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Article
Publication date: 30 September 2014

Nor Azrina Mohd Yusof and Ming Ling Lai

– This paper aims to present an integrative model in predicting corporate tax fraud.

Abstract

Purpose

This paper aims to present an integrative model in predicting corporate tax fraud.

Design/methodology/approach

This paper is grounded on three theories, namely, the theory of reasoned action, theory of planned behaviour and the “Fraud Diamond Theory”.

Findings

By integrating these three theories, this paper proposes that individual cognitive factors, fraud diamond factors and organizational factors such as normative and control factors influence managers to commit corporate tax fraud.

Practical implications

Practically, the proposed integrative model enables the government and tax authority to understand on why corporate managers engage in corporate tax fraud. It will also allow them to devise practical methods and strategies to prevent the corporate managers to engage in tax fraud.

Originality/value

This study has merit that proposed an integrative model in predicting corporate tax fraud. Research on corporate tax fraud has been the subject of limited investigation; hence, this study contributes to the tax compliance literature by proposing an integrative model to study corporate tax fraud in a Malaysian tax setting. Future studies can be conducted to test the proposed integrative model in examining the circumstances of managers’ intention to commit corporate tax fraud.

Details

Journal of Financial Crime, vol. 21 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 16 September 2019

Lisa Marriott and Dalice Sim

The purpose of this paper is to highlight, challenge and explain the inequitable treatment of tax and welfare fraudsters in the criminal justice systems of Australia and…

Abstract

Purpose

The purpose of this paper is to highlight, challenge and explain the inequitable treatment of tax and welfare fraudsters in the criminal justice systems of Australia and New Zealand. The authors offer prejudice by way of explanation and suggest that it is also prejudice that restricts the implementation of more equitable processes. A second objective of the study is to highlight the importance of critical tax research as an instrument to agitate for social change.

Design/methodology/approach

A survey captures 3,000 respondents’ perceptions of the likelihood that different “types” of people will commit welfare or tax fraud. Using social dominance theory, the authors investigate the extent to which prejudice impacts on attitudes towards those engaged in these fraudulent activities.

Findings

The authors find the presence of traditional stereotypes, such as the perception that businessmen are more likely to commit tax fraud and people receiving welfare assistance are more likely to commit fraud. The authors also find strong preferences towards respondents’ own in-group, whereby businessmen, Maori and people receiving welfare assistance believed that their own group was less likely to commit either crime.

Social implications

Where in-group preference exists among those who construct and enforce the rules relating to investigations, prosecutions and sentencing of tax and welfare fraud, it is perhaps unsurprising that welfare recipients attract less societal support than other groups who have support from their own in-groups that have greater power, resources and influence.

Originality/value

The study highlights the difficulty of social change in the presence of strong in-group preference and prejudice. Cognisance of in-group preference is relevant to the accounting profession where elements of self-regulation remain. In-group preferences may impact on services provided, as well as professional development and education.

Details

Accounting, Auditing & Accountability Journal, vol. 32 no. 7
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 5 October 2015

Frederic Compin

The purpose of this paper is to point out that tax fraud, recognized as a scourge by both governments and responsible tax-payers, hits public finances hard with an…

Abstract

Purpose

The purpose of this paper is to point out that tax fraud, recognized as a scourge by both governments and responsible tax-payers, hits public finances hard with an inevitable knock-on effect on general welfare. Based on this observation, key players interviewed for this paper, including magistrates, a trade unionist and a high-ranking official, will attempt to provide some possible solutions to help understand why significant sections of public opinion consider this very particular form of financial crime to be legitimate, largely inspired by the notion that tax fraud and evasion are socially acceptable and even seen as a national sport in certain countries.

Design/methodology/approach

The survey was carried out among 20 tax officials, a trade unionist, two magistrates and a high-ranking civil servant. The interviewees were carefully chosen for their ability to provide valuable insights into the reasons behind the lenient treatment of fraudsters by a state lacking the necessary means and structures to fight this crime.

Findings

The fight against tax fraud has clearly sparked numerous controversies around evaluation, scope, criminal perpetrators and cooperation between services.

Social implications

Tax fraud, an offence committed with the aim of avoiding taxation or reducing the amount of tax to be paid, ranges from low-level illegal activity, such as undeclared work to make ends meet, to more serious offences, such as value-added tax carousel fraud. All the unpaid tax resulting from such blatant flouting of the law represent a serious loss of revenue for the state and local authorities.

Originality/value

The fight against tax fraud is crucial in determining taxpayers’ acceptance of the contribution required for state expenditure and investment. In a country such as France, where tax fraud is almost a national sport, combating this scourge will help restore the state’s budgetary sovereignty by making it central to people’s concerns about redistributive justice, tax equality and fair access to public goods.

