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In this study, we examine the role of temporal framing in the context of tax audit risk. Using construal-level theory, we propose that compared with an every-year frame (e.g., 1.5 million returns are audited every year), framing audit risk in an everyday frame (e.g., 4,000 returns are audited every day) will make audit risk seem more likely and thus increase taxpayer compliance. We test whether perceived fairness of the tax system, an individual difference variable related to tax compliance, moderates the effect of temporal framing on behavioral intentions. The results show that communicating risk in a day frame rather than a year frame increases compliance for taxpayers who perceive the tax system as unfair but not for taxpayers who perceive the tax system as fair. Increasing compliance among taxpayers who perceive the tax system as unfair is crucial, as they are less likely to be compliant. Thus, framing audit risk can assist in increasing taxpayer compliance.

In this study, we examine the impact of audit protection services on individual taxpayer decision making. Audit protection services provide additional support for taxpayers in the event of an audit including preparation and representation. While these services could provide taxpayers with additional confidence, such services could also foster greater reliance on tax software, possibly resulting in riskier tax decisions. Drawing on risk homeostasis theory, we investigate two factors that could affect taxpayer reliance: the amount of taxes owed and the extent of audit protection services. Our results indicate that taxpayers are more likely to rely on tax software prompts when there are full audit protection services and a greater amount of taxes owed. Further, we find that the provision of full audit protection services reduces the likelihood that taxpayers change their tax reporting behavior. Collectively, we provide evidence on taxpayer interactions with tax software.

This study investigates whether consideration of future consequences (CFC), Machiavellianism (MACH) and the perceived role of ethics and social responsibility (PRESOR) enhance understanding of the impact of tax audit risk on compliance.

A between-subjects experiment is conducted to test the hypotheses. A hypothetical tax audit case (or lack thereof) is used to create a high (low) perceived tax audit risk. The usable responses of 144 participants representing the general taxpayer population are analyzed.

The results suggest that taxpayers with lower CFC, MACH or PRESOR scores are more compliant when tax audit risk is high than low. In contrast, taxpayers with higher CFC, MACH or PRESOR scores are indifferent toward high or low tax audit risk.

Research can elicit consideration of future consequences of being detected for taxpayers with lower CFC scores to increase compliance. Additionally, increased saliency of tax audit risk and detection of noncompliance in a tax audit can enhance the compliance of taxpayers with lower MACH scores. Dissemination of information via social media on the value of ethical and social responsibility of compliance can also increase the compliance of taxpayers with higher PRESOR scores.

This study helps researchers and the tax authority better understand the complexities of compliance and the ethical dilemmas that taxpayers face, especially when a considerable amount of cash income is involved. To deter underreporting of cash income, the tax authority can use social media to explain how data analytics tools can facilitate the analysis and integration of multiple sources of a taxpayer’s income and expenses.

Prior studies present participants with objective tax audit rates, such as 5, 25 and 30 (Cullis et al., 2006; Maciejovsky et al., 2007; Trivedi et al., 2003) or 50% (Maciejovsky et al., 2012) to investigate tax compliance. However, the actual tax audit rate is very low (about 1%) due to the limited resources of the tax authority (Alm and Torgler, 2011). To attenuate perceptions of unrealistic tax audit rates, this study operationalizes high (low) tax audit risk via a hypothetical tax audit case (or lack thereof) to examine the impact of tax audit risk on compliance.

The purpose of this paper is to focus on the role of the tax agent as a preparer of tax returns and provider of professional tax advice under a system based on self‐assessment principles. It recognises the competing pressures under which tax agents attempt to discharge their professional responsibilities, and examines the implications for potentially unethical behaviour.

The paper uses a mail survey of tax professionals in Western Australia. Respondents are presented with realistic tax return scenarios, in which the demands of the client are varied according to the risk of audit, the severity of tax law and the materiality of dollar amounts involved.

