Compliance Costs Research Articles

The Effect of Maximum Residue Limits on Agri-Food Trade: Evidence from Chinese Exports to the EU

There is debate about whether maximum residue limits (MRLs) for pesticides act as a catalyst or barrier to trade. By constructing a trade model based on heterogeneous firm quality and productivity, we show that MRLs’ net effects on total export value, the number of exporting firms, and the average export value per firm depend on the interplay between the effect on import demand and that on variable and fixed compliance costs. We employ firm-level transaction data for agri-food products exported from China to the European Union (EU). We use heterogeneity indices that combine the number and level of MRLs to measure MRL stringency between China and the EU; a Poisson pseudo-maximum-likelihood estimator with fixed effects is used for estimation. We find that stricter MRLs, whether imposed by China or the EU, promote China’s agri-food exports to the EU. However, such promotion effects are heterogeneous across agri-food-exporting firms. In China, updates to MRL standards improve agri-food-exporting firms’ ability to comply with stricter MRLs. Public investment and services help reduce compliance costs. Our findings provide new evidence that MRLs are not new non-tariff measures adopted to replace reduced import tariffs.

Do human rights treaty obligations matter for ratification?

International relations scholarship assumes that states weigh the costs and benefits of treaty ratification. In human rights, the worse a particular state’s record, the higher the presumptive costs of ratification and the lower the likelihood of ratification. But prior work neglects variation in the extent of obligation that different treaties create. In this article, we argue and demonstrate that (1) human rights treaties differ substantially in the scope and scale of the obligations they contain, (2) this variation can be measured, and (3) it matters for ratification. Treaties that create a larger number of demanding obligations imply greater potential costs of compliance for states. The larger the number of demanding obligations, the more grounds various actors will have to challenge a state’s practices. We analyze innovative data on treaty obligations and commitments for the 10 core global human rights treaties to test our propositions, and we find strong support.

It's not merely about the content: How rules are communicated matters to administrative burden

AbstractResearch suggests that citizens often abstain from taking up benefits for which they are eligible because of the costs of learning about how to apply for and the compliance and psychological costs associated with taking up benefits. But to what extent can such burdens be altered simply by changing the way rules are communicated? Bridging literatures on administrative burden, communication theory, and cognitive psychology, we theorize and test the causal impact (using a pre‐registered randomized survey experiment (N = 2243)) of two prominent aspects of rule communication: information structure and bureaucratic language. Our findings lend support to the expectation that bureaucratic language influences citizens' learning costs as well as their compliance – and to a lesser extent psychological – costs, even when the content of the rules communicated is the same.

Operating AI systems in the electricity sector under European’s AI Act – Insights on compliance costs, profitability frontiers and extraterritorial effects

Artificial intelligence (AI) brings great potential but also risks to the electricity industry. Following the EU's current regulatory proposal, the EU Regulation for Artificial Intelligence (AI Act), there will be direct, potentially adverse effects on companies of the electricity industry in Europe and beyond, as well as those active in the development of AI systems. In this paper, we develop a replicable framework for estimating compliance costs for different electricity market agents that will need to comply with the numerous requirements the AI Act imposes. The electricity systems of Austria, Greece and Switzerland are used as case-studies. We estimate annual, aggregated costs for electricity market agents ranging from less than one million to almost 200 million Euros per country, depending on compliance costs scenarios. Results suggest that a profit growth of 10% through AI utilization is needed to offset the highest added compliance cost of the AI Act on electricity market agents. Eventually, we further show how to assess the regional differences of these costs added to system operation, providing spatially disaggregated compliance costs estimates that consider the structural differences of the electricity industry within 26 Swiss cantons.

Exploring Factors that Influence Citizens’ Voluntary Quarantine Compliance about Future Pandemics

To cope with pressing challenges posed by a pandemic, governments cannot merely rely on coercive power; rather, governments must know why and why not citizens voluntarily comply with policy measures. Building on previous research, this study examines the drivers of citizens’ voluntary quarantine compliance from two perspectives: citizens’ perceptions of risks and citizens’ perceptions of government. We find that citizens’ perceived risks significantly drive their voluntary quarantine compliance about a future pandemic. However, as for citizens’ perceptions of government, only citizens’ trust in government authority and trust in government responsiveness are positively related to their voluntary quarantine compliance. Government transparency is not positively related to citizens’ voluntary quarantine compliance. Based on the results, we conclude that governments can facilitate citizens’ voluntary quarantine compliance by lowering citizens’ compliance costs, justifying their authority actions, highlighting their rapid efforts to fight pandemics, and preventing media exaggeration.

