Essential Characteristics of Tax Compliance in the Framework of the Organization of Interaction between Tax Authorities and Taxpayers

The paper is aimed at researching tax compliance from various theoretical points of view. It was determined that at present tax compliance is considered most often in the context of a narrow and wide interpretation of this term. In the first case, we are talking about tax risk management, and in the second— complying with tax laws. In this regard, we can draw a conclusion about an economic and legal understanding of the institution under consideration. However, it should be borne in mind that tax compliance is aimed at implementing an effective tax policy both at the micro level and at the national level. The study of foreign experience led to the conclusion that in domestic practice of tax relations more attention should be paid to the psychological comfort of taxpayers, which will contribute to their more legitimate behavior, as well as successful interaction with tax authorities.The author summarizes that the importance of tax revenues to the budget of any state determines the development of an effective tax policy of the state in order to comply with tax legislation. Understanding of tax compliance is diverse. It is based on either a broad or narrow interpretation of this term, on the emphasis made on either its legal or economic aspect. It can be interpreted as an internal policy of a taxpayer related to the payment of taxes and fees, as well as an assessment of tax risks or compliance with tax legislation by all participants in the relevant relationship. The effectiveness of tax compliance largely depends upon interaction between taxpayers and tax authorities. Achieving a similar effect is possible by studying and using the experience of other countries that provide tax authorities with more functions to advice taxpayers.

This study aims to investigates the effect of the tax authorities' attitude, and the effectiveness of the taxation system on tax compliance. This study also wants to investigates the moderating role of the tax authorities' moral obligations on the effect of the tax authorities' attitudes and the effectiveness of the taxation system on taxpayer compliance. The population in this study are non-employee individual taxpayers who are registered at the Primary Tax Service Office in Pekanbaru. The sampling technique in this study used purposive sampling. To test the direct effect of the tax authorities' attitude and the effectiveness of the taxation system, multiple regression analysis was used, while to test the moderating role of the tax authorities' morale obligation, moderated regression analysis was used. The results show that the attitude of the tax authorities and the effectiveness of the taxation system affect taxpayer compliance. This study also found that the tax authorities' morale obligations moderated the effect of the tax authorities' attitude and the effectiveness of the taxation system on taxpayer compliance.

The proliferation of Internet of Things (IoT) technologies has revolutionized various aspects of modern life, including business operations and government services. This research paper delves into the intersection of IoT technologies and tax compliance, aiming to elucidate the opportunities, challenges, and policy implications arising from their integration. Through a comprehensive review and analysis of existing literature, this paper seeks to provide insights into the transformative potential of IoT in tax compliance, while also highlighting potential hurdles and offering policy recommendations. IoT technologies offer a myriad of opportunities to enhance tax compliance processes for both taxpayers and tax authorities. The ability of IoT devices to collect real-time data and automate various tasks can streamline recordkeeping, improve accuracy in reporting, and enable proactive compliance measures. For taxpayers, IoT-enabled systems can simplify tax documentation, minimize errors, and provide timely reminders for compliance deadlines. Likewise, tax authorities can leverage IoT data for better monitoring, enforcement, and risk assessment, thus enhancing overall tax administration efficiency. However, the integration of IoT in tax compliance also presents notable challenges. Privacy and data security concerns emerge as paramount considerations, given the sensitive nature of financial information involved in taxation. The vast amount of data generated by IoT devices also raises questions regarding data governance, ownership, and liability. Moreover, the digital divide may exacerbate existing disparities in access to IoT technologies, potentially marginalizing certain segments of the population and hindering equitable tax compliance. In light of these opportunities and challenges, policymakers must carefully design regulations and guidelines to harness the benefits of IoT while mitigating associated risks. Clear standards for data protection, encryption, and user consent are essential to safeguard taxpayer privacy and instill trust in IoT-enabled tax compliance systems. Additionally, implementation of measures to bridge the digital divide and ensure equitable access to IoT technologies, thereby promoting inclusivity in tax compliance efforts. Furthermore, tax authorities need to develop robust frameworks for data governance, encompassing data collection, storage, sharing, and usage. Collaboration between public and private sectors is crucial to foster innovation in IoT-based tax compliance solutions while adhering to regulatory requirements and ethical principles. In conclusion, the integration of IoT technologies in tax compliance holds immense potential to revolutionize the way in which taxes administered and enforced. However, realizing this potential necessitates a holistic approach that addresses technical, legal, and socio-economic considerations. By embracing innovation while safeguarding privacy and inclusivity, governments can harness the transformative power of IoT to foster more efficient, transparent, and equitable tax systems.

