Benchmarking tax compliance efficiency (risk) at the business entity level

Abstract

Empirical works on examining taxpayer compliance and judiciously targeting risky taxpayers from a population of large taxpayers are hitherto scarce. This paucity of research has been the main result of the limited set of taxpaid data available at a micro level to researchers. It is in this context, the objective of this paper is to suggest a benchmarking method, which takes into account firm‐specific, particularly governance characteristics, to identify and measure the extent of taxpayer compliance with the limited amount of data available. It is expected that this method will be of much value to tax administrations and compliance managers. Our approach to compliance is based on comparisons among taxpayers of the extent of under‐reporting of income, as well as over‐reporting of reconciliation deduction and cost items. The workability of the proposed model is demonstrated using data from the Australian services industry.

Citation

Syed, A. and Kalirajan, K. (2000), "Benchmarking tax compliance efficiency (risk) at the business entity level", Benchmarking: An International Journal, Vol. 7 No. 3, pp. 206-222. https://doi.org/10.1108/14635770010331379