Details

Journal of Financial Crime, vol. 22 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 6 November 2017

Lisa Marriott and Dalice Sim

Individuals with fewer resources often receive more punitive treatment in the justice system than those who are more privileged. This situation is frequently justified…

Abstract

Purpose

Individuals with fewer resources often receive more punitive treatment in the justice system than those who are more privileged. This situation is frequently justified with reference to societal preferences. To test the accuracy of this justification, the purpose of this study is to report on the extent to which the different treatments of tax evaders and welfare fraudsters in the Australian and New Zealand justice systems reflect the views of these societies.

Design/methodology/approach

Attitudes are captured in a survey with 3,000 respondents in Australia and New Zealand.

Findings

When asked directly, the majority of respondents (58 per cent) perceive no difference in people committing welfare fraud or tax evasion. However, responses to presented scenarios on tax evasion and welfare fraud show different tolerances for each crime. When provided with scenarios including crimes and criminals, results show that survey respondents see tax evasion as a less serious crime. However, when asked about their own propensity to commit the same offence, respondents indicate that they are more likely to engage in welfare fraud than tax evasion. The authors also report on factors that have an impact on individual’s attitudes towards tax evasion and welfare fraud.

Social implications

The survey results do not clearly show more punitive attitudes towards tax evasion or welfare fraud. Thus, the authors do not find support for the suggestion that the harsher treatment of welfare fraud can be justified with reference to society’s views.

Originality/value

The study reports on original survey research.

Details

Pacific Accounting Review, vol. 29 no. 4
Type: Research Article
ISSN: 0114-0582

Keywords

Content available
Article
Publication date: 27 July 2020

Zaleha Othman, Mohd Fareez Fahmy Nordin and Muhammad Sadiq

This study provides in-depth explanation of Goods and Services Tax (GST) fraud prevention towards sustainability business.

Abstract

Purpose

This study provides in-depth explanation of Goods and Services Tax (GST) fraud prevention towards sustainability business.

Design/methodology/approach

This study applies a qualitative research method, i.e. case study, to address the specific research objective.

Findings

The finding revealed a GST prevention model towards sustainable business. The finding shows that it is pertinent for the government to set preventive strategies in order to retain sustainable income for the government. Two essential dimensions emerged in the findings to support preventive strategies, namely macro- and micro-level measures.

Practical implications

The findings of this study provide managers, investors and policymakers with evidence to what extent GST fraud could be minimize in order to safeguard government source of revenue and retain sustainable business in a country. As GST is an important source of revenue for the government, it is thus crucial to prevent fraud from occurring.

Originality/value

Past studies have primarily focused on GST implementation from the perspective of service tax effectiveness and efficiency. However, this study examined the impact of GST fraud to determine measures that could ensure service tax sustainability using preventive strategies, in turn, introducing to the existing literature on indirect tax.

Details

Journal of Asian Business and Economic Studies, vol. 27 no. 3
Type: Research Article
ISSN: 2515-964X

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Article
Publication date: 16 October 2007

Konstantin V. Pashev

The paper sets out to study value added tax's (VAT's) exposure to missing‐trader or carousel fraud and possible countermeasures, their costs and benefits.

Abstract

Purpose

The paper sets out to study value added tax's (VAT's) exposure to missing‐trader or carousel fraud and possible countermeasures, their costs and benefits.

Design/methodology/approach

It studies the modus operandi of network fraud by distinguishing it from individual evasion. Drawing on the experience of Bulgaria, it discusses the costs and benefits of the principle of joint liability and of the VAT account, the latter being tried so far only in Bulgaria.

Findings

The study concludes that the possible solutions are in the field of optimizing risk management and the application of the principle of joint liability rather than through tighter controls at entry and on the conduct of business.

Originality/value

Confronted with the drastic increase of carousel fraud, the European Commission identified the urgent need of a coherent strategy to combat it. Yet, neither the literature nor the practices of tax and law enforcement have addressed the threat adequately. Tax evasion literature is focused on the drivers and deterrents of individual evasion, while studies of VAT network crime rarely consider the preventive instruments' extra compliance costs for taxpayers. In this context, Bulgaria's unique experience with the VAT account provides useful insights to policy makers about its limitations and the application of the joint liability principle.

Details

Journal of Financial Crime, vol. 14 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 2 October 2017

Katia Weidenfeld and Alexis Spire

Since 2008-2009, the governments in France and Great Britain have encouraged more rigorous penalization of tax evaders. This paper aims to investigate the implementation…

Abstract

Purpose

Since 2008-2009, the governments in France and Great Britain have encouraged more rigorous penalization of tax evaders. This paper aims to investigate the implementation of these policies on the basis of an important and original empirical material.

Design/methodology/approach

The study done in France relies on interviews conducted with representatives of law enforcement agencies on public statistics and on an innovative database compiled from nearly 600 cases submitted to the judiciary. The comparison with Great Britain is developed through interviews conducted with different participants in the fight against tax fraud and statistical information.

