Economic analysis of tax installment forgiveness using game theory approach: The case of Iran

Abstract

One of the most important income economic policy instruments for all countries is taxes. On time receipt of taxes for countries is very vital and the basis of government planning for all projects and especially their budgeting. In Iran, taxpayers have been penalty for delaying the payment of taxes and paying them in installments. In this study, the interaction between the tax affairs organization and taxpayers in the installment penalty and its forgiveness was examined through game theory and the Nash equilibrium was derived from the inverted inference of a dynamic game with complete information between the two players mentioned. The results of the Nash equilibrium of the designed game indicate that in case of repeated forgiveness, the installment penalty regular taxpayers also pay their diagnostic tax in installments  this means that the installment penalty does not have the necessary efficiency. In other words, the system of installment penalty and eventually its forgiveness will turn regular taxpayers into irregular taxpayers. In this regard, suggestion to the tax affairs organization that to achieve your goals non-payment penalty within the deadline without forgiveness performance or instead of mentioned penalty for irregular taxpayer used for rewarding system from regular taxpayers.