Search results

This paper aims to analyse the profiles of high net-worth individuals (HNWIs) who were caught for tax malfeasance during a tax audit and to examine factors that influence tax malfeasance among HNWIs in Malaysia.

This paper examined 235 HNWIs who were involved in tax malfeasance after audited by the Inland Revenue Board Malaysia from year 2009 to 2013. A research model was developed to examine the influence of four independent variables which are tax rate, level of income, source of income and taxation performed by tax professionals on tax malfeasance.

Multiple regression was used to test the proposed research model. The findings show that source of income and taxation performed by tax professionals influence tax malfeasance among HNWIs in Malaysia. This study also uncovers no significant relationship between tax rate and level of income with tax malfeasance of HNWIs.

This study could be the first in Malaysia that has used actual audited data in examining tax malfeasance among HNWIs. This study provides important insights not only to the Malaysian tax authorities but also to tax authorities and tax researchers in other parts of the world, given the fact that tax malfeasance of HNWIs is a prevalent and universal problem.

This paper is an effort to demystify tax havens – what they mean, what they offer and why they are harmful. It offers a detailed analysis of abusive tax planning by multinational corporations, involving the use of tax havens, shedding light on how corporations use “egregious” tax-sheltering techniques right from their incorporation to avoid payment of income taxes. The paper also discusses global efforts against the phenomenon and policy recommendations.

The paper brings together definitions from various sources to accurately define and identify tax haven economies. The key contribution of the paper is to diagrammatically explain the use of tax havens by MNCs right from the time they are incorporated. It explains how every big and small corporate decision is motivated by the desire to save taxes and how tax havens come in handy for such corporations.

This paper finds that base erosion and profit shifting (BEPS) is a pervasive phenomenon, largely due to the suppliers of tax haven operations. Here, corporate decisions are divided into strategic and operational and further subdivided into investing, operating and financing activities, and provide real-life corporate examples of how tax havens fit into almost every corporate decision. This is the key contribution of the paper.

This is a review paper that sums up knowledge about tax havens and their use by MNCs. It does not, however, use empirical data to corroborate its findings. It would be interesting to see empirically whether MNCs with greater tax haven operations actually have lower effective tax rates.

The paper can provide a framework for designing tax policies in a manner that geographical arbitrage can be minimized. It can enable formulation of the necessary incentive structures in the form of penalties, rewards and the like for both the users and providers of tax haven services to curb massive base and profit shifting out of high-tax countries.

The paper is one small step in the direction of bringing about equality in tax payments, i.e. to align real tax systems with the canon of equality that Adam Smith once dreamt of. Taxes should be progressive in nature, implying that the amount of taxes paid should increase with one’s income. However, with the advent of offshore financial centres and egregious tax planning techniques, only the smaller corporations and middle-class individuals end up paying taxes, while the rich and bigger corporations get away easily.

The paper explores in detail the manner in which MNCs use, rather exploit, regulatory loopholes in tax systems of different countries to save on tax payments. By shifting their tax base from one country to another, MNCs not only hamper Treasury collections but also breed disrespect for the global tax system. The paper can help in designing tax laws in tune with such corporate motives.

The issue of tax evasion through fraudulent financial reporting committed by companies is a major concern facing the tax authority in Malaysia. As such, the purpose of this study is to propose a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small- and medium-sized enterprise (SME) taxpayers.

The proposed model for this study is designed to explore the extent of the relationships between the independent variables: family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits and the moderating variable, i.e. tax audit officers’ level of competence; and the dependent variable, i.e. tax evasion from the perspective of fraudulent financial reporting. This study is grounded on four theories: agency theory, political cost theory, economic deterrence theory and competency theory. Data will be gathered from actual audit cases resolved by the Inland Revenue Board of Malaysia. Ordinary least square regression analysis is proposed for the investigation.

This study anticipates that family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits could be associated with tax evasion amongst SMEs in Malaysia. This study further proposes that highly competent tax audit officers could mitigate the relationship between frequency of tax audits and tax evasion practices amongst SMEs in Malaysia.

