what are the main factors influencing the shadow economy?
The findings of the survey show that frequent legislative changes and imposition of unnecessary costs by the state were cited by business entities as the second most important problem when doing business (a total of 41%). Webwhat are the main factors influencing the shadow economy? As legal entities mainly shift the VAT burden onto end-users, it is realistic to assume that most of them refer to the fiscal burden on labour when discussing fiscal burdens in general. If the tax burden is high at these wage levels, it is a clear obstacle to formalisation on the labour demand side. Study prepared by GIZ and the German Federal Ministry of Economic Cooperation and Development, IMF (2010) Balance of payments manual, 6th edn. Shadow banking has been a contributor, along with money growth, to economic growth. Hence, in countries with a low degree of trust in government institutions and their fairness and efficiency (such as Serbia) tax morality is also low, which adversely impacts the volume of the shadow economy. Thus, for instance, new (unused) industrial products are generally sold in flea and farmers markets where taxes are evaded partially or wholly. u S. Tabaroi, ur. IMF Occasional Paper No 259. International Monetary Fund, Washington, DC, Chami R, Barajas A, Gapen M, Fullenkamp C, Montiel P (2009) Do workers remittances promote economic growth? When informal businesses (including informal self-proprietorships) are formalised by moving into the formal sector they typically introduce salaries close to the minimum wage. Empirical findings show a substantial positive correlation between the regulatory burden imposed on the private sector and the extent of the shadow economy.Footnote 9 Some authors (e.g., Friedman et al. Faculty of Economics, Belgrade, pp 215236, Johnson S, Kaufmann D, Zoido-Lobaton P (1998) Regulatory discretion and the unofficial economy. 104/2009, 99/2011other law, and 71/2012Constitutional Court ruling) have been repealed. The amount of the minimum wage is one of the key parameters that define how many workers will be squeezed out of the formal sector. This system of quasi-fiscal charges has not been sufficiently transparent: unpredictable changes to it have been made and the main parameters of the charges (base, rate, taxpayer, etc.) New directions in measurement and policy, vol 8. To tackle tax evasion, therefore, the elimination of environmental incentives must be accompanied by the establishment of an efficient evasion detection system, and non-selective prosecution of evaders caught. Economic policy uncertainty has increased dramatically in recent years due to events such as COVID-19, which will alter the business environment of enterprises and ultimately affect their innovation behavior. In addition, states with a greater share of agriculture in GDP have greater volumes of the shadow economy on average, since the consumption of own products is not taxed. Although there are no consistent and comparable data on the probability of detecting tax evasion in Serbia and other Central and Eastern European countries, we estimate, from the results of the survey, that it is relatively low in Serbia. India witnessed in economic revolution in late 1980s and early 90s. If an institutionally imposed lower wage limit means that it is not cost-effective for businesses to pay workers more than the wage that reflects their marginal productivity, such businesses will simply refuse to hire them. The shadow economy is perhaps best described by the activities of those operating in it: work done for cash, where taxes arent paid, and regulations arent strictly Groundwater drought is a specific type of hydrological drought that concerns groundwater bodies. In addition, there is no actuarial penalty for early retirement. In addition to the fact that the share of the dinar measured in this way is less than one-third, it should be borne in mind that the bulk of dinar-denominated loans are actually those subsidised by the state. (2006) state that Countries with better institutions tend to create regulatory environments genuinely aimed to improve business conditions rather than privilege a few interest groups. On the other hand, such financing was rarely admitted when respondents spoke about their own operations. In practice this often takes place with no sanctions for the owner. The standard retirement age in Serbia is lower than in most other European countries (particularly for women), while the difference between the standard and minimum age is among the greatest, which indicates that this factor could substantially affect the shadow economy among the Serbian population. Personal income from various sources is taxed differently, so that individuals with high income from capital are taxed at a lower rate than those with high income from work. In an environment dominated by such a large number of charges and with few qualified people auditing taxes, the complexity of the tax system is a major cause of the shadow economy. www.nbs.rs, OECD (2008) Serbia a labour market in transition. Tax morality defined as the readiness of a taxpayer to pay taxes in full and on time and thus pay in full for the public goods and services provided by the government, also has a substantial effect on the extent of the shadow economy. Types of macroeconomic factors These are examples of the macroeconomic factors that affect an economy: 1. The key issue and precondition for establishing these specialised entities essentially remains similar to that for the proposal to establish a single Serbian Development Bank: it is necessary to design appropriate laws and bylaws to prevent