Abstract:
Despite continuous government attempts to increase taxpayer compliance, the shadow
economy continues to offer a way for taxpayers to evade their taxpaying obligations. The consequences
are dear: policy-makers have increasingly imperfect knowledge about the state of economic
affairs as shadow economy activity expands. We provide the first known estimates of the shadow
economy for 17 Asia-Pacific countries. We show that, not only have these activities grown over
the last ten years but countries with relatively thin taxpayer compliance initiatives experience the
greatest shadow economy activity.