The cooperative approach to corporate tax compliance: An empirical assessment

Both coercion, such as strict auditing and the use of fines, and legitimate procedures, such as assistance by tax authorities, are often discussed as means of enhancing tax compliance. However, the psychological mechanisms that determine the effectiveness of each strategy are not clear. Although highly relevant, there is rare empirical literature examining the effects of both strategies applied in combination. It is assumed that coercion decreases implicit trust in tax authorities, leading to the perception of a hostile antagonistic tax climate and enforced tax compliance. Conversely, it is suggested that legitimate power increases reason-based trust in the tax authorities, leading to the perception of a service climate and eventually to voluntary cooperation. The combination of both strategies is assumed to cause greater levels of intended compliance than each strategy alone. We conducted two experimental studies with convenience samples of 261 taxpayers overall. The studies describe tax authorities as having low or high coercive power (e.g., imposing lenient or severe sanctions) and/or low or high legitimate power (e.g., having nontransparent or transparent procedures). Data analyses provide supportive evidence for the assumptions regarding the impact on intended tax compliance. Coercive power did not reduce implicit trust in tax authorities; however, it had an effect on reason-based trust, interaction climate, and intended tax compliance if applied solely. When wielded in combination with legitimate power, it had no effect.

This conference paper assesses the effect of taxpayer education on SMEs’ tax compliance: The Case of Dar es Salaam City. The specific objectives of this conference paper were to investigate the effect of e-taxpayer education on SMEs’ tax compliance, to evaluate the effects of print media tax education on SMEs’ tax compliance, and to analyze the effect of stakeholder education initiatives on SMEs’ tax compliance. The study was guided by two theories, the economic deterrent theory and the theory of planned behavior. This study involved the collection of primary data through a questionnaire. The nominal and ordinal data were collected using questionnaires and later subjected to quantitative analysis using Statistical Package for Social Sciences. Data was presented in the form of frequency distribution tables & graphs. The study results showed that indeed; electronic taxpayer education, and stakeholder education initiatives have a significant positive effect on tax compliance among SMEs in Kariakoo tax region-Tanzania, on the other hand, print media taxpayer education has a positive but insignificant effect. The study concludes that education for taxpayers, especially small and medium enterprises (SMEs), and stakeholder education initiatives significantly positively affect their performance in Tanzania. Stakeholders like tax authorities, accounting professionals, and business associations should provide education and support to SMEs through accessible platforms. Collaboration is crucial for consistent education initiatives. Government and tax authorities should offer incentives for high tax compliance and effective tax planning, and simplifying tax regulations can reduce confusion and enable efficient compliance.

PURPOSE: Tax compliance is a topic of concern for many scholars all over the world. Most of them point out factors affecting tax compliance, and one significant factor is the adoption of tax compliance. However, there have not been many studies analyzing the relationship between attitude towards an e-tax system, adoption of an e-tax system, and tax compliance. This paper aims to investigate the mediating impact of adoption of an e-tax system in the association between attitude towards an e-tax system and tax compliance based on empirical evidence from Vietnamese enterprises. METHODOLOGY: On the basis of the Theory of Reasoned Action (TRA), the research model is proposed. Accordingly, hypotheses are developed and this study applies a quantitative analysis with a research sample of 435 Vietnamese enterprises. The questionnaire includes close-ended questions sent to managers or tax accounting officers at enterprises by three methods: directly interviewing, via e-mail, and via the General Department of Taxation. The collected data are then processed and analyzed by SPSS v.22 and AMOS. The study applies Cronbach’s Alpha as a tool for assessing the reliability or internal consistency of scales. Following is the exploratory factor analysis (EFA). Finally, regression analysis is used to evaluate the impact of the independent variables on the dependent variable and to estimate the research model. FINDINGS: There are significant direct effects of the two independent variables, attitude towards an e-tax system and adoption of an e-tax system, with the dependent variable tax compliance. Furthermore, the adoption of an e-tax system partially mediates the association between attitude towards an e-tax system and tax compliance. This mediating effect positively consolidates the impact of attitude towards an e-tax system and tax compliance. IMPLICATIONS: This paper mainly focuses on the tax compliance of Vietnamese enterprises that could be further studied with foreign enterprises that have been operating in Vietnam. Besides, the research is conducted in the context of Vietnam, thus, it is a reference for studies in other developing countries having a similar economy or tax administration. ORIGINALITY/VALUE: This study contributes to enhancing research associated with tax compliance, especially investigating the mediating impact of adoption of an e-tax system in the association between attitude towards an e-tax system and tax compliance of enterprises in the context of Vietnam. The findings of the study suggest some policy implications for improving tax compliance in Vietnam including (1) continuously improving the information technology infrastructure for both tax authorities and enterprises; (2) widely disseminating tax law and providing support services to enterprises; (3) upgrading the e-tax system to ensure the effective coordination between tax authorities, tax officials, enterprises, and other authorities in applying e-tax; (4) consolidating the supervision and assessment of the adoption of e-tax; (5) promoting information and education on the perception of complying with the tax law for taxpayers in particular and the entire population in general; (6) developing a tax administration strategy based on tax compliance.

