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1 – 10 of over 42000Michael Heasman and Spencer Henson
Presents the results of a postal questionnaire to UK food and drink manufacturers on the costs of compliance with food regulation. In particular, the questionnaire focused on the…
Abstract
Presents the results of a postal questionnaire to UK food and drink manufacturers on the costs of compliance with food regulation. In particular, the questionnaire focused on the usefulness of compliance cost assessments ‐ introduced by the Government in 1985 across all government departments as an analytical tool for assessing the regulatory costs to business ‐ as they relate to food businesses. Explains that the questionnaire sought to establish to what extent food companies actually costed the impact of food regulation on their business operations and explored other aspects of food regulation, such as the benefits and constraints. Reports the results which gave some unexpected insights on the costs of compliance with food regulation. For example, the majority of respondents were not aware that the Ministry of Agriculture Fisheries and Food carried out compliance cost assessments on food regulation; around two‐thirds of the sample found it “difficult” or “very difficult” to identify where compliance costs would affect their company and an even greater proportion (more than three‐quarters) said they would have problems quantifying compliance costs. Concludes that the compliance cost assessment, as a tool for helping to analyse the cost of food regulation on businesses, is an inappropriate method for the food sector and the development of new methods should be considered.
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John L. Turner, Malcolm Smith and Bruce Gurd
Virtually all of the completed research to date shows that taxpayer compliance costs are large and generally a multiple of the revenue authority’s administrative costs. Compliance…
Abstract
Virtually all of the completed research to date shows that taxpayer compliance costs are large and generally a multiple of the revenue authority’s administrative costs. Compliance costs have also been found to be capricious in their incidence and generally highly regressive. On the other hand, for some taxes (eg. Employer PAYE deductions), much of the research shows that larger firms derive a net economic benefit from enhanced cash flows. There is also perceived to be a fair correlation between high compliance costs and high non‐compliance. These findings and perceptions have led to government pressure in most developed countries to reduce compliance costs. This paper explores the likely impact of compliance costs in the UK as income tax self‐assessment is introduced, leaning on evidence from Australia, where self‐assessment is the standard.
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Doreen Musimenta, Sylvia Naigaga, Juma Bananuka and Mariam Ssemakula Najjuma
The purpose of this study is to examine the contribution of tax morale, compliance costs and tax compliance of financial services firms in Uganda.
Abstract
Purpose
The purpose of this study is to examine the contribution of tax morale, compliance costs and tax compliance of financial services firms in Uganda.
Design/methodology/approach
This study is cross-sectional and correlational and adopts firm-level data collected using a questionnaire survey of 210 financial services firms in Uganda from which usable questionnaires were received from 152 financial services firms.
Findings
Tax morale and compliance costs contribute up to 20.6 per cent of the variance in tax compliance of the financial services firms. Tax morale and tax compliance are positively and significantly associated. Results further indicate that compliance costs and tax compliance are positively and significantly associated. National pride and trust in government and its legal systems as dimensions of tax morale independently are significantly associated with tax compliance. Results also indicate that administration costs and specialist costs as dimensions of compliance costs individually are significantly associated with tax compliance.
Research limitations/implications
This study results should be generalized with caution, as they are limited to the financial services firms in Uganda.
Originality/value
Whereas there has been a number of studies on tax compliance in both developed and developing countries, this is the first study on the African scene to examine the contribution of tax morale and compliance costs on tax compliance of financial services firms in a single suite. It is unbelievable that the financial services firms, especially commercial banks which are highly regulated by the central bank in many developing countries, can afford to report tax payables year after year.
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A. Loh, M. Ariff, Z. Ismail, M. Shamsher and M. Ali
This is the first report on estimates of tax compliance costs of Malaysian companies. Compliance cost is an unavoidable cost of doing business and arises from activities…
Abstract
This is the first report on estimates of tax compliance costs of Malaysian companies. Compliance cost is an unavoidable cost of doing business and arises from activities associated with the reporting of income for tax purpose. The average compliance cost per company was estimated to be RM68,836, which is RM0.26 per RM 1,000 sales turnover. Sixty‐one percent of compliance cost was incurred in computation‐related activities and 39 percent in tax planning activities. Measured relative to revenue, the compliance cost is higher for smaller companies than for larger companies, which suggests that compliance cost is regressive, a finding similar to those reported in other countries.
To answer the following research questions: (1) What is the tax burden, on average, as a percentage of the generated revenues of companies in BiH? (2) Are there differences in the…
Abstract
Purpose
To answer the following research questions: (1) What is the tax burden, on average, as a percentage of the generated revenues of companies in BiH? (2) Are there differences in the load level in relation to: (a) company size, (b) company location, (c) company age, (d) hiring of tax advisors and other external consultants on CIT issues and (e) company business activity.