The findings suggest that the severity of tax law violation is an important factor in ethical decision‐making, but that audit risk and the amounts involved are not.

The lack of support for audit risk as an influential variable is an important outcome, because policy makers have traditionally proceeded on the basis that increases in audit probabilities will reduce the likelihood of taxpayers adopting aggressive tax reporting positions. However, since the findings are based on an Australian sample, care must be taken in generalizing these findings elsewhere.

The implications are important in that alternative enforcement and compliance strategies must be considered by tax administrators.

The paper extends empirical research into taxpayer attitudes to those of the preparers of tax returns. The findings will be of relevance both to tax agents and to tax administrators.

This study aims to analyze the relationship between a company’s use of aggressive tax planning and several audit committee members’ characteristics, namely, independence, expertise, diligence and gender diversity.

This paper is an empirical research using archival data from 289 Canadian listed companies for the 2011-2015 period.

The authors find that measures of expertise and diligence are significantly related to tax aggressiveness. Financial expertise and tenure on the audit committee play an important role in constraining tax aggressiveness, as does having a larger audit committee.

One limitation – and an area for future research – is that the effects of the audit committee members’ relationships with managers of the firms were not investigated.

Knowledge of audit committee characteristics may send a signal to shareholders, investors and tax agencies regarding the company’s potential risk with respect to aggressive tax planning. The analysis provides useful insights for board governance committees when determining the profile of persons to nominate for board positions and committees. In discussing tax-risk management, the study may heighten audit committee members’ awareness of their role in this respect.

This study’s results indicate that even in a setting where incentives for firms to be tax-aggressive is low compared to high-tax rate countries, there is variability in firms’ tax aggressiveness. This situation allows us to find audit committee characteristics that are effective in decreasing tax aggressiveness.

The purpose of this study is to examine the impact of internal and external corporate governance mechanisms on the probability of engaging in tax aggressiveness.

This study uses a sample of 52 firms listed on the Tunis stock exchange observed over the 2003–2016 period (The authors had to stop sampling in 2016 because the measurement of tax aggressiveness requires 4 years after the year of study. Therefore, the data on the measurement of tax aggressiveness were collected until 2020). This paper uses the logistic regression technique.

The results of the first logistic regression show that ownership structure and the supervision role of the tax authorities are determining factors that explain tax aggressiveness; while, the attributes of the board of directors does not seem to explain the probability of engaging in aggressive tax strategies. To further probe this question, the authors carried out additional analyses that examine the moderating effect of controlling shareholders on the relationship between the attributes of the board and tax aggressiveness. The results of our additional regressions indicate that the effect of these attributes improves in cases of non-presence of a controlling shareholder. This implies that the role that the board of directors can play in controlling management is possibly conditioned by the presence or no of control block holders.

The major limitation of this study is that it concentrates only on Tunisian listed companies because they are the only companies the financial statements of which are publicly available in Tunisia. Although the sample is relatively small due to the problem of data availability, it appears to be satisfactory given the 15-year sampling period (i.e. from 2003 to 2016).

The results of the study may help Tunisian regulators create requirements for corporate governance (such as the size of the board of directors and audit committee or the concentration of ownership). Moreover, this study not only focuses on the effect of corporate governance mechanisms on tax aggressiveness but also provides shareholders with information on the governance mechanisms to which they should pay more attention in their desire to obtain more efficient tax results.

The findings are also useful for tax policymakers seeking to identify the circumstances that give rise to an increased risk of tax aggressiveness, as tax aggressive behavior and the resulting non-payment of taxes also have societal implications. In fact, taxes also play an important role in financing the provision of public goods, making corporation tax a matter of public concern.

The present study differs from others in the existing literature by designing a more precise measure of tax aggressiveness and examining the interaction between two internal governance mechanisms; the presence of a controlling shareholder and the attributes of the board of directors. This study also examines the impact of the control exercised by the tax authorities on the behavior of firms in terms of tax aggressiveness.