Due to the significance of tax revenue as the primary source of a country’s income, any leakage due to non-compliance behaviour may impact the country, which will eventually affect citizens. One way to reduce tax non-compliance is through compliance strategies which can be categorised into two; deterrence and accommodative approach. It is advisable that tax authority should not only focus on the deterrent approach (tax audit and penalty), mainly on tax offenders. Instead, tax authority also needs to find ways to preserve good taxpayers’ continuous fulfilment of their tax responsibilities, encourage future taxpayers to commit to tax laws, and transform tax offenders to become good taxpayers using the accommodative approach. This study uses the survey method to determine individual taxpayers’ perception of tax authority’s compliance strategies (threat of punishment, tax education programme, treatment provided by tax authority, special voluntary disclosure programme (SVDP)). This study then investigates the influence of those compliance strategies towards tax compliance behaviour. Our findings indicate that individual taxpayers have a positive perception towards compliance strategies provided by the tax authority in Malaysia (refer to Inland Revenue Board of Malaysia (IRBM)). In addition, the threat of punishment, treatment provided by IRBM and SVDP are significantly proven to have a positive relationship with tax compliance. However, it is suggested that IRBM should improve their tax education programmes as it is found to be insignificant. This study contributes to current tax compliance literature in a relatively important field of compliance strategies by providing comprehensive insights into the influence of both deterrence and accommodative apporaches in influencing tax compliance behaviour, as well as focusing more on an accommodative approach that is receiving attention lately. With both approaches in one study, the results of this study provide a clear, complete and comprehensive understanding since most of previous studies conducted separately. Finally, the findings of this study also provide valuable and significant input to the tax authorities and policymakers, especially IRBM in assessing and making a necessary improvement on their compliance strategies with the mission to enhance tax compliance behaviour, especially among individual taxpayers. Keywords: tax compliance; tax authority; compliance strategy; accommodative approach; deterrence approach

The article is devoted to the consideration of the system for the tax authorities to assess tax risks and to prevent tax law violations. The work focuses on how the tax authorities affect the conduct of taxpayers through “soft law,” disclose information about their approach towards understanding tax risks and enforce a system of measures to ensure compliance. Tax compliance is analysed in the article as good-faith and lawful conduct of a taxpayer, which is formed under the influence of a system of, at the same time, preventive and incentive measures. This article considers tax compliance issues in Russia, the United Kingdom and the USA, not so much as a consequence of the voluntary actions of the taxpayer, but as a consequence of the conditions that are set for a taxpayer by the administrative action of tax authorities. To do this, the approaches of the tax authorities to defining the criteria for tax risks and the procedure for assessing them are analysed, as is the effect of these approaches on the subsequent implementation of tax control measures, while the system of enforcement measures and incentives for taxpayers to comply with tax legislation are examined. Tax compliance is the most desirable regime for the state, but in the entire history of taxation no jurisdiction has been able to achieve full tax collection solely based on a persuasive method. At the same time, owing to the limited resources of tax administrations, in practice there is no real opportunity to examine absolutely every taxpayer. For specifically this reason, a risk-based approach to carrying out tax control with a reasonable combination of both incentive measures and the enforcement of compliance with tax legislation is becoming increasingly relevant. The authors consider the implementation of a risk-based approach and its effect on tax compliance, on the choice of tax control measures, and on depth and scope in terms thereof, using the example of the experience of Russia, the United Kingdom and the USA. The article also pays special attention to an analysis of incentive measures and the enforcement of tax compliance in these jurisdictions.