corruption in allocating funds, and ensure professionalism and efficiency in managing the limited resources available to such an entity. Remittances are most often used to purchase current assets, which is only logical in these activity sectors. Enste (2010) used a comprehensive regulation index (comprising regulation of the labour and goods market, and the quality of institutions) to also analyse the relationship between the regulatory environment and the shadow economy. Correspondence to Low efficiency, lack of transparency, and greater uncertainty reduce the trust of the participants in the system, which leads to less readiness to embark on new projects and invest: this in turn has adverse repercussions on the growth of the economy as a whole. As the fees and charges have, in some cases, been assessed at a much higher level than appropriate for the purpose of these instruments, they have often been primarilyand sometimes predominantlytaxes in nature.Footnote 2 Apart from issues regarding the amounts of the charges, multiple quasi-fiscal fees have often been introduced that have similar purposes (same base, same taxpayer). In addition, our survey found that respondents ranked corruption as the fourth most important cause of the shadow economy in Serbia. (2015). Levels of infrastructure e.g. This creates incentives for people to continue working after retiring, primarily in the informal sector, as formal work by pensioners is highly restricted. Interestingly enough, only 34% of the funds received had been used for consumption, while as much as 66% had been employed in business. The survey found that quasi-fiscal charges were seen as 5th of the 11 causes of the shadow economy, being ranked after macroeconomic and fiscal factors, lack of trust in the state, and corruption. Even when there are formal regulatory impact analysis (RIA) reports that are part of the explanatory notes accompanying a proposed piece of legislation, the quality of such analysis is often questionable, as it is not carried out simultaneously with the law drafting and, as a rule, does not contain any type of quantitative assessment of the impact (costs and benefits) on the private sector. Although comparative data indicate that the structure of Serbias economy, in terms of the number of small, medium-sized, and large businesses, is similar to that of EU member states, it has been estimated that the current ratio of Tax Administration staff effectively engaged in tax audit to the number of taxpayers is relatively unfavourable. In: Schmidt V, Vaughan-Whitehead D (eds) The impact of the crisis on wages in South East Europe. The first one is the informal sectors limited access to finance. These benefits are a reserve source of income for workers who lose their jobs, designed to help protect their standard of living and to enable them to devote all of their time to looking for a new job. Entrepreneurs who had employed such funds over the previous year made up 23% of those who received remittances. 3. the main factors influencing the shadow economy the factors related to the design of the tax system and the institutional environment for its payment, collection, and administration, the following have the most significant impact on the extent of the shadow economy: size and structure of the tax burden; efficiency of the tax 62/2006 and 31/2011) stipulates, among other things, that incoming and outgoing payments and transfers between residents and non-residents in Serbia must be made in dinars, save for particular cases listed in Article 34(2), in which foreign currency may be used. The reason for this lies in the fact that it is easier to evade taxes on the factors of production (particularly personal income tax). On the one hand, tax policy and the social security system are much more difficult to reform, due to the rigidity of the need to finance public goods and services and the political sensitivity of such reforms. WebThe consensus is that the shadow economy, tax evasion and corruption cause severe damages to the economy. There are four main types of economic systems: traditional, command, market, Firstly, the extent of these benefits was reduced by cutting the maximum period to 1 year (or, exceptionally, 2 years for people meeting at least one condition for retirement at the time they lose their job), as well as by establishing lower minimum and maximum benefit amounts ranging from 80 to 160% of the minimum wage, respectively. They therefore represent a natural extension of employment protection legislation during the time that a worker is unemployed. Given that the degree of trust in the state reflects the degree of taxpayer satisfaction with the way that the state functions (and the quality of public goods it provides), it can be concluded that this is one of the major causes of the shadow economy in Serbia. However, 2011, and particularly 2012, saw a major increase in the minimum wage, which reached a level of approximately 50% of the average wage in 2012, making the minimum-to-average wage ratio in Serbia higher then the Western Balkans average (Kovtun et al. World Dev 33(10):16451699, CrossRef A large number of taxes, including many that are difficult to assess, can also lead to tax evasion by omission, as taxpayers may fail to comply because they are not aware of the requirements or lack the technical knowledge for tax self-assessment. On the other, deregulation does not bring about an increase in the budget deficit, while at the same time removing constraints and creating greater freedom of choice in how to do business, thereby directly contributing to the shadow economy becoming a less attractive option. To be able to