Design/methodology/approach
In order to answer the research questions asked, quantitative analysis of primary data purposefully collected for this research will be used. The empirical part of the paper relies on the collection of primary data through survey using the method of stratified random sampling from the population of SMEs enterprises registered in BiH focusing only on FBIH and the RS. Regression analysis (OLS model) was used to estimate results.
Findings
Average share of tax compliance costs in SME revenues is 8.3%. Tax compliance costs are regressive, dependent on company age, location and business activity as well as on whether companies hire external consultants.
Research limitations/implications
The chosen research method is a telephone survey, with the aim of encouraging respondents to give answers to the questions asked, using experienced interviewers from the market research agency. However, the use of this method is not without limitations, and they refer to the time-limited duration of telephone interviews that require shorter questions, and pre-prepared answer options to make it easier for respondents to give answers. One of the challenges is the fact that most respondents do not want to talk to strangers over the phone and answer unknown numbers. This risk was especially pronounced because the topic of the research is related to CIT, so many respondents expressed doubts about the purpose of the question, refusing to provide accurate data. This risk was mitigated by asking questions to include certain scales in terms of income, number of employees and gross wages, to make respondents feel free to share this type of sensitive data with interviewers.
Practical implications
First, the analysis of this paper showed that specific, identified factors contribute to, or directly affect, the level of the tax compliance costs of corporate income tax in BiH. Second, there is currently no comprehensive analysis of the tax burden in BiH in the literature that would quantify the tax compliance costs, both at the BiH level and at the entity level. Based on the aforementioned, it is necessary to design a fiscal policy in such a way as to eliminate or, in cases where this is not possible, reduce the tax burden on the private sector in general. Based on the data collected in this research, fiscal policy should pay special attention to the tax treatment of start-ups, small and medium-sized enterprises and enterprises operating in services and other sectors by introducing tax incentives that will be of a general nature and that will be applicable to multiple activities and categories of enterprises, in order to eliminate the current negative effects of existing incentives aimed at predefined categories. Finally, it would be necessary to consider the possibility of closer and more extensive harmonization of entity tax laws, in accordance with international practices and accounting standards - in order to reduce the difference in burden primarily between entities, which would facilitate foreign investors and contribute to increased competitiveness in the domestic, regional and ultimately the global market. It would be desirable to use harmonization as a tool in support of promoting the competitiveness of the country in order to attract and maintain the level of foreign direct investment.
Originality/value
There is currently no comprehensive analysis of the tax burden in BiH in the literature that would quantify the tax compliance costs, both at the BiH level and at the entity level.
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Jonathan E. Lee, Candice Correia, John Correia and Zhuoli Axelton
The cost of compliance is an essential variable to consider when administering a tax system. One recent study estimates that the yearly federal tax compliance burden in the US…
Abstract
The cost of compliance is an essential variable to consider when administering a tax system. One recent study estimates that the yearly federal tax compliance burden in the US exceeds $431 billion dollars, and this cost does not include the potential greatest cost of all – changes in taxpayer behavior that reduces economic efficiency (Laffer, Winegarden, & Childs, 2011). One example of such behavior is the renunciation of US citizenship due to the impact of the Foreign Account Tax Compliance Act (FATCA) reporting requirements. Using this context, our study examines how FATCA compliance costs can affect taxpayer behavior in a manner that reduces economic efficiency. We collected responses from 197 experienced US taxpayers living in the US. Our study finds that when tax compliance costs are high, taxpayers may be more likely to renounce their citizenship to avoid FATCA reporting requirements. We further learn that tax compliance costs may increase the likelihood of citizenship renunciation even in the presence of a minimal US tax burden. Supplemental mediation analysis demonstrates that one's perceived fairness of compliance does not mediate the effect of high compliance costs on a taxpayer's renunciation decision; however, one's perceived fairness of compliance and fear of sanctions, collectively, partially explain the effect of tax burden on the renunciation decision. In addition, we find that ethics, the perceived probability of detection, and average income level affect the decision to renounce citizenship. Our findings suggest broader impacts of tax policy and provide a foundation for future research to further explore domestic and foreign tax compliance behaviors.
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Ioannis Stamatopoulos, Stamatina Hadjidema and Konstantinos Eleftheriou
This paper examines the corporate income tax compliance costs and their determinants by analyzing survey and financial statements data from firms operating in Greece. We find that…
Abstract
This paper examines the corporate income tax compliance costs and their determinants by analyzing survey and financial statements data from firms operating in Greece. We find that corporate tax compliance costs are of considerable size and vary with several firm-specific characteristics, including the firm’s size, its age, the sector in which it operates, its location, and its legal form. The paper intends to raise awareness regarding the impact of tax compliance costs, especially for countries, such as Greece, that were significantly affected by the economic and financial crisis.
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The purpose of this paper is to find out the likely compliance cost of anti‐money laundering and counter terrorism financing (AMLCTF) for financial institutions in Australia to…
Abstract
Purpose
The purpose of this paper is to find out the likely compliance cost of anti‐money laundering and counter terrorism financing (AMLCTF) for financial institutions in Australia to help understand the regulatory burden of the legislation.
