Combatting Tax Evasion and Increasing Financial Transparency in the Time of COVID­19: The Case of Paraguay

Authors: Pierri, Gastón; Best, Michael; Blanco, Roberto; Monreale, José

Reducing tax evasion is one of the main objectives of countries, especially less­developed
countries with fewer resources. The literature has studied various tools to deal with tax evasion, but the results have been inconclusive. In addition, most of the evidence comes from
developed countries. To contribute to addressing this gap, this study presents evidence on
the impact of audit programs on the reduction of tax evasion in Paraguay. Using the synthetic difference­in­differences methodology, the study evaluates the effect of the audits on
declared sales, the reduction of purchases, and the payment of taxes by firms during the
2018–2019 period. In addition, results are presented on the use of a tax dashboard that
identifies discrepancies in declarations by firms. The findings show that the audits are effective in addressing tax evasion, and that the dashboard can orient criteria for more efficient
fiscal control, which is particularly important during the time of COVID-19. It is thus shown
that in less­developed countries, governmental auditing activities are key to improving tax

Ver en formato PDF