survive, the victims of phoenix companies themselves rely on moving part of their operations into the shadow economy. Innovation is the main driving force of the sustainable development of enterprises. Interest rates The value of a nation's currency greatly affects the health of its economy. The large number of small business entities has an adverse impact on the extent of the shadow economy, as more taxpayers mean that the Tax Administration is less likely to audit any one of them, which serves as an incentive for tax evasion. Limited access to finance means that these companies employ less capital: this in turn means that they cannot be more efficient due to division of labour, or achieve economies of scale and size. Since relevant international studies show that the quality of general public services (healthcare, education, efficiency of public administration, efficiency of the justice system, etc.) Cash represents a means that enables informal operations.Footnote 17 Cash transactions include off-account payments that often occur informally and in foreign currency (in dollarized economies). WebThe main factors affecting the indicators of the shadow economy are following: tax burden and tax morale (Torgler and Schneider, 2009; Torgler et al., 2010); quality of public Tax compliance costs are, along with high tax burden, one of the major elements of expenses associated with tax compliance. In a narrow sense, employment protection legislation (EPL) is made up of a set of provisions and procedures that apply to the termination of employees. The high tax compliance costs in Serbia are caused by the large number of payment procedures (as many as 66 times per year, compared to the Eastern European average of 28 times per year) and the substantial time cost of these activities (280 working hours per year, on average). Reflection Please include a paragraph in the initial To be able to be selective in their payments, business entities often shift part of their operations into the shadow economy and pay their debts according to the significance of each particular creditor to their business. The second cause of the poor regulatory environment is the frequent lack of publicity and consultations with the private sector in designing new legislation. Edward Elgar, Cheltenham, Schneider F (2011b) The shadow economy in Europe using payment systems to combat the shadow economy. For an overview of the relevant causes of the shadow economy, see Schneider and Enste (2000), and GIZ (2010). The consequences of informal finance are reflected in greater information asymmetries between market participants, lack of tax revenue derived from this area, and exclusion of formal financial intermediaries from the funds transfer process. The sanctions for non-payment of taxes in Serbia comprise the basic penalty (fine or imprisonment) and interest for not having paid the taxes in due time. As the greatest volume of remittances enters most developing countries mainly through informal channels, better knowledge of the features of these transfers is necessary if they are to be formalised and directed into productive activities in the recipient country.Footnote 20. Some businesses that used to be profitable before the crisis have now been forced to move at least part of their activities into the shadow economy to be able to continue doing business. You can also use pdf. Between 2007 and 2011 an increase of 56% in the number of transactions at cashpoints and points-of-sale involving cards issued in Serbia was recorded (a rise from 75 to 132million transactions). 2014). 4. 2000) even believe that entrepreneurs base their decision as to whether or not to enter the informal sector more on their desire to avoid bureaucracy (and corruption) than to evade paying taxes.Footnote 10 The administrative burden is considered to be one of the major causes of the shadow economy in Serbia. Between 2001 and 2010 the minimum wage in Serbia fluctuated in a relatively stable interval of between 35 and 40% of the average wage (Arandarenko and Avlija 2011), which, in international terms, is considered a moderate amount. The shadow economy refers to all work activity and business transaction that occur below the radar economic activity that is undeclared and for which taxes that should be Razvoj pravnog sistema Srbije i harmonizacija sa pravom EU. One should bear in mind the fact that, in the minds of business people, the economic crisis can to a large extent be equated with issues of poor liquidity (and insolvency) faced by the corporate sector. We evaluated quantitatively the effects of the following factors on Innovation is the main driving force of the sustainable development of enterprises. Reforms of the insolvency procedure have resulted in some progress, both in terms of the duration and cost of the proceedings and the number of insolvency cases (primarily owing to the application of automatic bankruptcy), and have also brought about a major reduction in the number of insolvent businesses (i.e., businesses whose bank accounts have been frozen). In: Jovanovi-Gavrilovi B, Rakonjac Anti T, Stojanovi (eds) Thematic collection of papers Economic Policy and Development. One should exercise caution when comparing these data, due to the different methodologies used to calculate administrative costs. The major factors that indirectly support the shadow economy within the system include the significant share of cash transactions in the total volume of payments, informal finance, and unregistered remittance inflows sent by migrants from abroad. When costs (time and money) associated with assessing, declaring, and paying taxes are high due to complicated procedures, lack of e-filing opportunities, etc., taxpayers are more incentivised to operate in the informal sector. The main influencing factors of TCEM include various aspects related to industrialization and urbanization such as economic output and structure, population and living standards, and the structure, intensity, and efficiency of energy consumption [28,36,41,42]. Serbia is ranked 149th (of 185 countries) for ease of paying taxes in the World Banks Doing Business 2012 survey: a decline in relation to last year and almost the worst result of all the countries in the region, as well as of all other areas of doing business in Serbia. There has, however, been criticism of the National Employment Service, which is believed by some not to be sufficiently efficient in supervising active job seeking by unemployment beneficiaries. 