Detecting Value Added Tax Evasion by Business Entities of Kazakhstan
This paper presents a statistics based method for detecting value added tax evasion by Kazakhstani legal entities. Starting from features selection we perform an initial exploratory data analysis using Kohonen self organizing maps; this allows us to make basic assumptions on the nature of tax compliant companies. Then we select a statistical model and propose an algorithm to estimate its parameters in unsupervised manner. Statistical approach appears to benefit the task of detecting tax evasion: our model outperforms the scoring model used by the State Revenue Committee of the Republic of Kazakhstan demonstrating significantly closer association between scores and audit results.
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