Which tax audits should be increased? Evidence from Italy using a machine learning approach

It is well established in theoretical and empirical research that more audits lead to more post-audit tax compliance. However, there is growing recognition that the deterrent effects of audits are more complicated than first appears, in part because audits do not always detect evasion. This study uses a laboratory experiment to investigate the effect of tax audits on post-audit tax compliance. An important feature of our experimental design is the addition of audit “effectiveness” to our audit mechanism, where effectiveness is defined as the share of undeclared income that the tax agency detects in an audit. This addition allows us to examine the effects of audit effectiveness on post-audit compliance. We also study whether the effect of audits depends on a taxpayer’s reporting behavior prior to an audit. Contrary to standard theoretical predictions, we find that tax audits have differential effects on post-audit compliance and that the effectiveness of audits determines these responses; that is, while effective audits increase post-audit tax compliance, ineffective audits have the opposite effect. We also find that relatively compliant taxpayers exhibit the strongest behavioral response to audits. Our findings suggest that the specific deterrent effect of tax audits is more ambiguous than much previous analysis suggests, with these effects dependent on the effectiveness of the audit process and on the taxpayer’s prior reporting behavior.

Each country can use a tax collection system that varies between countries. Basically, each country can choose one of the tax collection systems, namely between the official assessment system or the self assessment system. On the official assessment system the amount of tax payable and must be paid by the taxpayer is determined by the tax authority. Whereas in the self assessment system the amount of tax payable and must be paid will be calculated, deposited and reported by the taxpayer himself. Most countries in the world use the self assessment system. A country that applies the self assessment system will usually experience problems related to the low level of tax compliance. To increase the level of taxpayer compliance, countries that implement the self assessment system must routinely carry out tax audit actions to test the compliance of taxpayers. In
 order for the purpose of the tax audit to be achieved, the tax audit must be carried out effectively. Indicators that are usually used to assess the effectiveness of tax audits are compliance from taxpayers. The effectiveness of tax audits is also influenced by several factors that can generally be summarized into 7, namely: organization, organizational independence, taxpayer, tax audit quality, tax auditor, regulation, and management support. This research is intended to see whether the tax audit in Indonesia has been running effectively. The effectiveness of tax audits is evaluated by looking at whether the factors that influence the effectiveness of the tax audit have been included in the tax audit in Indonesia. This research is a library research with a statute approach, conceptual approach, and comparative approach. The results of the study show that from the evaluation of all factors that might influence the effectiveness of tax audits, organizational factors, tax auditors, regulations, and management support from the Directorate General of Taxation have met the criteria for the realization of effective tax audits in Indonesia. But the taxpayer factor, the independence of the organization and the tax audit quality have not supported the realization of an effective tax audit. Then when viewed from the level of taxpayer compliance as an indicator that shows that tax audits have been carried out effectively, tax audits in Indonesia have not been effective, because the level of compliance from taxpayers is only at 62.96% for corporate taxpayers and non-individual taxpayers employees and Compliance Ratio Submission of Annual Income Tax Returns in 2017 only reached 72.64%.

Each country can use a tax collection system that varies between countries. Basically, each country can choose one of the tax collection systems, namely between the official assessment system or the self assessment system. On the official assessment system the amount of tax payable and must be paid by the taxpayer is determined by the tax authority. Whereas in the self assessment system the amount of tax payable and must be paid will be calculated, deposited and reported by the taxpayer himself. Most countries in the world use the self assessment system. A country that applies the self assessment system will usually experience problems related to the low level of tax compliance. To increase the level of taxpayer compliance, countries that implement the self assessment system must routinely carry out tax audit actions to test the compliance of taxpayers. In order for the purpose of the tax audit to be achieved, the tax audit must be carried out effectively. Indicators that are usually used to assess the effectiveness of tax audits are compliance from taxpayers. The effectiveness of tax audits is also influenced by several factors that can generally be summarized into 7, namely: organization, organizational independence, taxpayer, tax audit quality, tax auditor, regulation, and management support. This research is intended to see whether the tax audit in Indonesia has been running effectively. The effectiveness of tax audits is evaluated by looking at whether the factors that influence the effectiveness of the tax audit have been included in the tax audit in Indonesia. This research is a library research with a statute approach, conceptual approach, and comparative approach. The results of the study show that from the evaluation of all factors that might influence the effectiveness of tax audits, organizational factors, tax auditors, regulations, and management support from the Directorate General of Taxation have met the criteria for the realization of effective tax audits in Indonesia. But the taxpayer factor, the independence of the organization and the tax audit quality have not supported the realization of an effective tax audit. Then when viewed from the level of taxpayer compliance as an indicator that shows that tax audits have been carried out effectively, tax audits in Indonesia have not been effective, because the level of compliance from taxpayers is only at 62.96% for corporate taxpayers and non-individual taxpayers employees and Compliance Ratio Submission of Annual Income Tax Returns in 2017 only reached 72.64%.

