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Article
Publication date: 6 December 2023

Rida Belahouaoui and El Houssain Attak

This study aims to understand the interaction between tax fairness perceptions, equitable tax burden distribution and tax compliance within Morocco’s unique socio-economic…

Abstract

Purpose

This study aims to understand the interaction between tax fairness perceptions, equitable tax burden distribution and tax compliance within Morocco’s unique socio-economic context, with the goal of uncovering strategies to enhance tax compliance.

Design/methodology/approach

Using the Delphi method, this study engaged tax experts in the Moroccan context to explore the impact of taxpayers’ perception of fairness, tax rates and tax burden on compliance. Their responses were gathered and analyzed with the aid of IRaMuTeQ software, which helped the authors identify themes relevant to the research question.

Findings

The preliminary results indicate a positive correlation between perceptions of tax fairness and compliance behavior, corroborating earlier studies conducted in different contexts. Notably, a substantial majority of Moroccan taxpayers perceive the current tax system as inequitable, deeming tax rates too high and the tax burden unfairly distributed among various taxpayer categories. This perception potentially influences their voluntary tax compliance behavior.

Practical implications

The findings have significant policy implications for the Moroccan Government and stakeholders. They suggest that by improving tax fairness, particularly by aligning tax assessment and payment modalities for employees, civil servants and small to medium enterprises, policymakers can encourage higher voluntary tax compliance, thereby potentially enhancing the efficiency of the Moroccan tax system.

Originality/value

This study adds to the existing body of knowledge by exploring the dynamics of tax fairness and compliance behavior in Morocco, a context which has been significantly understudied.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Book part
Publication date: 16 June 2023

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.

Article
Publication date: 9 February 2023

Edward Nartey

Tax compliance studies have been extensively conducted across various jurisdictions. However, only partial answers have so far been provided for the question: “Why do people pay…

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Abstract

Purpose

Tax compliance studies have been extensively conducted across various jurisdictions. However, only partial answers have so far been provided for the question: “Why do people pay tax?”. The aim of this study is to report tax compliance behavior from both the supply side (SMEs) and demand side (tax collecting authorities) in Ghana.

Design/methodology/approach

A survey of 233 responses comprising 169 SME managers and 64 tax officials of the Ghana Revenue Authority qualified for the study. Data were modelled using covariance-based structural equations modelling (AMOS Graphics version 23).

Findings

Isomorphic forces and tax fairness have a positive impact on tax compliance. However, the impact of strategic response on tax compliance was insignificant, which suggests that, although SMEs in Ghana adopt different strategies to respond to institutional pressures, such strategies do not influence their tax compliance behavior.

Research limitations/implications

This study investigates tax compliance behavior among SMEs using a survey design from only one developing country – Ghana. Based on a cross-sectional survey and the approach used to gather the sample data, assessing any changes over time may be impossible.

Practical implications

The findings suggest that SMEs’ tax compliance behaviors are shaped by institutional pressures in terms of obeying tax laws and filling their tax returns in a consistent manner. Given that isomorphic forces and tax fairness are significant predictors of tax compliance, SME tax compliance can be improved if strong institutions are incorporated in the administration of taxes. The findings also support the logical thinking of tax fairness theory that the higher SMEs perceived the tax system to be fair, the more their compliance behavior is encouraged.

Originality/value

This study represents one of the few to provide preliminary empirical evidence on tax compliance from the supply side of taxation in a developing economy. Therefore, the findings have implications for taxpayers in Ghana.

Details

International Journal of Sociology and Social Policy, vol. 43 no. 11/12
Type: Research Article
ISSN: 0144-333X

Keywords

Article
Publication date: 5 May 2023

Prianto Budi Saptono and Ismail Khozen

Even as governments worldwide take extraordinary measures and spend unprecedented amounts of their state budgets to combat COVID-19, tax compliance remains challenging. Therefore…

Abstract

Purpose

Even as governments worldwide take extraordinary measures and spend unprecedented amounts of their state budgets to combat COVID-19, tax compliance remains challenging. Therefore, this study employs previously identified predictors to investigate the factors that persuade individual taxpayers to comply with the law.

Design/methodology/approach

Individual taxpayers in Indonesia (N = 699) who had experienced COVID-19-related benefits were asked to assess the provided evaluation regarding the tax compliance intention and its determinants. The bootstrapping analysis was employed using smart partial least squares (SmartPLS) to test the hypotheses.

Findings

The results suggest that the perceived fiscal exchange, tax morality, tax fairness, tax complexity and the power of authority are significant determinants of tax compliance intention. This study also supports the indirect effects of numerous factors on tax compliance intention through the perceived fiscal exchange and tax morality. In practice, reminding taxpayers of how tax payments fund public services, improving taxpayer morale, increasing the perceived fairness of the tax system, streamlining the tax code and managing the effectiveness of tax administration could all lead to a greater intention to comply with the law.

