios, similar to other countries in the world, such as the united states, England, Italy, Russia, and Greek, self-employed individuals have high level of tax evasion and it is necessary to boost the efficiency of Iranian tax system in through the rise of government expenditure transparency and also decline of tax evasion.