The research work examines the effect of tax audit and investigation on revenue generation in Nigeria. The essence of the study is to determine the effect of tax audit and investigation, which is a viable instrument of relevant tax authority on revenue generation in Nigeria using the tools of tax audit and investigation as measuring indicators. Primary data were sourced through the administration of a structured questionnaire on 162 samples drawn from the total population of Federal Inland Revenue staff in the South-western zone of Nigeria, using Taro Yamane sample size calculator. Descriptive and inferential methods of data analysis were employed to measure the effect of tax audit and investigation’s indictors (desk/office audit, field audit, and audit investigation) on revenue generation. Findings revealed that about 38% variation in revenue generation in Nigeria is due to change in tax audit and investigation’s indicators/variables of DOA, FA, and ANINV, which implies that applications of these variables of tax audit and investigation will improve tax revenue generation in Nigeria as shown from the contributory regression coefficients of 0.576, 0.407, and 0.151 respectively. The study therefore recommends that effective and efficient tax audit and investigation habit should be encouraged by the relevant tax authorities as this will help in curbing taxpayers rendering false returns, reduce tax evasion and eventually improve tax revenue generation in Nigeria. Keywords : Tax Audit, Tax investigation, Field Audit, Office/Desk Audit, Revenue Generation, DOI: 10.7176/RJFA/13-18-05 Publication date: September 30 th 2022

This study discusses the effects of tax audits and tax collections on increasing corporated tax payer compliances at KPP Pratama Pasar Rebo East Jakarta (2017-2020), which aim to test and analyze effects of tax audits and tax collection on increasing corporated tax payer compliances. This research method uses descriptive statistical methods. These studies were test use data analyst method including descriptive analyst test, classic assumptions test, hypothesis testing, multipled linear regression analyst and coefficients of determination testing. The result of these studies shows that significances of effects of tax audits on increasing corporate tax payer compliance at KPP Pratama Pasar Rebo, East Jakarta (2017-2020) was 0.018 <0.05 and t (count) value was 2.515 > t (table) 1.706 so that it could be This means that tax audits have a positive effect on corporate tax payer compliances. Furthermore, the effect of tax collection on corporate tax payer compliance is 0.000 <0.05 and t (count) values is 11.988 > t (table) 1.706, in other words that taxes collection has a positive effect on corporate tax payer compliances. Likewise, it is known that taxes audit and tax collections is 0.000 <0.05 and F value (count) 81.506 > F value (table) 3.354 so it can be concluded that taxes audit and tax collections have a simultaneous effect on increasing corporate tax payer compliances. Keywords: Tax Auditor, Tax Collection, Corporate Tax payer Compliances

Tax audits are a necessary component of the tax system, but policymakers and others have expressed concerns about their potentially adverse real effects. Understanding the causal effects of tax audits has been hampered by lack of data and because typically tax audits are not randomly assigned. We use administrative data from random tax audits of small businesses to examine the real effects of being subject to a tax audit. We find that audited firms are more likely to go out of business following the audit. The effect is concentrated in firms that underreport their taxes, although we find some evidence that the administrative costs of an audit also negatively affect firm survival. Among firms that continue as going concerns, we find evidence that audits have adverse effects on future revenues but no effect on future wages, employment, or investment. Finally, we find that tax audits have side benefits, causing firms to make changes to improve their tax efficiency.Supplementary InformationThe online version contains supplementary material available at 10.1007/s11142-022-09717-w.

This paper focus on the effect of tax audit on the compliance of taxpayers in the Katsina State Board of Internal Revenue. This paper adopted the survey research design, using primary data. The questionnaire was structured thematically, in line with the research hypotheses, so that the respondents can concentrate on each theme and provide focused answers. The target population of the study comprised of the entire staff of the Katsina State Board of Internal Revenue in Katsina State which aggregated to a sum of Seventy-five (75) staff. The total staffs of the board were considered for the study consisting of Seventy-five staff. Tax Remittances (TAR) is the dependent variable. Independent Variable Audit Yield (ADY) and Field Tax Audit (FDTA) are considered as having potential effect on Tax Audit. Questions were measured on a 5-point “Likert” scale ranging from strongly disagreed (1) to strongly agreed (5) and a mean was obtained to compare against the expected mean. The result on Tax Compliance proxy by Tax Remittances is found to be positively associated with Audit Yield and Field Tax Audit with a coefficient of 0.342 and statistically significant at 5% with a P-value of 0.007. This goes to prove that Audit Yield field and Tax Audit have a statistically influence on Tax Compliance in Katsina State which implies that the null hypotheses of the study are rejected.