A blockchain framework for digitizing securities issuance: the case of green bonds

ABSTRACT Bond issuance is a highly technical and complicated process, including disparate regulatory frameworks, limited traceability and auditability, settlement failures, and mutually untrusted stakeholders. Green bond issuance presents additional challenges, as the qualification of a bond as ‘green’, third-party verification is needed to guarantee that the proceeds fund environmentally beneficial projects. This implies additional administrative and compliance costs. Blockchain technology can address some of the issues mentioned above, to establish trust in impact reporting green bond processes. To this end, we propose a blockchain-enabled green bond issuance architecture that safeguards investors' confidence in the bond's green credentials while keeping the issuer from being accused of greenwashing. To adjust the process of bond issuance to a blockchain-enabled model, we tokenize the bonds. The digital token is created through a smart contract with a specific standard (in our case, ERC-20). Within the smart contracts developed, we use various functions to handle the prerequisites of validators and regulators' approval based on the documentation presented and the parameters of rate and maturity requested by the issuer. We use a separate smart contract to offer forensic-by-design services. The overall system also considers various regulatory compliance instruments and enhances the access of regulatory bodies to issuance records.

Good for business: towards a management control research agenda relating to the employment of workers with intellectual disability

PurposeThe paper presents the initial groundwork for the development of a research agenda around the management control implications of employing workers with intellectual disability.Design/methodology/approachThe point of departure of this foundational enquiry is primarily prior analyses and critiques of empirical research into the employment of workers with intellectual disabilities.FindingsThe authors extend the management control framework advanced by Tessier and Otley (2012) by offering insights relating to the benefits and costs of both compliance as well as performance roles of management control systems (MCS). As such, the authors advocate potential avenues for further empirical investigation and also offer four broad ways in which the use of MCS is implicated in the employment of individuals with an intellectual disability by recognising that achieving compliance outcomes or achieving performance outcomes both carry associated benefits and costs.Research limitations/implicationsThe extent to which management control research has engaged with the context of workers with intellectual disability is limited. However, this paper identifies some of the salient considerations underlying an agenda for further research in this area.Social implicationsThe employment of workers with intellectual disabilities is by no means unprecedented. In many Western economies, there have in recent times been significant disability policy shifts, recognising the key role of employment in the financial security and social participation of people with disabilities, including those with intellectual disabilities. A key performance indicator stated in these policy positions is an increase in workforce participation for this group of people. However, an increase in the employment of such individuals is likely to represent significant implications in terms of prevailing conditions as well as new management control configurations that may be required.Originality/valueThe paper overviews existing knowledge about the employment of workers living with an intellectual disability and identifies areas relating to the management control implications of such arrangements within which more research is required.

The Effect of Government Regulations and Tax Policies on the Business Life of Shops in Suryakencana Market, Bogor

This research delves into the intricate relationship between government regulation, tax policy, and the business life of shops in Suryakencana Market, Bogor. Employing a mixed-methods approach that combines quantitative survey data, financial analysis, and qualitative insights from interviews, this study uncovers the multifaceted impact of government regulations and tax policies on businesses in the market. The results reveal that government regulations impose a significant regulatory burden and compliance costs on businesses, particularly affecting small enterprises. Industry-specific effects further highlight the need for tailored approaches to regulation. Additionally, tax policies influence business operations, with businesses often passing tax costs to consumers, and incentives promoting profitability. Cross-border taxation issues pose challenges to businesses engaged in international trade. These findings provide valuable insights for policymakers and stakeholders, emphasizing the importance of streamlining compliance procedures, supporting small businesses, and offering incentives for innovation and job creation to foster a conducive environment for business growth and sustainability in Suryakencana Market.

Moderating effect of urban endowment factors on environmental regulations-productivity relationship in Beijing-Tianjin-Hebei region

In this paper, six major cities in the Beijing-Tianjin-Hebei region of China are classified into two groups, namely core city (Beijing) and industrial cities. The objective is to analyze the moderating effect of urban endowments in different urban contexts on the environmental regulation-productivity relationship using an econometric model. The results are: As environmental regulation intensifies, production in Beijing's high-polluting industries rises after falling, showing “innovation compensation” and “inefficient exit” effects. In contrast, the high-polluting industries in the industrial cities exhibit a “compliance cost” effect. In Beijing, four urban endowment factors, including economic development, technological innovation, human capital, and government intervention, can provide supportive conditions for business development under environmental regulatory pressure, primarily by reducing the “compliance cost” effect and enhancing the “innovation compensation” effect. In industrial cities, on the other hand, urban endowment factors have not had a positive moderating effect, and government intervention has even had a negative effect. We argue that government intervention may be the more fundamental urban endowment factor, which may affect the moderating outcomes of other endowment factors. Based on these findings, we propose that governments should make greater use of guiding and incentive-based environmental policy instruments, while reducing administrative interventions. Appropriate policy instruments can activate the positive moderating role of urban endowments and thus provide a better supportive environment for firms' technological innovation.

