An Agent-Based Model of Tax Compliance: an Application to the Spanish Case

We present a new agent-based model for the simulation of tax compliance and tax evasion behaviour (SIMULFIS). The main novelties of the model are the introduction of a ‘behavioural filter approach’ to model tax decisions, the combination of a set of different mechanisms to produce tax compliance (namely rational choice, normative commitments, and social influence), and the use of the concept of ‘fraud opportunity use rate’ (FOUR) as the main behavioural outcome. After describing the model in detail, we display the main behavioural and economic results of 1,920 simulations calibrated for the Spanish case and designed to test for the internal validity of SIMULFIS. The behavioural outcomes show that scenarios with strict rational agents strongly overestimate tax evasion, while the introduction of social influence and normative commitments allows to generate more plausible compliance levels under certain deterrence conditions. Interestingly, the relative effect of social influence is shown to be ambivalent: it optimizes compliance under low and middle deterrence conditions, but not when deterrence is made harder. Finally, SIMULFIS economic outcomes are broadly in line with theoretical expectations,