This study aims to analyze the effect of tax audit and tax collection on taxpayer compliance both directly and indirectly through taxpayer awareness as a mediator. The population used in this study were taxpayers registered at the West Semarang Tax Service Office (KPP) in Semarang City, with a sample size of 126 respondents. The sampling technique used was accidental sampling. The data source used was primary data, with a questionnaire data collection method. The data analysis technique used was Structural Equation Modeling-Partial Least Square (SEM-PLS). The results of the study stated that tax audit had a positive and significant effect on taxpayer compliance, tax collection had a positive and significant effect on taxpayer compliance, and taxpayer awareness had a positive and significant effect on taxpayer compliance. Tax audit has a positive and significant effect on taxpayer awareness, and tax collection has a positive and significant effect on taxpayer awareness. The results of the mediation test obtained that taxpayer awareness can mediate the effect of tax audit on taxpayer compliance, and taxpayer awareness can mediate the effect of tax collection on taxpayer compliance. Keywords: Tax Audit, Tax Collection, Taxpayer Awareness, and Taxpayer Compliance

The tax collection system implemented in Indonesia is the Self Assessment System. This system has a loophole in the form of taxpayers' incorrect submission of tax returns. The Directorate General of Taxes has the authority to supervise and coach the compliance of taxpayers through administrative supervision and tax audits. This study aims to measure the level of Effectiveness of the implementation of tax audits at the Jakarta Kelapa Gading Pratama Tax Service Office based on the completion of SP2 and based on the realization of receipts from tax audit activities. This study uses a type of descriptive research with a qualitative approach. As well as data collection techniques using literature studies and field studies. The results of this research show that based on the indicators of tax audit effectiveness explained by Richard M Steers (2020), namely the achievement of goals, integration, and Adaptation, it is found that the process of implementing tax audit has been running well and is in accordance with the guidelines of tax audit and existing regulations but in its implementation has not been effective, this can be seen from several obstacles during tax audits, Starting from the limited number of employees to the scope of work that is too broad. This causes the tax audit to not reach the set target. The Jakarta Kelapa Gading Primary Tax Service Office is expected to prevent and reduce existing obstacles so that the tax audit process can run more effectively and better.

Tax revenue is a critical component of the Indonesian State Budget, with tax audits and collection as key mechanisms for optimizing state revenue. This study aims to analyze the effect of tax audits and collection on tax revenue at the Teluk Betung Pratama Tax Office (KPP Pratama), Bandar Lampung, for the 2021-2024 period. This empirical study uses quantitative research methods with secondary data from the Teluk Betung Pratama Tax Office (KPP Pratama) for the 2021-2024 period. Multiple linear regression analysis was conducted to examine the relationship between tax audits, tax collection, and tax revenue. The analysis shows that tax audits have a significant positive effect on tax revenue, while tax collection does not show a significant effect. The tax audit variable shows the highest contribution to optimizing tax revenue

The purpose of this study was to investigate the effect of tax audits in enhancing taxation compliance among small and medium-sized enterprises (SMEs) in Nairobi County, Kenya. The study was grounded on the economic theory of tax compliance and the target population was small and medium-sized enterprises in Nairobi County from which a sample of 399 constituting the managers and owners of SMEs in the County was obtained. The research applied the positivism research philosophy and descriptive cross-sectional design making use of a structured questionnaire for data collection. The data obtained were analyzed through descriptive and regression analysis using SPSS. The findings indicated that there was a moderate positive relationship between tax audits and tax compliance (R = 0.318). Moreover, tax audits had a significant positive influence on tax compliance among SMEs in Nairobi County, Kenya (β = 0.423, t = 7.656, p < 0.05). This, therefore, depicted that tax audit is key in enhancing tax compliance of SMEs in Nairobi County, Kenya. This study recommends that tax administrators should structure their audits to ensure at least every three years the SMEs are subjected to a tax audit. The audits can be sectoral based or based on embedded risk parameters identified by the tax administration. Besides, tax administration should have a systematic risk-based methodology that quickly identifies taxpayers to be audited and has an elaborate system of monitoring the results that come from these auditing initiatives.