Findings

This paper describes the recent evolution of the machinery for screening tax-related wrongdoings in France and in the UK. It demonstrates that whilst publicly calling for harsh punishment against tax dodgers, in practice, both governments tend to seek a balance between the growing demand for tax equality and the belief that the State should not intervene in the economic realm. This strategy leads to the over-representation of certain categories of taxpayers. Despite the commonalities resulting from the numerous filters before prosecution, the penal strategy takes on two different shapes on either side of the Channel: whereas the British institutions support an “exemplary punitive” system, French regulatory system favours a “quasi-administrative” treatment. The French tax authority continues to use the criminal procedures mainly as a financial instrument for the improved restitution of stolen taxes. The policy of Her Majesty’s Revenue and Customs, supported by the “Sentencing Guidelines”, aims much more at obtaining exemplary convictions.

Originality/value

Based on a large empirical material, this paper highlights the different outcomes of the criminal trials against tax evaders in the two countries.

Details

Journal of Financial Crime, vol. 24 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 18 January 2016

William E. Shafer, Richard S. Simmons and Rita W. Y. Yip

The purpose of this paper is to document relationships between accountants’ socioeconomic beliefs and attitudes and their professional commitment and ethical decisions in…

Abstract

Purpose

The purpose of this paper is to document relationships between accountants’ socioeconomic beliefs and attitudes and their professional commitment and ethical decisions in a domain-specific context. Specifically, it investigates the relationships among Chinese tax accountants’ level of belief in the importance of corporate ethics and social responsibility, affective/normative professional commitment and ethical judgements/intentions in a case involving client pressure to commit tax fraud.

Design/methodology/approach

The study employs a survey of tax practitioners employed by public accounting firms in China. The data are analyzed using linear regression and structural equation modelling.

Findings

The stakeholder view, representing both normative and practical support for the importance of corporate ethics and social responsibility, was strongly and positively associated with professional commitment among tax practitioners. The stakeholder view also exhibited a strong negative association with intentions to engage in tax fraud. Tax accountants who possessed higher levels of professional commitment judged tax fraud as more unethical, and such ethical judgements were associated with a lower likelihood of intending to engage in fraud.

Originality/value

The associations between: first, professional accountants’ beliefs in the importance of corporate ethics and social responsibility and their level of professional commitment; and second, professional commitment and tax professionals’ ethical judgements have received little attention in the prior literature. The findings of this study suggest that the integrity of public accounting services may be influenced by relatively broad socioeconomic attitudes, and that this effect may operate partially through commitment to professional values.

Details

Accounting, Auditing & Accountability Journal, vol. 29 no. 1
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 7 January 2019

Paul Nkoane

The purpose of this paper is to enlighten the reader about the development in tax law. Moreover, the author intends to show that other measures could be implemented to…

Abstract

Purpose

The purpose of this paper is to enlighten the reader about the development in tax law. Moreover, the author intends to show that other measures could be implemented to supplement the existing machinery.

Design/methodology/approach

The paper explores the duty vested in the courts to probe the merits of transactions meant to evade or avoid the burden of tax. So much of the text is based on case law. The methodology is based on literature research rather interpersonal research.

Findings

The paper highlights that the current tax machinery has solved a number of tax issues. However, the machinery has not addressed the problem of fraud committed in the banking sector. The paper therefore recommends solutions to this problem.

Research limitations/implications

The paper was formulated before the current tax laws where implemented. The current law contains the solution this study advanced. In a sense, this study examines the impact of the current law and the duty of the court to probe the merits of impeachable transactions.

Practical implications

The study would give the legislature food for thought and would also guide the courts with matters of tax fraud.

Originality/value

Though the original recommendations form part of the current statute, this study is still immensely original in delivery and thought. It provide not only an original influence on the court but also the legislature with original solution to the existing problem.

Details

Journal of Financial Crime, vol. 26 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 31 December 2015

Donna Yates

This paper aims to discuss the key aspects of the international trade in antiquities and the practice of philanthropic donation of objects to museums that allow for…

Abstract

Purpose

This paper aims to discuss the key aspects of the international trade in antiquities and the practice of philanthropic donation of objects to museums that allow for certain types of tax deduction manipulation, using a case of tax deduction manipulation from Australia and a case of tax fraud from the United States as examples.

Design/methodology/approach

Two thoroughly researched case studies are presented which illustrate the particular features of current and past antiquities donation incentivisation schemes which leave them open to manipulation and fraud.

Findings

The valuation of antiquities is subjective and problematic, and the operations of both the antiquities market and the museums sector are traditionally opaque. Because of this, tax incentivisation of antiquities donations is susceptible to fraud.

Originality/value

This paper presents the mechanisms of the antiquities market and museum world to an audience that is not familiar with it. It then clearly demonstrates how the traditional practices of this world can be manipulated for the purposes of tax fraud. Two useful case studies are presented.

Details

Journal of Financial Crime, vol. 23 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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