Factors influencing Voluntary Tax Compliance Among Small and Medium sized Enterprises in Kenya

Tax compliance is essential for generating revenue to fund government activities and public services. Despite the efforts of the Kenyan Revenue Authority (KRA), compliance remains a challenge due to factors such as complex tax systems, high compliance costs, and negative taxpayer attitudes. The study examines the factors that influence voluntary tax compliance, including information availability, tax compliance costs, and individual attitudes and perceptions. It delves into tax compliance theories, such as the Contingency Theory of Taxation and the Ability to Pay Theory, shedding light on their impact on organizational behavior and financial performance. Empirical evidence from previous studies is discussed, highlighting the importance of tax education and the perception of tax fairness in promoting compliance. The study also identifies challenges specific to Kenya, such as a complex tax system, high compliance costs, and negative attitudes toward taxation, which hinder compliance, particularly among SMEs. It underscores the efforts made by the Kenyan Revenue Authority (KRA) to enhance compliance but acknowledges the persistence of challenges. The abstract concludes by emphasizing the need for a comprehensive understanding of tax compliance to ensure an equitable and efficient tax system that supports economic growth and national development in Kenya and other developing nations.

Determinants of the Tax Compliance and Fairness Perceptions of Taxpayers on the online Tax System. A Case of Ghana

In the face of the growing digital economy of Ghana, the Ghana revenue authority as part of its goal to increase domestic revenue mobilization has introduced an online tax system. The objective of the study is to determine the determinants of taxpayers’ perception of the fairness of the tax system and the determinants of their tax compliance. Data were collected using questionnaires from 380 respondents and analyzed using Microsoft Excel and Stata version 14. Results showed that there is a negative relationship between tax compliance and tax complexity. Educational level and income levels have a positive relationship with tax compliance. The people of Winneba generally have a poor perception of the fairness of the tax structure. Tax knowledge, compliance cost, and tax usage were significant determinants of the fairness perception of the people of Winneba. In this regard, the study recommends that policymakers should direct policy drafting to ease the resource cost the tax structure poses on the taxpayers, intensify tax education, and also further simplify the tax complexity

Indian Tax System: Compliance by Design


 Taxes matter. They are required to finance social goods which the markets fail to provide. Since taxes are compulsory payments, it is important to evolve the design and implementation features to ensure effective compliance with the tax to ensure both horizontal and vertical equity. Tax compliance is a multiplicative function of the rate of tax, probability of detection, and penalty rate. The best practice approach to tax policy and reform is to evolve the system with a broad base, and low and less differentiated rates. Such a simple system with reasonable rates minimises the three costs associated with taxes namely, the collection cost to the government, compliance cost to the taxpayer, and distortion cost to the economy. Avoiding multiple objectives makes the tax system simple and broad-based and requires low tax rates to collect a given amount of revenue. A strong technology platform for administering the tax increases the probability of detection and enhances voluntary compliance. The paper discusses the important aspects of tax compliance in terms of design and the importance of technology in the administration of taxes in India.

Take up

Abstract Why are take up rates incomplete or low when the relevant opportunities are unambiguously advantageous to people who are eligible for them? How can public officials promote higher take up of opportunities? All over the world, these are challenges of the first order. There are three primary barriers to take up: learning costs, compliance costs, and psychological costs. These costs lower the net expected benefit of opportunities, and reduce participation in otherwise advantageous programs. Fully rational agents would consider these costs in their take up decisions, and in light of behavioral biases, such costs loom especially large and may seem prohibitive. Experimental and other evidence suggest methods for reducing the barriers to take up and the effects of behavioral biases. Use of such methods has the potential to significantly increase access to a wide range of opportunities that would increase individual well-being and social welfare.

