Authors : Eunbi Ko(University of Seoul), Heonjae Song(University of Seoul)

This paper studies the effect of the cash receipt system on preventing tax evasion by analyzing consumers’ behavior about the income tax deduction for cash receipt. The estimation results show that consumers ask self-employed to issue the cash receipt by 340∼1,160 thousand KRW in order to reduce their effective income tax rate by 0.1%p which is defined by the ratio of labor income tax to yearly wage. This result can be interpreted as a supportive evidence that the cash receipt system is effectively working in preventing tax evasion of the self-employed.