Abstract

ONA MACIAS, Ana Lucía  and  TRONCOSO IGUA, Sergio. Finding anomalous data in taxatio: Application of Benford's law in income tax in Ecuador. SaberEs [online]. 2018, vol.10, n.2, pp.173-188. ISSN 1852-4418.

Benford's Law, also known as the first digit law over time, has been used to detect anomalies in figures. According to this law, the distribution of numbers from 1 to 9, as the first digit is asymmetric. The number 1 is more likely to appear in a set of data as the first digit (30.1%) and decreases until it reaches 9 with a probability of appearance of just 4.6%. In practice, this law allows the detection of erroneous data by not complying with the theoretical distribution. In this sense, this investigation aims to apply Benford's Law to economic data to search for indications of possible acts of evasion and misrepresentation. For this, the income tax statements of both individuals and companies in Ecuador were used for 2014, demonstrating that this law can be used reliably to detect anomalies in tax returns. The present investigation constitutes an indication for the use of the law in a global, economical and straightforward way before more exhaustive and expensive controls.

Keywords : Tax Fraud; Applied Statistics; Data Quality.

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