6 of this study) shows that the shadow economy is at its most widespread with entrepreneurs and small and micro-businesses (Tedds 2010; Williams 2006). A nation 's currency greatly affects the health of its economy time a. Economic revolution in late 1980s and early 90s hand, such financing was rarely when., along with money growth, to economic growth part of their operations into shadow... The impact of the macroeconomic factors that affect an economy: 1 new legislation first one the! 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Faculty of Economics, Belgrade, pp 215236, Johnson S, Kaufmann D, Zoido-Lobaton P (1998) Regulatory discretion and the unofficial economy. 104/2009, 99/2011other law, and 71/2012Constitutional Court ruling) have been repealed. The amount of the minimum wage is one of the key parameters that define how many workers will be squeezed out of the formal sector. This system of quasi-fiscal charges has not been sufficiently transparent: unpredictable changes to it have been made and the main parameters of the charges (base, rate, taxpayer, etc.) New directions in measurement and policy, vol 8. To tackle tax evasion, therefore, the elimination of environmental incentives must be accompanied by the establishment of an efficient evasion detection system, and non-selective prosecution of evaders caught. Economic policy uncertainty has increased dramatically in recent years due to events such as COVID-19, which will alter the business environment of enterprises and ultimately affect their innovation behavior. 
In addition, states with a greater share of agriculture in GDP have greater volumes of the shadow economy on average, since the consumption of own products is not taxed. Although there are no consistent and comparable data on the probability of detecting tax evasion in Serbia and other Central and Eastern European countries, we estimate, from the results of the survey, that it is relatively low in Serbia. India witnessed in economic revolution in late 1980s and early 90s. If an institutionally imposed lower wage limit means that it is not cost-effective for businesses to pay workers more than the wage that reflects their marginal productivity, such businesses will simply refuse to hire them. The shadow economy is perhaps best described by the activities of those operating in it: work done for cash, where taxes arent paid, and regulations arent strictly Groundwater drought is a specific type of hydrological drought that concerns groundwater bodies. In addition, there is no actuarial penalty for early retirement. In addition to the fact that the share of the dinar measured in this way is less than one-third, it should be borne in mind that the bulk of dinar-denominated loans are actually those subsidised by the state. (2006) state that Countries with better institutions tend to create regulatory environments genuinely aimed to improve business conditions rather than privilege a few interest groups. On the other hand, such financing was rarely admitted when respondents spoke about their own operations. In practice this often takes place with no sanctions for the owner. The standard retirement age in Serbia is lower than in most other European countries (particularly for women), while the difference between the standard and minimum age is among the greatest, which indicates that this factor could substantially affect the shadow economy among the Serbian population. 
Personal income from various sources is taxed differently, so that individuals with high income from capital are taxed at a lower rate than those with high income from work. In an environment dominated by such a large number of charges and with few qualified people auditing taxes, the complexity of the tax system is a major cause of the shadow economy. www.nbs.rs, OECD (2008) Serbia a labour market in transition. Tax morality defined as the readiness of a taxpayer to pay taxes in full and on time and thus pay in full for the public goods and services provided by the government, also has a substantial effect on the extent of the shadow economy. Types of macroeconomic factors These are examples of the macroeconomic factors that affect an economy: 1. The key issue and precondition for establishing these specialised entities essentially remains similar to that for the proposal to establish a single Serbian Development Bank: it is necessary to design appropriate laws and bylaws to prevent corruption in allocating funds, and ensure professionalism and efficiency in managing the limited resources available to such an entity. Remittances are most often used to purchase current assets, which is only logical in these activity sectors. Enste (2010) used a comprehensive regulation index (comprising regulation of the labour and goods market, and the quality of institutions) to also analyse the relationship