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1 – 10 of over 14000Norasmila Awang and Azlan Amran
Tax compliance involves complying with the tax rules and regulation, which encompasses the filing, reporting and payment of tax. The two aspects of tax non-compliance are tax…
Abstract
Purpose
Tax compliance involves complying with the tax rules and regulation, which encompasses the filing, reporting and payment of tax. The two aspects of tax non-compliance are tax evasion and tax avoidance. While the ethicality of tax evasion as an illegal act of reducing tax is clear, the consensus regarding the morality of tax avoidance as a legal act of minimizing tax is mixed. This chapter will discuss the ethical perspective of tax (non)compliance.
Design/methodology/approach
We approach this topic by discussing the two important terms of tax non-compliance namely tax evasion and tax avoidance from the ethical point of view. The tax evasion and tax avoidance were critically evaluated to justify whether it is ethical or not. The tax non-compliance is also associated to the corporate governance which if do effectively help to protect the interest of larger stakeholder.
Findings
In a nutshell, tax non-compliance such as tax avoidance and tax evasion is unethical act and these acts of non-compliance go against the spirit of contemporary corporate governance which sought to protect the interest of the stakeholders.
Research limitations/implications
Tax non-compliance could enhance shareholders wealth (in terms of reduced tax); it affects the distribution of wealth (public benefits financed by tax revenues) among the society at large as another stakeholder affected by such act. Future research may be conduct to investigate this to the larger sample.
Social implications
Firms should avoid engaging in non-compliance activities such as engaging in tax evasion and aggressive tax avoidance as part of its social obligation to the society in line with the spirit espoused in the contemporary corporate governance.
Originality/value
This paper argues that tax non-compliance is unethical and highlights the importance of having efficient corporate governance for larger stakeholder’s interest.
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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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Rida Belahouaoui and El Houssain Attak
This study aims to understand the determinants of the relationship between tax authorities and taxpayers in the digital era and how this relationship impacts tax compliance…
Abstract
Purpose
This study aims to understand the determinants of the relationship between tax authorities and taxpayers in the digital era and how this relationship impacts tax compliance behavior, especially in the context of emerging countries like Morocco.
Design/methodology/approach
A qualitative methodology was adopted, involving interviews with tax inspectors and auditors, certified accountants’ experts and tax consultants. Data analysis was conducted using IRAMUTEQ software.
Findings
The research highlights that the relationship's quality and the level of mutual trust between tax authorities and taxpayers are critical in determining tax compliance in the digital era. Central factors affecting this relationship encompass effective communication, simplification of tax procedures, clarity of tax laws and the digitization of tax services. Furthermore, the study emphasizes that these dynamics and determinants significantly influence the tax compliance behavior of taxpayers in Morocco, revealing intricate connections between relational aspects and compliance attitudes.
Practical implications
The findings suggest that fostering a mutually trusting relationship, through improved communication, simplification and digitization, can enhance taxpayer compliance. This is valuable for policymakers and tax authorities developing strategies to improve tax systems in emerging countries.
Originality/value
This study contributes to the sparse literature on the relationship between tax authorities and taxpayers in the and digital era, offering new insights into factors that influence tax compliance in the post COVID-19 crisis context. Its practical recommendations provide a foundation for developing strategies aimed at improving this relationship and, consequently, taxpayer compliance behavior in emerging countries.
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Farah Nabihah Rahman, Salwa Hana Yussof and Khadijah Isa
This study aims to examine how Islamic educators’ perceptions on the imposition of personal income tax influences tax compliance behaviour in Malaysia.
Abstract
Purpose
This study aims to examine how Islamic educators’ perceptions on the imposition of personal income tax influences tax compliance behaviour in Malaysia.
Design/methodology/approach
A qualitative approach was adopted, using semi-structured interviews through online platforms. Participants were Islamic educators from higher educational institutions, who have been taxpayers for at least 10 years. They are assumed to hold high religious values, to possess knowledge about Islamic principles and to have adequate taxpayer experience.
Findings
The findings revealed that while all participants agreed that income tax imposition is permissible in Islam, they had different views on taxing side income. Side income from part-time jobs was viewed as taxable income, but side income from Islamic religious preaching was viewed as not subject to tax. Hence, participants’ tax compliance was influenced by their understanding. Wrong understanding leads to unintentional tax non-compliance. This study also found that religiosity promotes tax compliance behaviour.
Practical implications
The present study’s results may help the tax authority develop a mechanism from which to educate taxpayers and increase their awareness about properly reporting income from side jobs.
Originality/value
Prior studies examining the influence of religious beliefs on tax compliance have been conducted across religions. The present study was conducted with Muslim participants in Malaysia, and it used a qualitative approach to explore the issue more in-depth.
