Interest Groups, Corruption, and Tax Complexity: A Comparative Governance Perspective with Global Evidence

This article investigates the impact of corruption on tax complexity by integrating a governance-centred conceptual framework with cross-country empirical analysis. While existing research has primarily examined the effects of corruption on tax compliance and revenue performance, relatively little attention has been paid to how corruption shapes the structural and administrative design of tax systems. Drawing on political economy theory, we argue that corruption amplifies the political returns of accommodating interest groups, leading policymakers to introduce additional provisions, exemptions and procedural requirements that make tax codes more complex. We develop a conceptual framework in which corruption shifts the political equilibrium toward higher levels of complexity, and then evaluate this prediction using panel data for 177 countries from 2012 to 2019. Employing fixed-effects regressions as well as two- and three-stage least squares estimations, we measure tax complexity using two indicators from the World Bank’s Doing Business database: the number of tax payments per year and the time required for compliance. Across all specifications, corruption significantly increases both measures of complexity, and the results remain robust under alternative samples, specifications and institutional proxies. Our findings highlight the importance of addressing corruption not only to improve compliance and revenue but also to simplify tax administration and reduce compliance costs. By embedding corruption into a formal political economy model and testing its predictions with large-scale cross-country panel data, this article contributes to the economics of governance literature and to broader debates on the political determinants of fiscal institutions.