Tax evasion and crypto assets

Summary

This PhD project investigates tax evasion in the context of crypto assets.

Researcher

Project background and aims

With capitalisation peaking at US$3 trillion in 2021, the cryptocurrency market is expected to flourish in the future. As one of the world's fastest growing crypto adopters in the world, Indonesia is ironically also one of the countries with the lowest tax ratio in the region. The research documents and explores how Indonesian policymakers develop and implement revenue strategies to tackle highly probable tax evasion cases in this sector.

Some tax behaviour features in the conventional setting are well understood as reflections of economic and non-economic determinants. However, people may behave differently in the virtual space than in the real world. Tax evasion is thought to be rife, particularly when such activity takes place under cover of pseudo-anonymity. In this environment, a rational actor tends to perceive a lower risk of being identified, audited, or penalised, hence incentivising one’s non-compliant behaviour. The research experiments with the features uniquely present in crypto to explain whether tax evasion tends to increase in such settings. Put simply, the research aims to validate established tax behaviour tenets in a crypto context.

The research seeks to verify and explore whether crypto, with its reputation of sheltering illicit activities, is indeed an alternative avenue for tax evasion, and discuss how the policymakers respond. The study quantitatively analyses the existence of crypto-related tax evasion and qualitatively assesses the policy response. This study is anticipated to contribute to the existing knowledge by drawing on empirical evidence to inform an innovative approach and policy response to curtail crypto-related tax evasion.

Supervisors