Do Tax Audits Remain the Primary Component of Anti-Evasion Tax Policies?

This chapter draws inspiration from the Italian context, where tax benefits exist but tax evasion is the highest in Europe. In theory, tax reward is able to reduce corporate tax evasion. Also, tax reward amplifies the fiscal policies available to the tax authority. However, the extent of both tax evasion and tax compliance (the current fiscal scenario) plays a key role in the decisions of the tax authority. Moreover, it is always possible to choose between a deterrence tax policy and a more friendly tax policy. Tax policy, therefore, depends on both the current fiscal scenario and the type of policy chosen by the tax authority. Tax audit turns out to be the primary component of an anti-evasion fiscal policy: regardless of the current fiscal scenario, a deterrence fiscal policy is always characterised by a stricter auditing, while a more friendly policy implies less stringent tax audits.