THE UNDERGROUND ECONOMY: DETERMINANTS AND IMPLICATIONS
THE UNDERGROUND ECONOMY: DETERMINANTS AND IMPLICATIONS

Summary/Abstract: The concept of underground economy has attracted attention due to its special features. It is difficult to detect its exact existence and magnitude in an economy, because most activities related to the underground economy are not declared voluntarily. This secret creates a special impetus for researchers to explore the limits of the underground economy. However, different tax authorities have different methods for measuring the size of the underground economy, have different tax systems, and tax policies are not similar. For this reason, the reasons that push economic agents to the informal side of the economy may be different. Economic freedom, on the other hand, is supposed to be a common factor, leading to similar relationships in different economies. The article studies the architecture of the underground economy, researching the main forms of manifestation of the underground phenomenon such as: tax evasion, undeclared work, corruption and crime. We have shown that fraud can take various forms, such as: tax evasion, smuggling, fraud, but also less noticeable forms or speculative activities, subjective interpretations of some provisions of the law aimed at evading taxes. At the same time, we studied what forms illegal work can take, showed that corruption usually attacks the very driving force created by the reform process, forcing firms to enter the underground economy, and revealed that the most profitable side of the mechanism is display of the phenomenon of organized crime is represented by business crime.

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