This study examines the effect of tax audit on revenue collection performance evidenced from ERCA-LTO. The objective of the study is to examine the effect of tax audit on revenue collection performance. In doing so, tax audit is measured by nine variables (tax audit resources, audit case selection, capacity of auditors, tax protection system, tax automation, and tax evasion, and tax compliance, amount before and after audit). The study uses explanatory research design and mixed research approach with secondary data utilized over the study period 2005-2011 E.C (7 years). The data is collected both from primary and secondary source of data. More specifically, the study adopts a multiple regression model. The finding of the study reveals that; tax compliance, revenue protection system, and tax automation has positive and significant effect on revenue collection and statically significant at 1%, 1% and 5% significant level respectively. Furthermore, audit case selection and auditors capacity has a positive and significant effect on revenue collection performance at 10 percent significance level. Apart from this, the variable tax audit resource, tax evasion and before audit amount has a negative effect on revenue collection and statically significant at 1 percent significance level. On the other hand the amount after audit has positive and insignificant effect on revenue collection performance. Keywords : Tax audit, Revenue collection, multiple regression analysis DOI: 10.7176/RJFA/11-7-01 Publication date: April 30 th 2020

This theoretical paper studies the relation between tax audits and labour market outcomes (job creation and unemployment) in an economy that contemplates penalties for firms that evade taxes and rewards for firms that comply with tax rules. Intuitively, the simultaneous presence of penalty and reward amplifies the role of auditing, since tax audits allow both punishing tax-evading firms and rewarding fiscally honest firms. Indeed, the presence of tax rewards can make the effect of tax audits on firms’ net profits positive. However, the effect of tax audits on labour market outcomes is ambiguous. By setting the choice of optimal fiscal policy in a different and original way, this paper is able to derive a formula for the audit rate—consistent with the budget constraint—that makes the relation between tax audits and labour market outcomes positive.

The purpose of this study was to examine and analyze: the effect of market performance on corporate tax, examine and analyze the influence of corporate governance on corporate tax, the effect of tax audit on corporate tax, the role of Tax amnesty in moderating relations between market performance and corporate tax, the role of Tax amnesty in moderating corporate governance relationship, and corporate tax, Tax amnesty in moderating the relationship between tax audit and corporate taxThis research model uses panel regression. The unit of analysis is an open company (corporate taxpayer), with a purposive sampling sample, namely taxpayers registered in the Large Taxpayers KPP Two of 44 companies in the period 2014-2017The results showed: Market performance has a positive effect on corporate tax, this shows that the higher market performance as measured by tobins q, the corporate tax will increase; Corporate governance has a positive effect on corporate tax, this shows that the higher the corporate governance index, the corporate tax will increase; Tax audit has a positive effect on corporate tax, this shows that the more there is an examination of the tax, the corporate tax will increase; Tax amnesty strengthens the influence of market performance on corporate tax, because the tax amnesty has a positive influence on the relationship between market performance and corporate tax with a type of pure moderation; Tax amnesty strengthens the influence of corporate governance on corporate tax, tax amnesty has a positive influence on the relationship between corporate governance and corporate tax with a type of pure moderation; Tax amnesty strengthens the effect of tax audits on corporate tax, because tax amnesty has a positive influence on the relationship between tax audits and corporate tax with pure types of moderationModeration of tax amnesty can strengthen the influence of market performance, corporate governance and tax audit on corporate tax.

Purpose: The implementation of turnover tax compliance (TOT) in Kenya was aimed at enhancing revenue collection and improvements in the tax system, the effectiveness of tax administration, and lowering the collection costs in the SME sector. However, over the past decade, the KRA has visibly struggled to implement the tax regime as well as collecting the returns. One of the major shortfalls of the TOT has been its collection due to its dependence on the goodwill among the affected taxpayers. Therefore, the main aim of the study was to establish the effect of tax audit on turnover tax compliance among small and medium enterprises in Langata sub-county, Nairobi, Kenya. The study was anchored on the Economic Deterrence theory. Methods: The study adopted an explanatory research design. The sample size for this study was 353 derived from 3,061 registered SMEs of the population using Yamane (2012) formulae and the responses by owners/managers of the firms. The study targeted 353 questionnaires with each target firm, 268 respondents managed to fill and return the questionnaires showing a 76% response rate. Results: The analysis of the hierarchical model found that tax audit has a significant positive effect on TOT compliance (B = 0.373, p = 0.006). In a nutshell, the study found that there is a significant relationship between tax audit and TOT compliance among small and medium enterprises in Langata Sub County, Nairobi, Kenya. Conclusion: The study recommends conducting frequent tax audits to enhance Turnover tax compliance.