between the regulatory environment and the shadow economy. Correspondence to Low efficiency, lack of transparency, and greater uncertainty reduce the trust of the participants in the system, which leads to less readiness to embark on new projects and invest: this in turn has adverse repercussions on the growth of the economy as a whole. As the fees and charges have, in some cases, been assessed at a much higher level than appropriate for the purpose of these instruments, they have often been primarilyand sometimes predominantlytaxes in nature.Footnote 2 Apart from issues regarding the amounts of the charges, multiple quasi-fiscal fees have often been introduced that have similar purposes (same base, same taxpayer). In addition, our survey found that respondents ranked corruption as the fourth most important cause of the shadow economy in Serbia. (2015). Levels of infrastructure e.g. This creates incentives for people to continue working after retiring, primarily in the informal sector, as formal work by pensioners is highly restricted. Interestingly enough, only 34% of the funds received had been used for consumption, while as much as 66% had been employed in business. The survey found that quasi-fiscal charges were seen as 5th of the 11 causes of the shadow economy, being ranked after macroeconomic and fiscal factors, lack of trust in the state, and corruption. Even when there are formal regulatory impact analysis (RIA) reports that are part of the explanatory notes accompanying a proposed piece of legislation, the quality of such analysis is often questionable, as it is not carried out simultaneously with the law drafting and, as a rule, does not contain any type of quantitative assessment of the impact (costs and benefits) on the private sector. Although comparative data indicate that the structure of Serbias economy, in terms of the number of small, medium-sized, and large businesses, is similar to that of EU member states, it has been estimated that the current ratio of Tax Administration staff effectively engaged in tax audit to the number of taxpayers is relatively unfavourable. In: Schmidt V, Vaughan-Whitehead D (eds) The impact of the crisis on wages in South East Europe. The first one is the informal sectors limited access to finance. These benefits are a reserve source of income for workers who lose their jobs, designed to help protect their standard of living and to enable them to devote all of their time to looking for a new job. Entrepreneurs who had employed such funds over the previous year made up 23% of those who received remittances. 3. the main factors influencing the shadow economy the factors related to the design of the tax system and the institutional environment for its payment, collection, and administration, the following have the most significant impact on the extent of the shadow economy: size and structure of the tax burden; efficiency of the tax 62/2006 and 31/2011) stipulates, among other things, that incoming and outgoing payments and transfers between residents and non-residents in Serbia must be made in dinars, save for particular cases listed in Article 34(2), in which foreign currency may be used. The reason for this lies in the fact that it is easier to evade taxes on the factors of production (particularly personal income tax). On the one hand, tax policy and the social security system are much more difficult to reform, due to the rigidity of the need to finance public goods and services and the political sensitivity of such reforms. WebThe consensus is that the shadow economy, tax evasion and corruption cause severe damages to the economy. There are four main types of economic systems: traditional, command, market, Firstly, the extent of these benefits was reduced by cutting the maximum period to 1 year (or, exceptionally, 2 years for people meeting at least one condition for retirement at the time they lose their job), as well as by establishing lower minimum and maximum benefit amounts ranging from 80 to 160% of the minimum wage, respectively. They therefore represent a natural extension of employment protection legislation during the time that a worker is unemployed. Given that the degree of trust in the state reflects the degree of taxpayer satisfaction with the way that the state functions (and the quality of public goods it provides), it can be concluded that this is one of the major causes of the shadow economy in Serbia. However, 2011, and particularly 2012, saw a major increase in the minimum wage, which reached a level of approximately 50% of the average wage in 2012, making the minimum-to-average wage ratio in Serbia higher then the Western Balkans average (Kovtun et al. World Dev 33(10):16451699, CrossRef A large number of taxes, including many that are difficult to assess, can also lead to tax evasion by omission, as taxpayers may fail to comply because they are not aware of the requirements or lack the technical knowledge for tax self-assessment. On the other, deregulation does not bring about an increase in the budget deficit, while at the same time removing constraints and creating greater freedom of choice in how to do business, thereby directly contributing to the shadow economy becoming a less attractive option. To be able to survive, the victims of phoenix companies themselves rely on moving part of their operations into the shadow economy. Innovation is the main driving force of the sustainable development of enterprises. Interest rates The value of a nation's currency greatly affects the health of its economy. The large number of small business entities has an adverse impact on the extent of the shadow economy, as more taxpayers mean that