Classroom acoustics: A case study of the cost-benefit of retrofitted interventions

It is known that suitable classroom acoustics is important for effective teaching and learning. To this end, many countries have developed classroom acoustics standards. However, research shows that these standards are often not implemented. Research assessing the implementation of classroom acoustic standards internationally concludes that successful implementation is driven by mandatory standards that are part of the building codes and that the cost of compliance is a barrier. The study presented here explores the cost of upgrading classrooms to achieve a suitable reverberation time. The paper presents a case study in South Africa, where acoustic standards are generally not implemented and cost and know-how are barriers. The objective was to optimize the cost, acoustic benefit, and accessibility of acoustic interventions. Four adjacent similar classrooms were retrofitted with different sound-absorbing ceiling panels that cover a percentage of the ceiling area. The weighted sum model was used to assess the suitability of each intervention, taking into account the cost, acoustic benefit (in terms of reverberation time), and ease of access to materials. The case study demonstrates that a noticeable improvement in acoustic conditions can be achieved without significant cost and provides a basis for further research to develop simple standardized design recommendations.

Analisis Sengketa Pajak atas Aset Tidak Berwujud Berupa Goodwill di Indonesia

The receiving party in a merger or acquisition can record goodwill, which is subjectively assessed based on appraiser assumptions. Indonesian regulations on goodwill are limited to Article 11A of the Income Tax Law for amortization. Goodwill is almost always a matter of concern between taxpayers, entities claiming amortization, and the tax authority (Directorate General of Taxes). Differences in perception between taxpayers and the tax authority can lead to tax disputes. Tax disputes result in the same losses for both taxpayers and the tax authority. The disputing parties bear high costs (cost of tax compliance and cost of tax collection) to settle tax disputes. This research aims to analyze the causes of tax disputes related to goodwill and recommend solutions to address the recurrence of disputes. This study is a qualitative research with a case study approach. The research is conducted through triangulation, involving content analysis of tax court verdicts from 2018 to 2022 and interviews with tax consultants and the tax authorities. The research findings indicate that there are two main causes of tax disputes related to goodwill. These are differences in the interpretation of tax regulations and the burden of proof related to income generation, maintenance, and collection activities. Based on these findings, the Directorate General of Taxes needs to standardize interpretation differences and harmonize tax regulations to create clear legal certainty that will minimize disputes between the tax authority and taxpayers.

Trimodal therapy versus radical cystectomy for cT2N0M0 urothelial muscle-invasive bladder cancer: Single-center experience

Abstract Background: Bladder cancer is ranked the ninth most common cancer in the world. Locally, the incidence of bladder cancer has increased tenfold over the past 26 years. Radical cystectomy (RC) is considered a gold standard management option for muscle-invasive bladder cancer (MIBC), but trimodal therapy (TMT) has shown comparable oncological outcomes in selected patients. Materials and Methods: This is a retrospective study in which we reviewed medical records of patients diagnosed with MIBC without nodal disease or distant metastasis (cT2N0M0) who underwent either RC or TMT. Demographic data, comorbidities, histopathological and clinical staging, neoadjuvant/adjuvant therapy, and follow-up were analyzed. Results: We included a total of 31 patients in the study, with 10 patients in the TMT group and 21 patients in the RC group. There was no significant difference in recurrence between the TMT and RC groups (P = 0.58). The TMT group had a higher percentage of local recurrence (40% vs. RC 5.2%, P = 0.018) but no significant difference in metastasis (0% vs. 10%, P = 0.420). The difference in overall survival between the TMT and RC groups was not significant (P = 0.25). Conclusion: TMT may be considered an alternative option for patients unwilling to undergo RC due to related complications and prioritize a better quality of life. However, the decision should be made after considering the cost of extensive follow-ups and patient compliance with surveillance.

U.S. hybrid Striped Bass and Red Drum farms: Economic effects of the U.S. regulatory framework

AbstractObjectiveHybrid Striped Bass (HSB) and Red Drum Sciaenops ocellatus (known commercially as redfish) are important commercial sectors of foodfish production in the USA. The objective of this study was to measure the regulatory compliance burden on U.S. HSB and Red Drum farms.MethodsNational surveys were conducted in 2021 of U.S. hybrid Striped Bass and Red Drum farmers with response rates of 35% and 89% and coverage rates of 37% and 99.8%, respectively.ResultResults showed that the regulatory costs were one of the greatest costs of production, at 22% of total costs on HSB farms and 15% on Red Drum farms. Nationally, the total annual regulatory compliance cost burden was US$4.5 million for HSB and $2.2 million annually for Red Drum farms. Per‐farm, the regulatory cost burden was $152,698 ($1.20/kg) on HSB farms and $274,746/farm ($1.44/kg) on Red Drum farms. In addition, lost sales revenue on HSB farms was found to equal 92% of total sales revenue, at $31.3 million, and 54% of total sales revenue on Red Drum farms, at $13.6 million. The regulatory categories of greatest cost were those related to water rights and access, predatory bird management, and effluent discharge regulations.ConclusionRegulatory constraints have likely contributed to the contraction of the HSB sector from 2012 to 2018 and likely dampened the sales growth observed in Red Drum farming over the same time period. Smarter and more cost‐effective approaches to regulatory oversight of U.S. aquaculture are needed that allow for growth to meet increased demand for locally produced food and to remove the economic incentives to import seafood produced under less environmentally sustainable conditions than those in the USA.

