Modeling factors affecting tax revenues of natural persons and legal entities

Subject Areas : Public Economics

Shahnaz Moradkhani ¹ , Mahdi Kamali ² , Hamid Asayesh ³ , Mohammad Khorsandzak ⁴

1 -
2 - Faculty member of Islamic Azad University, Qeshm Branch
3 - Department of Mathematics, Aligudarz Branch, Islamic Azad University, Aligudarz, Iran, [e-mail]
4 - Department of Mathematics, Aligudarz Branch, Islamic Azad University, Aligudarz, Iran, [e-mail]

Received: 2024-12-06 Accepted : 2025-03-15 Published : 2025-05-17

Keywords: Tax revenue, natural person, legal entities, WALS method JEL Classification: H24, H25, H21 ,

Abstract :

This paper aims to model and identify the key factors influencing tax revenues. Using the weighted least mean squares approach, the most significant explanatory variables affecting tax revenues were analyzed for the period 2001–2023, separately for the real and legal sectors. The findings indicate that inflation, the business environment, economic growth, the nominal tax rate, and the ratio of the service sector’s value added to GDP positively impact tax revenues in the legal sector. In contrast, tax evasion and sanctions exert a negative effect.

For the real sector, the ten most influential variables include tax evasion, inflation, economic growth, sanctions, tax system fairness, tax morale, tax culture, unemployment, the Gini coefficient, and the average male wage. Based on these results, policymakers are advised to implement effective measures to control inflation, as rising inflation can ultimately reduce tax revenues.

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