The studies in tax compliance, tax evasion and tax morale often largely focus on the economic and behavioural factors responsible for tax (non)compliance, but very little attempt has been made to determine the extent to which the sociodemographic characteristics of taxpayers influence their (non)compliance behaviour in Nigeria. Therefore, the current study examines the influence of sociodemographic characteristics of SME entrepreneurs on tax (non)compliance behaviour. Information on tax non-compliance behaviour and sociodemographic variables was elicited from (N = 382) SME entrepreneurs from six geopolitical zone divisions of Nigeria using a questionnaire and executed by survey research tradition. The results of the study reveal that certain sociodemographic variables including age, education and business sectors of the SME entrepreneurs are significant determinants of tax (non)compliance behaviour, while gender and religiosity exert insignificant influence. The study concludes that beyond economic sanctions, tax incentives and taxpayers’ attitudes, certain sociodemographic factors are effective in encouraging or discouraging tax noncompliance in Nigeria. Most importantly, tax authorities must come to reality by including sociodemographic factors as part of their tax drive strategies. Further discussions of the study’s theoretical and practical implications are discussed.

In his article, Levi (2010, this issue) makes an argument for why serious tax fraud and noncompliance should be addressed through criminal as opposed to noncriminal proceedings. But will it deter the noncompliant? Context, as he acknowledges, is a central determinant in how sanctions affect subsequent tax noncompliance. Context includes the norms and attitudes of the community to tax evasion. It is also the case, as Levi notes, that a more “criminalizing” orientation has implications for “staffing levels and expertise of tax agencies, prosecution depart ments, and the already heavily occupied criminal and civil courts.” Such factors are bound to intervene between a more aggressive policy that applies criminal sanctions in response to serious tax evasion and the ultimate goal of deterring tax fraud and delivering to the taxpaying public just outcomes in response to serious tax noncompliance. That is not to say that Levi’s appeal should fall on deaf ears, just that it needs to be interspersed with a suite of other sanctioning mechanisms that have political support and that are embedded in the public’s understanding of how justice can be delivered in the domain of tax noncompliance. Levi (2010) suggests that an analysis of cases—in particular, analogous cases—is the appropriate methodology for gathering evidence on causes and consequences. In the absence of such data, the policy question is how to progress the argument, begin a systematic scrutiny of cases, and maintain scope for correcting the strategy as evidence accumulates. Research supports Levi’s position that serious tax noncompliance needs to be a more costly exercise for taxpayers who intentionally engage in fraud, who drift into such activity through poor business acumen or financial desperation, or who act as opinion leaders and experts, convincingly discounting the risks of prosecution as they market financial products to an unsuspecting public. This policy essay considers how tax authorities might increase the costs of serious tax noncompliance through a

Theoretical background: The article emphasizes the essence of tax risk interpreted from the perspective of fiscal authorities. The study is an invitation to initiate an in-depth scientific discourse on taking into account tax risk in the state’s financial policy. The study argues that tax risk management sensu stricto should be an integral part of modern and integrated management at every level of state authority. A deeper insight into tax risk in the context of noncompliance, but also in the broad sense of public liabilities management, is justified by many reasons. Government and local government finances are not immune to disruptions in fiscal policy-making, the costs of which are borne by society and the economy. The responsibility for this lies with those who, as economic analysis shows, act rationally, but evidence of a lack of fiscal discipline is also an element of the puzzle, which should in principle ensure responsible financial management. Thus, better tax risk management at every level of the General Government sector underlines the importance of financial resilience to unexpected shocks, countercyclical policy and, political credibility. Purpose of the article: The objective of the study is to scientifically identify the essence of tax risk and to provide a comprehensive analysis of tax risk management from the perspective of fiscal authorities. To achieve this goal, three specific objectives were adopted: defining tax risk, justifying the linkage between tax gap and compliance risk management and emphasizing the necessity to monitor this risk in the established financial policy at every level of the state. Research methods: The verification of the hypothesis is based on an in-depth examination of the literature on the subject and the information from reports of national and international institutions. An economic analysis of the tax gap was applied, using data from the Ministry of Finance and the Central Statistical Office. Estimates for Poland are provided, covering both central and local government sub-sectors. This fills the research gap and gives the research an innovative character. The research covered the most recent period of 2003–2023. Main findings: The findings emphasize the need for a systematic approach to understanding and managing tax risk within public sector finances. Effective management requires integrating both internal and external risks arising from the relationship between taxpayers and tax authorities. Relying solely on unpaid taxes provides an incomplete view of tax risk. A holistic approach that considers non-compliance, tax errors, and discretionary policies is essential for accurately assessing lost revenues. Discretionary decisions in tax policy can impact tax risk differently across various government levels. To minimize tax risk effectively, implementing a comprehensive tax risk management framework at all levels of public authorities is crucial.

