Examine the Effects of Financial and Non-Financial Variables on Tax Evasion Using of Data Mining Techniques: Automotive and Parts Manufacturing Industry

Tax revenue is one of the most important financial sources of the Government, which has a leading role in the economic development of each country. However, some companies try to avoid paying their correct taxes, which creates a problem called "tax evasion". The difference between the tax stated by the company and the tax payment identified by the tax authorities (Tax Organization) can be considered as an example of tax evasion. At this time, Tax organization is applying traditional methods to deal with this challenge, which can reduce the Government's revenue and increase its expenses in the long-term. The objective of this research is to apply data mining techniques to examine the effects of financial and non-financial variables on tax evasion by the companies operating in automotive and parts manufacturing industry. The findings show that "assets to net revenue ratio", absolute value of interest expense to net revenue ratio", and board independence" increase and "net income (loss) to assets ratio", and company's performance (net income or loss) decrease the likelihood of tax evasion. These findings can help tax authorities in both policy making as well as conducting tax audit.