Tax Compliance: Approaches to Understanding

Abstract

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.