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Und`erground Economy and Tax Gap

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In this paper the relation of underground economy and tax gap in Iran has been examined. The results show that the underground economy size is almost 20 percent of GDP in Iran. In this research three methods of estimation of underground economy size has been used and combined to achieve a more precise estimation. The methods that have been used are: cash, fuzzy and latent variable methods. The size of tax gap in Iran has been over 30 billion dollars in recent years. Some new payment systems as ATM cause change in money velocity which makes it necessary that new factors to be taken into account

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