Game Theory Applied to Business Decision Making under Fiscalization in Croatia: Analysis, Equilibrium, and Policy Recommendations
The Croatian Fiscalization Law implemented in Croatia in 2013 created dynamic interaction and significant consequences for business and the Government. We examine the influence of the Fiscalization Law on decision making of businesses and its consequences. The paper provides an overview and anal...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Primorska
2018-03-01
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| Series: | Managing Global Transitions |
| Subjects: | |
| Online Access: | http://www.hippocampus.si/ISSN/1854-6935/16.37-58.pdf |
| Summary: | The Croatian Fiscalization Law implemented in Croatia in 2013 created
dynamic interaction and significant consequences for business and the
Government. We examine the influence of the Fiscalization Law on decision
making of businesses and its consequences. The paper provides an
overview and analysis of the implementation process, business decisions,
interactions between business and Tax Administration, as well as the consequences.
Financial benefits of tax evasion form a clear motivation for
businesses, but noncompliance could lead to losses due to penalties. Given
the decision-making under risk, the interaction between a business and
Tax Administration should be formed as a game model enriched with empirical
data. Given the empirical data, while businesses show tendency to
deviate, Government generates gain. Hence, it is necessary to examine the
equilibrium: how much deviation will the Government tolerate before raising
penalties, and which amount of risk will business be willing to take in
order to evade taxes. |
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| ISSN: | 1581-6311 1854-6935 |