The European Commission’s Proposal for a Modernised Union Customs Code: A Brief Introduction

The European Union (EU) Customs Union has existed since 1968, but to this day it is not fully harmonised. Although customs law is Union law, there are 27 different national customs administrations, resulting in the customs legislation not being uniformly applied. To remedy this, the European Commission has proposed a comprehensive customs reform, the Modernised Union Customs Code (MUCC), a draft of which was presented by the Commission on 17 May 2023 (COM (2023)258 final). The following innovations are worth highlighting: • establishing the new European Customs Authority to pool expertise and competence and support national customs authorities • establishing a Union-wide Customs Data Hub to ensure the monitoring of the movement of goods, including the supply chain, on the one hand, but at the same time allowing for the simplification of procedures • an independent legal regime for e-commerce: platform operators in e-commerce will become importers and customs debtors (‘deemed importers’) in the future. This is intended to reduce compliance costs and at the same time improve Union-wide risk analysis • the new ‘Trust and Check Trader (TCT)’ (which will be alongside the Authorized Economic Operator [AEO] until the TCT permanently replaces it), will communicate electronically via the Customs Data Hub with Union-wide effect. TCTs can benefit from further facilitations, such as performing certain controls themselves. In return, complete electronic monitoring of the TCT’s supply chain must be always ensured through real time access to the company’s internal data. The reform should be implemented within the next 10–15 years. The reform is to be welcomed. However, there are still pitfalls hidden in the details. The standardisation of IT systems is necessary for Union-wide centralised customs clearance. Better risk analysis can be performed on a Union-wide data platform, both to protect the EU’s financial interests and to enforce import and export restrictions to protect the Union and its citizens. An EU customs authority can reduce divergent administrative practices across member states through governance and support. The further development of the AEO, the TCT, can establish better cooperation between administration and business, and the ability of companies to perform certain controls and release the goods themselves can speed up customs procedures. Harmonised sanctions for misconduct by economic operators will lead to a level playing field. Much will depend on the concretising legal acts that are now being drafted and discussed.

Impact Assessment for Pillar One and Pillar Two from a German Perspective

In this article the tax effects of Pillar One and Pillar Two in Germany are discussed. The study complements the few studies available so far. The presented estimate of the tax revenues to be expected from the introduction of Pillar One varies between EUR 2 billion and 2.5 billion for the introduction of a 25%-over-10% rule. With regard to Pillar Two, additional revenues of around EUR 1.3 billion to 1.8 billion can be assumed in Germany. Further research should be carried out to anticipate expected changes in governments' behaviour as a response to Pillar One and Two. Likewise, expected compliance costs for multinationals need to be further assessed.

The impact of adoption of milk safety practices on food and nutrition security: Evidence from smallholder dairy farmers in Ethiopia

Despite the progress observed over the past decades, food and nutritional insecurity remain the prominent challenges in Ethiopia. In this respect, improved farming practices and productivity-enhancing agricultural technologies have been identified as pathways out of these problems; these technologies are the priority agenda of the government policy in Ethiopia. Nonetheless, the impact of the adoption of milk safety practices on dairy farmers’ food and nutrition security has not yet been addressed, especially at the smallholder farmers’ level. The aim of this study was to evaluate the impact of the adoption of milk safety practices on dairy farmers’ food and nutrition security in Ethiopia, using primary data collected from 410 dairy farmers. Generalized propensity score matching was used to evaluate the heterogeneous impact of the adoption of milk safety practices on the household food and nutrition security indicators (per capita food consumption expenditure and food consumption score). The findings reveal that the adoption of milk safety practices had a moderate impact on food consumption expenditure but had no significant impact on food consumption score. An ordered probit endogenous switching regression was also used to account for unobserved bias and check the robustness of the generalized propensity score estimates. Accordingly, the results are similar to the generalized propensity score estimates, and unobserved bias was not a problem. In general, the impact of adoption of milk safety practices on food and nutrition security of smallholder dairy farmers is moderate in Ethiopia. This might be because of the high compliance costs with the adoption of milk safety practices and the lack of quality-based pricing systems. Hence, creating an enabling environment, which in turn, encourages the adoption of milk safety practices would help improve positive effects of the adoption of milk safety practices on food and nutritional security.