This study should be able to provide a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst SMEs in Malaysia. Research on fraudulent financial reporting amongst SMEs is very limited, especially involving the level of competence of the tax audit officers; therefore, this study should contribute to the tax evasion literature by providing a comprehensive model of predicting tax evasion through fraudulent financial reporting using a Malaysian tax setting.

Profit shifting is a matter of great concern for governments internationally. It leads to the loss of tax revenues and puts multinational corporations (MNCs) in a disparate position. Lately, due to the aggressive stance of the Indian taxman, several Indian MNCs are planning to minimise their tax outflows. This paper aims to study profit-shifting drawing from the institutional theory for the Indian MNCs.

The sample comprises 679 MNCs listed on the Bombay Stock Exchange or the National Stock Exchange with either Indian parents with foreign subsidiaries (553) or Indian subsidiaries of a foreign parent (126) for FY 2013–14 to FY 2018–19. A fixed-effect panel regression technique was invoked to examine tax rate differential motivated profit-shifting undertaken by MNCs with the moderating effect of international presence and patents.

The results suggest that MNCs shift their profits to take advantage of differences in global tax rates when they have an international presence in at least five tax countries. Further, profit shifting is likely towards no-tax compared to low-tax countries, with the presence of patents in an MNC group having no significant impact.

Losses to the government revenue due to profit shifting by MNCs are rather severe in emerging economies. The study provides the first empirical evidence of the direction of profit shifting with the moderating effect of the extent of global presence and group patents, which would interest scholars in the field. The findings provide valuable insights to the policymakers, highlighting the urgent need to operationalise the general anti-avoidance taxation rules.

Recent research shows that financial institutions in the European Union (EU) close branches, offices and correspondent connections to jurisdictions with less transparency due to possible sanctions related to the increase in EU money laundering regulation. This tendency is called de-risking and the purpose of this paper is to analyze whether the recent regulatory approach towards money laundering in the EU limits the incentive to have operations in tax havens.

This paper follows a functional approach to law and economics.

The paper finds that recent EU money laundering regulation increase an incentive for financial institutions to limit any connection to jurisdictions known as tax havens, where transparency is at minimum. Thereby, it can be discussed whether the spillover effect from money laundering regulation in to the fight of tax avoidance could support further regulatory interference.

The recent trend of de-risking in light of money laundering regulation is scarcely covered by present research. Furthermore, there has been no linking of this de-risking tendency and the effects or relation to the use of tax havens/low tax jurisdictions.

The purpose of this paper is to examine the current state and future pressures of money laundering on Jamaica and the financial crime connections between the UK and Jamaica.

The paper focuses on the primary data collected from a series of semi-structured interviews with members from the law enforcement and financial services sectors of Jamaica. The main objective of the interviews was to secure a range of opinions concerning the problem of money laundering in the country. Interviewees were selected from the Office of the Director of Public Prosecutions, the Financial Investigation Division of the Ministry of Finance and Planning, the British High Commission and the Financial Services Commission. The names of all subjects shall remain anonymous to protect the privacy of those who were interviewed.

Through the analysis of primary data it will be shown that Jamaica remains vulnerable to money laundering – particularly the proceeds of crime laundered through the remittance sector – despite a legislative overhaul in 2007 to adopt the UK’s Proceeds of Crime Act. Ineffective legislation is most certainly due to generic weaknesses and flaws which are applicable to many Caribbean states, for example, a lack of political will to enforce anti-money laundering regulations, corruption, inadequate police training, lack of resources, a strong remittance sector and geographical positioning along a drug-trafficking route.

This paper is the first of its kind to comprehensively analyze the money laundering situation in Jamaica, using detailed first accounts from members of the law enforcement and financial sectors.