Taxes are the largest revenue source in addition to oil and gas. In the era of Indonesia's tax reform, the tax collection system is set to a self-assessment system, which gives full trust to the taxpayer to calculate, pay, and report all taxes that become his obligations. One of the obstacles that may hinder the effectiveness of tax collection is tax compliance. This is happened in every region in Indonesia, including in the Manado City and Minahasa District, which has a decrease tendency of tax compliance since 2010 until 2014 based on the data from the Dinas Pendapatan Daerah Kota Manado (Local Revenue Office of Manado City) and Dinas Pendapatan Daerah Kabupaten Minahasa (Local Revenue Office of Minahasa District). As tax authorities, these offices tried to uphold the norms of taxation by applying administrative sanctions such as fines for taxpayers who are late paying taxes in accordance with the district’s legislation, but it has not been able to increase tax compliance in paying taxes. Therefore, this study is aimed to analyze the influence of the attitude of the taxpayer on the implementation of financial penalties on tax compliance, the service tax authorities on tax compliance, and tax awareness on tax compliance. By using qualitative research methods with multiple linear regression, this study concluded that the attitude of taxpayer on the implementation of financial penalties affect tax compliance, service tax authorities did not affect tax compliance, and awareness of tax affect tax compliance. Keywords : Tax Compliance, Tax Authorities, Tax Awareness.

This study is done against a background of perennial negative variances between the projected and actual tax collections in Zimbabwe. Studies that look at the influence of mental accounting, perceived trust and power of tax authorities on tax compliance seem to be lacking in Africa. The target population comprise of self-employed tax payers because these currently comprise the highest form of employment among Zimbabweans. Their compliance depends to some extent on their mental accounting practices, perceived trust and power of the tax authorities. The study objectives are therefore to i) examine the influence of mental accounting on tax compliance ii) examine the influence of trust in revenue authorities on tax compliance and iii) examine the influence of perceived authority of revenue officers on tax compliance. This study used mental accounting theory, slippery slope framework, perceived trust and perceived power of tax authorities to explain tax compliance behaviour among SME owners in Harare, Zimbabwe. A questionnaire is used as the data collection tool, with constructs adopted from some scholars. Self-employed tax payers registered under the Small to Medium Enterprises Association of Zimbabwe (SMEAZ). Those which are based in Harare are selected using simple random selection method. The STATA software package is used to analysis data. The nature of relationships that exist among the variables under study are established and reported on. It is on the basis of these findings which include that there was a strong positive relationship between perceived trust in tax authorities and voluntary compliance that recommendations are made. Key words: Mental accounting, mental accounting theory, slippery slope framework, perceived trust, perceived power of tax authorities, tax compliance, ZIMRA.

This research aimed to examine the factors influencing tax compliance decisions among Small and Medium Enterprises (SMEs) in Harare CBD. The objectives were to identify the determinants of tax compliance, understand the perceptions of SME operators regarding tax compliance, analyse the association between tax compliance determinants and behaviour, and propose tax procedures to encourage voluntary compliance for Zimbabwean small businesses. To achieve these objectives, a mixed-method research strategy was employed, collecting data from 128 participants through questionnaires and interviews. Descriptive and inferential statistical analysis tools were utilized, with data analysis conducted using MS Excel packages. The findings indicated that tax compliance determinants among SMEs in Harare CBD include tax morality, tax fairness, tax complexity/simplicity, availability of tax information, tax awareness, trust in authorities, and power in authorities. Furthermore, the study revealed that SMEs perceive tax compliance as crucial for their success and reputation, although it is seen as burdensome. Adhering to tax regulations can provide SMEs with a competitive advantage. The research also highlighted that the tax compliance behaviour of peers significantly influences individual SMEs, while the complexity of tax regulations hampers motivation to comply. Therefore, simplified processes and improved education initiatives are recommended. Policymakers and tax authorities are advised to promote tax morality, fairness, and transparency while regularly reviewing and updating regulations. Enhancing tax information availability and awareness initiatives are also suggested. SMEs and business associations should raise awareness about the importance of tax compliance and learn from the behaviour of compliant peers to create a positive compliance culture. Advocating for simplified tax regulations and improved education initiatives is crucial to alleviate the burden of tax compliance for SMEs. This research provides valuable insights into the determinants of tax compliance among SMEs in Harare CBD and offers recommendations for policymakers, tax authorities, and SMEs to improve compliance levels and alleviate challenges.