This paper represents a discussion of transfer pricing (TP). Key factors are identified and propositions developed from tax accounting and other perspectives. Stages of the TP decision process are identified along with the critical factors directly affecting sales and a TP audit. Propositions are derived which show relationships among these variables and tax rates, competition, and TP methodologies. Finally, academic research implications are suggested.

The purpose of this paper is to investigate the direct and indirect links between book-tax differences (BTDs) and audit quality using accounting conservatism (proxy of earnings quality). Hence, this paper seeks to extend prior audit quality research.

This study uses a sample of Tunisian listed firms on the Tunis Stock Exchange and operating in the industrial and commercial sectors during 2005-2012. This investigation is motivated by structural equations system models that specify both a direct link and an indirect link that is mediated by information reflected in BTDs.

The results show that for the Tunisians companies, firms with large BTDs are associated with higher audit quality implies that such BTDs represent an observable proxy for earnings quality that affects auditor decisions. The authors find statistically an indirect link between abnormal BTDs and audit quality that is mediated by earnings quality. The current study also provides evidence that information reflected in BTDs can improve audit quality.

The findings may be of interest to the academic researchers, practitioners and regulators who are interested in discovering the informational value of BTDs in the audit process.

This paper extends the existing literature by examining the mediation effect of information reflected in BTDs on relationship between BTDs and audit quality.

This study examines the moderating effect of XBRL mandatory adoption on the association between managerial ability and corporate tax outcomes.

This study used a quantitative method with panel data regression models using a sample of listed firms on the Indonesia Stock Exchange from 2010 to 2019.

The regression results indicate that XBRL adoption moderates the relationship between managerial ability on tax avoidance and tax risk. Firms with higher managerial ability have relatively greater tax avoidance practices and lower tax risk following XBRL adoption. In this study, the authors document unfavorable and unexpected consequences of XBRL in an emerging country.

Results are from a sample of firms from one emerging country.

It becomes important and necessary to develop more and better taxonomies with standardized extensions related to taxes information in the XBRL financial reporting to support the tax administrator’s performance in assessing firms’ tax avoidance and tax risk. The authors underscore the importance of improving taxes tags, including tags from financial statements and the disclosure section. This study may also inform policymakers in other countries that more adequate tax tags are needed to leverage benefit from XBRL adoption in monitoring and assessing corporate tax avoidance and tax risk.

This study is among the first to test an explanation for the moderating role of XBRL adoption on the association between managerial ability and corporate tax avoidance and tax risk.

This study examines the association between corporate tax avoidance and the cost of debt (COD). It also investigates the moderating effect of integrated report (IR) assurance on tax avoidance/COD relationship.

Based on a sample of 76 South African companies listed on the Johannesburg Stock Exchange (JSE) from 2010 to 2020, the authors built and estimated regression models using the feasible generalized least squares (FGLS) method. The authors significantly mitigated the endogeneity concerns using propensity score matching (PSM), difference-in-differences (DID) analysis and fixed effects regression.

The authors found that tax-avoiding firms pay higher costs of debt due to information asymmetries and agency problems. Bankers systematically reflect the increase in tax avoidance by adjusting the COD upward. However, results show that the assured IR disclosure mitigates these problems, which decreases the COD for tax avoidance strategies adopters. Using a quasi-natural experiment, well-grounded evidence was provided showing that the decrease in the COD for debtors who engage in tax avoidance practices is attributed to the availability of an assured IR.

This study provides plausible evidence in favor of the role that an assured IR can play in capital allocation decisions. Consequently, it is likely to push policymakers in South Africa and other countries to set standards for IR assurance.

This is the first study that investigates and validates the role of IR assurance in solving the controversy about the “tax saving effect” vs. “risk exposure effect” that bankers face while identifying debtors with successful (non-risky/cash-saving) tax avoidance practices and those with non-successful (risky) ones.