What is the black economy?

En accounting terms and economy, it is understood by submerged economy to the set of activities of production of goods and provision of services that are developed for the market that avoids the fiscal and economic law of a country, among which are labor regulations, technical standards or security, etc. It is the sum of the informal or irregular economy, understood as the illegal economic activity that hides the registration in banking or financial entities for reasons of tax evasiĆ³n, and the illegal economy, such as drug or arms trafficking, organized crime or prostitution.

The concept of the black economy is universal, although it has more influence in less developed countries. With this practice, the concealment of the goods or services acquired before the country's tax law, records, statistics and official controls is expected. Likewise, employers opt for this practice in order to avoid paying taxes for hiring new workers as well as Social Security contributions.

The black economy is also known as the underground, covert or black economy.

Leave a Comment