Originality/value

In addition to highlighting the dynamics of tax compliance amid the unprecedented pandemic crisis, our findings also provide insight into the importance of perceived fiscal exchange and tax morality for achieving and sustaining planned behavior to comply with tax rules.

Details

International Journal of Sociology and Social Policy, vol. 43 no. 11/12
Type: Research Article
ISSN: 0144-333X

Keywords

Article
Publication date: 8 February 2024

Ahmad Farhan Alshira’h, Malek Hamed Alshirah and Abdalwali Lutfi

This study aims to determine the impact of forensic accounting, probability of detections, tax penalties, government spending, tax justice and tax ethics on value-added tax (VAT…

Abstract

Purpose

This study aims to determine the impact of forensic accounting, probability of detections, tax penalties, government spending, tax justice and tax ethics on value-added tax (VAT) evasion.

Design/methodology/approach

The study uses partial least squares-structural equation modeling to examine the connection between tax sanction, probability of detection, tax ethics, tax justice, forensic accounting and government spending on VAT evasion based on 248 responses collected from the retail industry in Jordan.

Findings

The findings also demonstrate that there is a negative correlation between tax sanctions, probability of detection, tax ethics, tax justice, forensic accounting, government spending and VAT evasion efficiency.

Practical implications

The results, considering forensic accounting and government expenditure considerations, may emphasize the importance of the tax sanction, probability of detection, tax ethics, adoption of tax justice in the public sector and tax authority. Additionally, the findings are important for regulators and decision-makers in announcing new laws and strategies for VAT evasion.

Social implications

It turns out that the tax authority and public sector can definitely improve their capacity to protect public funds and limit VAT evasion practices within SMEs by adopting increased tax sanctions, probability of detection, tax ethics, tax justice, forensic accounting and government spending.

Originality/value

Numerous studies have been conducted at the individual level in the context of income tax on the link between tax punishment, probability of detection, tax ethics, tax justice, forensic accounting and tax evasion. This study expands on the scant evidence of this connection to the retail business in the context of VAT avoidance. Additionally, it advances prior studies by integrating fresh elements, such as forensic accounting and government expenditure, that have never been considered in connection to VAT evasion in the retail sector.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 12 July 2023

Arshad Hasan, Naeem Sheikh and Muhammad Bilal Farooq

This study aims to examine why tax reforms fail and explores how tax collection can be improved within a developing country context.

Abstract

Purpose

This study aims to examine why tax reforms fail and explores how tax collection can be improved within a developing country context.

Design/methodology/approach

Data comprise 28 semi-structured interviews with taxpayers, tax experts and tax authority personnel based in Pakistan. The results are analysed using a combined lens of taxpayer trust and tax agencies’ capabilities.

Findings

Tax reforms failed to build taxpayers’ trust and tax agencies’ capabilities. Building trust is challenging and demands extensive ongoing engagement with taxpayers while yielding gradual permanent results. This requires enhancing confidence in government; educating taxpayers; removing complexities; introducing transparency and accountability in tax agencies’ operations and the tax system; promoting procedural and distributive justice; and reversing perceptions of corruption through reconciliation and stakeholder inclusivity. Developing tax agencies’ capabilities requires upgrading outdated technologies, systems and processes; implementing governance and organisational reforms; introducing an oversight board; and recruiting and training skilled professionals.

Practical implications

The findings can assist policymakers and tax collection authorities in understanding why tax reforms fail and identifying potential solutions.

Originality/value

This study contributes to the emerging literature by exploring tax administration failures in developing countries. It contributes to the literature by engaging stakeholders to understand why reforms fail and potential solutions to stimulate tax revenues.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 23 November 2023

Lemessa Bayissa Gobena

The aim of this study was to examine the moderating roles of the legitimate power and distributive justice of the tax authority on the effect of procedural justice on the…

Abstract

Purpose

The aim of this study was to examine the moderating roles of the legitimate power and distributive justice of the tax authority on the effect of procedural justice on the voluntary tax compliance of taxpayers in Addis Ababa, the capital of Ethiopia, by using survey data collected from taxpayers in the city.

Design/methodology/approach

Data for the study were collected from 800 sample taxpayers who were drawn by using a systematic sampling technique. The variables of the study were constructed as indices from composing the scale items developed and tested for their validity by prior researchers. Having collected the data by using a 7-point Likert scale questionnaire and forming the latent variables, hierarchical multiple regressions were applied to determine the moderating effects of the two variables (i.e. legitimate power and distributive justice) on the effect of procedural justice on voluntary tax compliance.

Findings

The author found that both the legitimate power of the tax authority and distributive justice of the authority moderate the effect of procedural justice on voluntary tax compliance. The moderating roles of the two variables appear to be opposite in that low (but not high) distributive justice and high (but not low) legitimate power of the tax authority stimulate the effect of procedural justice on voluntary tax compliance.

