Negative Consequences of the Shadow Economy: Impact on the Tax System and the Formal Economy
Keywords:
Shadow economy, tax system, formal economy, tax evasion, corruptionAbstract
The shadow economy poses significant challenges to both the tax system and the formal economy worldwide. By its very nature, the shadow economy operates outside the legal framework, evading regulation and taxation. This article investigates the negative consequences of the shadow economy, particularly focusing on its impact on the tax system and the formal economy. Through a review of relevant literature, statistical analysis, and case studies from various countries, the article examines the legal and practical challenges posed by the shadow economy. It also offers policy recommendations for mitigating the adverse effects of informal economic activities, drawing upon international experiences and scholarly discourse.
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