the Tax Administration is less likely to audit any one of them, which serves as an incentive for tax evasion. Limited access to finance means that these companies employ less capital: this in turn means that they cannot be more efficient due to division of labour, or achieve economies of scale and size. Since relevant international studies show that the quality of general public services (healthcare, education, efficiency of public administration, efficiency of the justice system, etc.) Cash represents a means that enables informal operations.Footnote 17 Cash transactions include off-account payments that often occur informally and in foreign currency (in dollarized economies). WebThe main factors affecting the indicators of the shadow economy are following: tax burden and tax morale (Torgler and Schneider, 2009; Torgler et al., 2010); quality of public Tax compliance costs are, along with high tax burden, one of the major elements of expenses associated with tax compliance. In a narrow sense, employment protection legislation (EPL) is made up of a set of provisions and procedures that apply to the termination of employees. The high tax compliance costs in Serbia are caused by the large number of payment procedures (as many as 66 times per year, compared to the Eastern European average of 28 times per year) and the substantial time cost of these activities (280 working hours per year, on average). Reflection Please include a paragraph in the initial To be able to be selective in their payments, business entities often shift part of their operations into the shadow economy and pay their debts according to the significance of each particular creditor to their business. The second cause of the poor regulatory environment is the frequent lack of publicity and consultations with the private sector in designing new legislation. Edward Elgar, Cheltenham, Schneider F (2011b) The shadow economy in Europe using payment systems to combat the shadow economy. For an overview of the relevant causes of the shadow economy, see Schneider and Enste (2000), and GIZ (2010). The consequences of informal finance are reflected in greater information asymmetries between market participants, lack of tax revenue derived from this area, and exclusion of formal financial intermediaries from the funds transfer process. The sanctions for non-payment of taxes in Serbia comprise the basic penalty (fine or imprisonment) and interest for not having paid the taxes in due time. As the greatest volume of remittances enters most developing countries mainly through informal channels, better knowledge of the features of these transfers is necessary if they are to be formalised and directed into productive activities in the recipient country.Footnote 20. Some businesses that used to be profitable before the crisis have now been forced to move at least part of their activities into the shadow economy to be able to continue doing business. You can also use pdf. Between 2007 and 2011 an increase of 56% in the number of transactions at cashpoints and points-of-sale involving cards issued in Serbia was recorded (a rise from 75 to 132million transactions). 2014). 4. 2000) even believe that entrepreneurs base their decision as to whether or not to enter the informal sector more on their desire to avoid bureaucracy (and corruption) than to evade paying taxes.Footnote 10 The administrative burden is considered to be one of the major causes of the shadow economy in Serbia. Between 2001 and 2010 the minimum wage in Serbia fluctuated in a relatively stable interval of between 35 and 40% of the average wage (Arandarenko and Avlija 2011), which, in international terms, is considered a moderate amount. The shadow economy refers to all work activity and business transaction that occur below the radar economic activity that is undeclared and for which taxes that should be Razvoj pravnog sistema Srbije i harmonizacija sa pravom EU. One should bear in mind the fact that, in the minds of business people, the economic crisis can to a large extent be equated with issues of poor liquidity (and insolvency) faced by the corporate sector. We evaluated quantitatively the effects of the following factors on Innovation is the main driving force of the sustainable development of enterprises. Reforms of the insolvency procedure have resulted in some progress, both in terms of the duration and cost of the proceedings and the number of insolvency cases (primarily owing to the application of automatic bankruptcy), and have also brought about a major reduction in the number of insolvent businesses (i.e., businesses whose bank accounts have been frozen). In: Jovanovi-Gavrilovi B, Rakonjac Anti T, Stojanovi (eds) Thematic collection of papers Economic Policy and Development. One should exercise caution when comparing these data, due to the different methodologies used to calculate administrative costs. The major factors that indirectly support the shadow economy within the system include the significant share of cash transactions in the total volume of payments, informal finance, and unregistered remittance inflows sent by migrants from abroad. When costs (time and money) associated with assessing, declaring, and paying taxes are high due to complicated procedures, lack of e-filing opportunities, etc., taxpayers are more incentivised to operate in the informal sector. The main influencing factors of TCEM include various aspects related to industrialization and urbanization such as economic output and structure, population and living standards, and the structure, intensity, and efficiency of energy consumption [28,36,41,42]. 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