As countries develop, many transactions that once would have occurred in the shadow economy move to formal establishments, Önanced by formal banking. A little-observed fact is that this transition does not necessarily bring the formalization of income. In particular, in countries with generous social services, an environment of semiformality can emerge, in which individuals remain registered taxpayers, to receive public beneÖts, but do not declare all of their income to tax authorities. According to the Enterprise Surveys of the World Bank, 52% of companies across all countries do not report all income to tax authorities, which is perhaps not a surprising Ögure given the size of the.