Research limitations/implications

The first limitation is that the data used in this study are self-reported data while the subject of the study is sensitive subject about which respondents are not believed to provide genuine responses. This is presumably because taxpayers are less likely to confess their tax evasion as they fear legal actions following their self-report. Hence, other controlled methods such as the experimental design are recommended to replicate the results of this study. The second limitation is that data for the study were gathered through a one-time cross-sectional survey and hence it would not warrant a causal claim between the study variables. Consequently, other research with a longitudinal or experimental design might warrant a causal relationship between the variables.

Practical implications

Therefore, the tax authorities must endeavor to attain high legitimacy by doing “the right things” as perceived by the taxpayers so that their tax-related decisions gain acceptance from the decision recipients. Tax policy makers as well ought to consider the importance of and the relationship between procedural justice, distributive justice and legitimate power of the tax authority in order to attain the maximum possible voluntary compliance of taxpayers that significantly reduces the administrative cost of taxes.

Social implications

The study benefits society by enhancing tax compliance and hence helping the government secure a better amount of tax revenue and provide better public goods and services.

Originality/value

The findings of this study are of high theoretical and policy significance. Theoretically, the findings contribute to the integrative literature on economic deterrence and social-psychological factors that are responsible for voluntary tax compliance decisions. The parallel moderating roles of the two variables on the relationship between procedural justice and voluntary cooperation in a single model and in the tax compliance context are novel. In terms of applicability to policy formulations, they shed light on the need for a shift from a pure focus on aggressive tax audits and penalties, especially in emerging economies to a combination of the tax audits and the nurturing of the voluntary deference of taxpayers to the tax authority's decisions. Caution must, however, be taken that the results of this study may not be applicable to tax environments in other countries.

Details

Asian Review of Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1321-7348

Keywords

Article
Publication date: 22 April 2020

Emmanuel Carsamer and Anthony Abbam

The purpose of this study is to assess the suitability of religion and religiosity in small and medium-scale enterprises’ (SMEs) tax compliance in Ghanaian markets. The current…

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Abstract

Purpose

The purpose of this study is to assess the suitability of religion and religiosity in small and medium-scale enterprises’ (SMEs) tax compliance in Ghanaian markets. The current research attempts to obtain insights into the advantages of Ghanaian religious notoriety in tax compliance based on the perceptions of entrepreneurs.

Design/methodology/approach

A questionnaire survey is the main tool used in this research. A total of 472 questionnaires were distributed to SMEs without Ghana revenue authority. Because of self-administered instrument, all the questionnaires were returned for analysis.

Findings

The results suggest that Ghanaian religious notoriety does not explain SMEs’ tax compliance and that tax evasion is seen as ethical. Institutional, firm and entrepreneurs’ characteristics are important determinants of SMEs’ tax compliance.

Practical implications

The results of this research paper will help regulators and Ghana Revenue Authority in developing tax compliance education without compromising on religion.

Originality/value

This paper provides empirical evidence of the suitability of religion and religiosity in emerging markets in general and Ghana in particular and enhances the level of understanding of SMEs’ tax compliance.

Details

Journal of Financial Crime, vol. 30 no. 3
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 22 March 2024

Rida Belahouaoui and El Houssain Attak

This study aims to analyze the tax compliance behavior of family firms by integrating social and psychological norms with legitimacy determinants, focusing specifically on the…

Abstract

Purpose

This study aims to analyze the tax compliance behavior of family firms by integrating social and psychological norms with legitimacy determinants, focusing specifically on the Moroccan context.

Design/methodology/approach

Employing a qualitative research design, the study conducted semi-structured interviews with 30 chief executive officers (CEOs) of Moroccan family firms. The data were analyzed using thematic analysis to unravel the interplay between individual beliefs and societal norms.

Findings

The findings reveal a complex interplay between the personal norms of CEOs and chief financial officers (CFOs) and wider societal and cultural expectations, significantly influencing tax compliance behavior. The study identifies the multifaceted nature of tax compliance, which is shaped by personal ethics, family values and the dominant societal tax culture.

Research limitations/implications

The research is limited by its qualitative approach and focus on Moroccan family businesses, which may not be generalizable to other contexts. Future studies could use a quantitative approach and expand to other geographical settings for a more comprehensive understanding.

Practical implications

Insights from the study can assist policymakers and tax authorities in developing culturally sensitive tax compliance strategies that resonate with family business values.

Social implications

The research underscores the importance of considering sociocultural dimensions in tax compliance, fostering a more cooperative relationship between family businesses and tax authorities.

Originality/value

The study contributes a novel perspective by synthesizing social, psychological and legitimacy factors in understanding tax compliance in the unique context of family businesses.

Details

International Journal of Sociology and Social Policy, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-333X

Keywords

Article
Publication date: 11 July 2023

Ahmad Alshira'h

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.

Details

Journal of Money Laundering Control, vol. 27 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

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