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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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Mohd Allif Anwar Abu Bakar, Mohd Rizal Palil and Ruhanita Maelah
This study examined social media, tax morale, and tax compliance behaviour. Partial Least Square-Structural Equation Modelling (PLS-SEM) was utilized to investigate the…
Abstract
This study examined social media, tax morale, and tax compliance behaviour. Partial Least Square-Structural Equation Modelling (PLS-SEM) was utilized to investigate the quantitative data gathered from 592 salaried and self-employed taxpayers in East Malaysia, comprising two regions – Sabah and Sarawak. The results showed that social media had no significant effect on tax compliance. There was, however, a significant and negative relationship between social media and tax morale. A significant and positive effect of tax morale on tax compliance was also discovered. The bootstrapping technique indicated that tax morale mediates the association between social media and tax compliance. This research is among the earliest in a developing country to investigate the effect of social media in enhancing tax compliance, thus, contributing to the tax literature with a broader focus.
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This chapter investigates the effects of the corporate sector on the effectiveness of selected tax compliance instruments in the context of large corporate taxpayers belonging to…
Abstract
This chapter investigates the effects of the corporate sector on the effectiveness of selected tax compliance instruments in the context of large corporate taxpayers belonging to the finance, manufacturing, and service sectors. Applying multilevel logit models based on real tax office and survey data from Bangladesh, it is found that the filing compliance of large corporate taxpayers is influenced by penalty, tax audit, and taxpayer services, while reporting compliance is influenced by tax audit, criminal prosecution, and tax simplification. In the case of payment compliance, two coercive instruments – penalty and tax audit – have been found to be statistically significant. However, when sector characteristics are considered, the extent of the influence of these instruments, and, in some cases, their statistical significance changes. This suggests that the effectiveness of tax compliance instruments, among other things, largely depends on the sector affiliation of corporate taxpayers. Overall, this study establishes that corporate sector plays an important role in the effectiveness of tax compliance instruments, with the caveat that findings might be different if working definitions of the study variables were measured differently.
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This brief paper discusses the relevance of conducting surveys that measure individuals’ attitudes for understanding fiscal behaviour. While many surveys assess individuals’…
Abstract
This brief paper discusses the relevance of conducting surveys that measure individuals’ attitudes for understanding fiscal behaviour. While many surveys assess individuals’ attitudes towards paying taxes (e.g. by asking them to what extent they believe tax evasion is ever justified), it is less clear whether individuals’ responses to such survey questions are indicative of the way they would behave in reality. The paper presents a discussion of the way attitudes have been assessed in tax surveys and assesses existing evidence to support a link between these attitude measures and actual compliance behaviour. The paper suggests several avenues to improve the predictive value of attitude measures, such as increasing the specificity of measures, using evaluation scales or mitigating social desirability biases. A series of recommendations are made for measuring attitudes and interpreting attitude surveys for the use of researchers planning to conduct survey work, as well as for the use of findings from taxpayer surveys in the design of tax policy and administration.
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K-Rine Chong and Murugesh Arunachalam
This study examines the determinants of enforced tax compliance behavior of Malaysian citizens where trust in tax authorities is assumed to be a mediator. Quota sampling method…
Abstract
This study examines the determinants of enforced tax compliance behavior of Malaysian citizens where trust in tax authorities is assumed to be a mediator. Quota sampling method was used to select a sample of 340 participants to participate in a survey. A two-step structural equation modeling (SEM) process was adopted to test a framework comprising 13 hypotheses. Model fit was initially measured using confirmatory factor analysis (CFA) while model specification was applied in the second stage to test the structural relationship. The mediating effects of trust in tax authorities were tested via Baron and Kenny (1986) approach, bootstrapping, and AMOS AxB estimand. The findings confirmed that trust in government, trust in tax administrator, power of Inland Revenue Board of Malaysia, and awareness influence enforced compliance. However, tax morale and tax amoral behaviors do not influence enforced compliance. The findings suggest that citizens would fulfill their tax responsibilities if they believe that tax authorities are effective in tax administration. Trust in government fosters trust in the tax authorities. This study contributes to existing literature by confirming the factors that affect enforced tax compliance.
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Fadi Alasfour, Martin Samy and Roberta Bampton
This paper investigates how individuals determine their tax morale levels and tax compliance decisions. Using a questionnaire survey and a multivariate tests procedure, the paper…
Abstract
This paper investigates how individuals determine their tax morale levels and tax compliance decisions. Using a questionnaire survey and a multivariate tests procedure, the paper revealed that tax evasion is morally acceptable in Jordan under some circumstances, indeed there could be an affirmative duty to evade taxes since the government is perceived to be highly corrupted. The findings also show that while the extent of the governmental corruption has a positive (negative) effect on tax non-compliance (tax morale), the efficient expenditure of governmental tax revenues has a negative (positive) impact on tax non-compliance (tax morale). The individuals’ tax non-compliance decisions are likewise positively affected by the tax rates and by the taxation system’s being perceived as unjust, but decline with the increase of audit rates and the subsequent penalty rates. The degree and effectiveness of these determinants are dependent on the individual’s level of risk aversion, financial constraints and the surrounding referent groups. The results also confirm that individual factors play a significant role in determining the level of tax morale. Overall, the tax morale level and the compliance decision of an individual are greatly influenced by gender, age, educational level, occupational status and religious background.
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