Evgeniya Dubinina (Charles University) will present “Online Cash Register Policy in Russia: Impact on Firm Profits and Exit Decisions” on May 19th, 2025, at 10:30 AM, in room QA405.
Abstract:
To improve tax compliance, the Russian government required small firms to use online cash registers (OCRs) for business-to-consumer transactions from 2017. While OCR policy aims to increase transparency, the implementation of OCRs raises fixed costs for small and middle firms, potentially driving them to adopt various coping strategies, such as shifting to the shadow economy, exiting the market, underreporting profits, overstating costs, or a combination of these. Using the TWFE and Regression Discontinuity in Time techniques, I estimate the effects of the OCR policy on reported profits, profits tax, and firms’ exit decisions. Exogenous variation for causal inference is possible thanks to different years of policy implementation (2017, 2018, 2019). I find that tax revenues increased. However, the effects vary by tax regime, with no significant revenue changes for some. Furthermore, the number of firms declined following the policy’s implementation.