The Effect of Financial and Non-Financial Firms Characteristics on Tax Gap

 In this research, the effect of financial and non-financial firm’s characteristics on tax gap by using structural equation modeling approach has been investigated. To conduct this study, financial reports of 79 companies during the financial periods of 1385 to 1395 (Iranian Calendar) are used. Financial characteristics as latent variable are measured by four observed variable those are: profitability, operation cash flows, firm value and leverage. Non-financial characteristics as another latent variable are measured by four observed variable those are: firm size, firm age, audit office size and type of industry. The results of this research show that financial characteristics have a positive and meaningful effect on tax gap. The results also show that non-financial characteristics have a negative effect on tax gap but a meaningful relationship between non-financial characteristics and tax gap was not found.