The purpose of this study is to examine the existing literature on the fraud triangle. The fraud triangle framework, popularized by Donald Cressey and W. Steve Albrecht, has been used to explain financial crimes since the 1940s. The theory includes that workplace financial crime and fraud occurs only when an offender has sufficient opportunity, pressure and rationalization to commit the crime. The fraud triangle has been empirically applied to the array of criminal behaviors and specific financial crimes and offenders internationally to determine if all three elements are necessary for the crimes to occur.

This systematic review summarized 33 empirical studies that have applied all three components of the fraud triangle to study financially criminal behavior committed by both corporations and individuals. The review included published and non-published papers and manuscripts from a variety of sources internationally.

Of the 33 studies included, 32 found support for at least one element of the fraud triangle and 27 found support for all three elements. Overall, these studies have shown that the fraud triangle has generally received support across different subjects, industries and countries.

This research only examined papers using the “fraud triangle” term.

This paper systematically reviewed different types of studies internationally, concluding that the fraud triangle is largely valid internationally as an explanation for financial crimes.

When there is freedom of press, newspapers provide prying eyes that investigate and report the malfeasance by public officials. More prying eyes together with more newspaper readership make monitoring of public officials by the public easier and cheaper. This paper aims to investigate the role of newspapers in helping the public observe the conduct of local officials fearful of discovery of malfeasance by the newspaper readers in the USA during 1978 – 2008 when the internet was still a fledgling source of news.

A model that recognize that corruption is an agency problem that thrives in the absence of monitoring of public officials is used. The estimation technique used address problems issuing from the subjective nature of measures of press freedom and perception of corruption, and the persistence of corruption over time.

More newspapers and newspaper readers help to alleviate the agency problem that underlies public corruption in the USA and elsewhere. More newspapers (i.e. more journalists) act to deter corruption at the margin, and, ceteris paribus, higher readership works on exposing corrupt acts and helps to convict the errant officials in larger numbers.

The paper provides a timely context to consider the implication of sharp fall in local newspapers as well as newspaper readership all across the USA.

This paper extends the literature by considering press freedom, the number of newspapers and size of newspaper readership as joint determinants of public corruption.

Organization theory and management studies rely on a representational idiom to account faithfully for empirical data, but such research ideals do not always apprehend what is essential in the case at hand. Comedy and the comical remain an underutilized resource within, e.g. the critique of power imbalances and imprudent or illicit behavior in corporations, providing an entirely different set of mechanisms that do not sketch the “broad picture” but target elementary and constitutive empirical data. The purpose of this paper is to explore the possibilities for using such resources in management studies writing.

This paper uses the literature addressing the Enron bankruptcy as an exemplary case wherein an analytical framework recognizing a comic outlook of life can be fruitfully applied. Additional cases are presented to substantiate the proposed model.

The paper advocates a broader repertoire of analytical practices in organization studies, including techniques and modes of representation used in comedy.

The paper proposes a minor literature within management studies, drawing on a performative idiom and the use of comedy techniques, including the debasing of social situations, to extend the repertoire of styles. In the end, such a minor literature may be able to grapple with the current situation, characterized by organizational absurdities that preclude the use of a representational idiom.

Many corporate managers, with the aid of the board of directors, discovered that they could provide themselves with guaranteed or excessive compensation by manipulating the terms of stock option grants that were included in their compensation packages. This paper seeks to examine the legal, tax, and accounting issues that have evolved because of these suspect illegal activities.

The author presents the theory behind performance‐based compensation that is the basis for employee stock option grants. The author then examines regulations, judicial theory, and court cases to determine the current legal status of backdating, spring loading, or bullet dodging of executive stock option grants.

The current legal environment has made it difficult for executives to continue the practice of manipulating stock option grants without falling under the ire of regulators and shareholders. However, a question remains whether executives that manipulated stock option grants in the past will be found criminally liable for their acts.

The paper's review of the discourse on the legality of corporate executives enhancing their compensation packages shows the complexity of detecting and regulating this type of suspect activity.

This paper presents a contemporaneous discussion and data on legal and regulatory changes that resulted from management malfeasance of executive compensation.