Design/methodology/approach
The paper adopts a case study approach. Using the method of analogy, the cost of compliance is estimated.
Findings
It is found that the legislation brings substantial financial regulatory burden on the financial institutions in Australia. It is also found that the compliance cost is quite substantial and stands at about A$1.02 billion for the banking industry as a whole at 2007 prices. The per capita burden has been estimated at A$50 approximately. The author's estimate compares well with other publicly available estimates.
Research limitations/implications
Limitations of case study research method apply. Through this case study, prior work on regulatory cost burden on organisations is confirmed – in the context of financial institutions.
Practical implications
Policy makers and reporting entities the world over would particularly be interested in the findings as it helps gauge the cost impact of regulatory burden the legislation imposes. The compliance cost burden could affect the overall competitiveness of Australian financial institutions particularly because of the small size of the economy in terms of population.
Originality/value
This is the first paper in the literature that has attempted to estimate the cost of AMLCTF compliance. It is believed that the study could provide an impetus for similar studies in other jurisdictions.
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Ahmad Al-Hiyari, Mohamed Chakib Kolsi and Abdulsalam Mas’ud
This paper aims to examine the antecedents of the Automated VAT Solution (AVS) and its eventual consequence on value-added tax (VAT) compliance costs among the small and medium…
Abstract
Purpose
This paper aims to examine the antecedents of the Automated VAT Solution (AVS) and its eventual consequence on value-added tax (VAT) compliance costs among the small and medium enterprises (SMEs) in Gulf Cooperation Countries (GCC), with the United Arab Emirates (UAE) as context.
Design/methodology/approach
A quantitative research design was deployed through a survey of 576 SMEs in the UAE. The data was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM).
Findings
The findings revealed that technological factors (IT complexity and IT competency) and organizational factors (management support and size of SME) significantly influence AVS adoption. However, only consumer pressure was found to be significant among the environmental factors, and AVS adoption was found to have a significant negative effect on the VAT compliance cost.
Research limitations/implications
A lower coefficient of determination for the effect of AVS adoption on VAT compliance cost meant that there may be other accounting-related technologies that improve operational efficiency and process automation and, in the long run, lower the cost of VAT compliance. These technologies should be included in future studies.
Practical implications
The findings imply that the adoption of AVS among SMEs is highly desirable, as it reduces VAT compliance costs. Increased regulatory pressure by the UAE’s policymakers is also desirable to accelerate AVS adoption for enhanced cost reduction and revenue maximization from the perspectives of both the government and SMEs.
Originality/value
To the best of the authors’ knowledge, this study could be the first to expand the Technology-Organization-Environmental (TOE) Framework through the integration of determinants of AVS adoption and VAT compliance costs among SMEs in GCC countries.
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This study aims to investigate the relationship between trust in government, value added tax (VAT) compliance costs and VAT compliance in the Jordanian retail industry context.
Abstract
Purpose
This study aims to investigate the relationship between trust in government, value added tax (VAT) compliance costs and VAT compliance in the Jordanian retail industry context.
Design/methodology/approach
The study makes use of an online questionnaire survey to collect the required data, and the research model is eventually validated based on 189 responses gathered from the retail industry in Jordan. The obtained data was analyzed using partial least squares-structural equation modeling to examine the effects of trust in government and costs of VAT compliance on VAT compliance.
Findings
The results showed that VAT compliance costs have no significant influence on VAT compliance; while trust in government was found statistically positive significant with VAT compliance.
Practical implications
This study’s results are expected to have implications for VAT authorities and policymakers in Arab countries, like Jordan in their policies formulation to enhance VAT compliance in retail industry. The study’s findings are alerting the policymakers for the positive noneconomic consequences of VAT compliance. It provides evidence that trust in government can increase VAT compliance.
Social implications
The results of the research have a plentiful of social implications. Higher VAT compliance will enable higher levels of government spending on a many of social targets such as health, education, welfare programs and infrastructure.
Originality/value
While the study builds on recent research examining how to incentivize VAT compliance, it simultaneously seeks to make three contributions. First, the study design aims to apply recent advances in behavioral sciences (impact of trust in government and VAT compliance costs) in a policy area that has not seen much use of such interventions in the Jordanian context (i.e. VAT compliance). Second, the study is government procedures pertinent in the sense that it aims to increase the effectiveness of existing government policies by complementing them with behavioral primes. Third, there is nearly no literature found applying this topic in a developing country such as Jordan. To the best of the author’s knowledge, this is the first study that examines the trust in government and VAT compliance costs on VAT compliance among Jordanian retail industry. Thus, this paper contributes to mitigating the literature gap by providing empirical evidence concerning the influence of trust in government and VAT compliance costs on the retail industry VAT compliance in the Jordanian context.
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