Tax Evasion Research Articles

Tax Evasion and Company Survival: A Brazilian Case Study

Enterprises face significant growth and survival challenges in highly competitive markets. Many companies fail to meet their tax obligations, which deprives society of essential resources and often results in tax penalties. This article examines whether companies that receive tax fines for evasion have a longer or shorter life expectancy compared to those that consistently comply with tax regulations. To analyze survival rates, the Kaplan–Meier estimator and Cox regression model were applied, considering factors such company size, sector, location, and tax evasion fines. The study included data from 11,297 firms established in 2017, in Rio Grande do Sul, Brazil. The findings indicate that companies fined for tax evasion had a higher survival rate (69%) compared to those without fines (38%) by 2023. This suggests that fines might serve as a corrective measure, helping companies realign and improve their chances of survival. Additionally, the study shows that medium-sized enterprises face significant challenges, possibly due to exceeding the limits of a simplified tax regime. This study highlights the importance of continued research across different regions and countries to validate these findings and enhance tax administration strategies.

Harnessing network power: Weaponised interdependence in global tax policy

AbstractFor decades, global tax policy has grappled with the challenge of mobile capital, failing to harness the regulatory potential of network power. This oversight has allowed tax havens to flourish, and multinational corporations and wealthy elites to circumvent state authority, undermining national fiscal policies and democratic capacity to meet grand societal challenges, such as climate change and inequality. But recent regulatory innovations pave a different way forward. This article spotlights the dynamics of ‘weaponized interdependence’, suggesting a critical role for strategically targeting global corporate and financial networks in reinvigorating action against tax havens, tax avoidance and tax evasion. Identifying and exploiting network chokepoints – financial institutions, corporate subsidiaries and expert intermediaries – can empower states to reassert their sovereignty and counterbalance the structural advantages of global capital. This approach helps us understand how and why recent regulatory measures have effectively countered financial secrecy, profit shifting and sanctions evasion, repairing public finances and restoring democratic integrity. In an age where weaponised interdependence is predominantly linked to national security, this recasting of global tax policy highlights a progressive path for using network power to develop effective global economic frameworks, strengthen democratic capacity and address contemporary challenges.

Identifying money laundering risk indicators: Evidence from Bulgaria

The study of the fight against money laundering in Bulgaria takes on a heightened significance due to the country's unique geopolitical and economic context. As a member of the European Union and a key regional player, Bulgaria assumes a pivotal role in preventing cross-border crimes, including money laundering. The present study aims to analyze how modern technologies can bolster this crucial role, facilitating monitoring and analysis processes to enhance the effectiveness of audit and tax inspections in the country. The research applied practical methods involving digital tools and technological solutions such as artificial intelligence and machine learning. These tools were used to identify risk patterns and anomalies in transaction data, demonstrating their real-world application and effectiveness. They enable fast and accurate analysis of large volumes of data, which is particularly important in the context of sophisticated money laundering schemes. The results of the study underscore the potential benefits of technological innovation in the field of financial audits. With the aid of digital technologies, supervisory authorities in Bulgaria stand to significantly enhance their ability to detect financial abuses, including money laundering and tax evasion. In conclusion, the study reiterates the pressing need for further integration of modern technological solutions in the practices of audit and tax services in Bulgaria. This integration is crucial to ensure the effectiveness of control mechanisms and the country's ability to respond to current and future challenges in the fight against crimes in the financial sphere, underscoring the urgency of this matter.

Effects of royalty payment on petroleum profit tax evasion: evidence from the Nigerian non-renewable energy sector

AbstractThe impact of the tax regime on the non-renewable energy sector has been neglected in the current literature. The sector is reported to be at the heart of most oil and gas producing economies. Considering the immense contributions of this sector, the present study investigated the effects of royalty payments on petroleum profit tax evasion in Nigeria’s non-renewable energy sector. A survey, in the form of a questionnaire, was used to collect data from 312 oil and gas companies; while SPSS and PLS software were used to analyze the data. The results indicate that there is positive and significant relationship between tax rate, detection probability, and penalty, and petroleum profit tax evasion. Additionally, the result shows that there is a significantly negative relationship between royalty payment and petroleum profit tax evasion. The findings have significant policy implications for the non-renewable energy sector across the globe. The findings confirm the fact that higher tax rate, detection probability, and penalty, have a direct impact on petroleum tax evasion. The findings also call on policymakers to reconsider the level of royalty rates to a more reasonable level so as to reduce the extent of petroleum tax evasion among the oil and gas companies.

Effectiveness of ex ante honesty oaths in reducing dishonesty depends on content.

Dishonest behaviours such as tax evasion impose significant societal costs. Ex ante honesty oaths-commitments to honesty before action-have been proposed as interventions to counteract dishonest behaviour, but the heterogeneity in findings across operationalizations calls their effectiveness into question. We tested 21 honesty oaths (including a baseline oath)-proposed, evaluated and selected by 44 expert researchers-and a no-oath condition in a megastudy involving 21,506 UK and US participants from Prolific.com who played an incentivized tax evasion game online. Of the 21 interventions, 10 significantly improved tax compliance by 4.5 to 8.5 percentage points, with the most successful nearly halving tax evasion. Limited evidence for moderators was found. Experts and laypeople failed to predict the most effective interventions, though experts' predictions were more accurate. In conclusion, honesty oaths were effective in curbing dishonesty, but their effectiveness varied depending on content. These findings can help design impactful interventions to curb dishonesty.

The Impact of Tax Audit Intensity and Probability of Fraud Detection on Tax Evasion: The Moderating Role of Tax Officials' Service

This study investigates the relationships between tax audit intensity, the probability of fraud detection, and tax evasion while examining the moderating role of tax officials' service. The research reveals that tax audit intensity significantly reduces tax evasion, confirming its effectiveness as a deterrent. However, the hypothesis regarding the probability of fraud detection's impact on tax evasion was rejected, indicating that the likelihood of detection does not directly influence taxpayer behavior in this context. Additionally, the study found no significant moderating effect of tax officials' service on the relationship between tax audit intensity, fraud detection probability, and tax evasion. These findings suggest that while audit intensity is crucial for enhancing compliance, the quality of service provided by tax officials does not substantially alter taxpayer responses to enforcement measures. The results underscore the need for tax authorities to prioritize strengthening audit processes and detection mechanisms while recognizing that service quality, though important for building long-term trust, may not significantly influence immediate compliance behavior. Future research should explore other moderating factors that could impact taxpayer decisions in varying economic and cultural contexts.

FACTORS INFLUENCING STUDENT PERCEPTIONS OF TAX EVASION

This study aims to examine the factors that influence students' perceptions of ethical tax evasion actions. The population of this study were students majoring in accounting and tax administration at the Faculty of Economics and Business, Universitas Sultan Ageng Tirtayasa. Sampling was carried out based on purposive sampling with the type of judgment. The stages in this study were carried out by collecting data through questionnaires distributed to accounting and tax administration students who had taken taxation courses and continued with data analysis. The data of this study are primary data and were analyzed using validity tests, reliability tests, normality tests, multicollinearity tests, heteroscedasticity tests and multiple linear regression analysis tests. The results of this study indicate that the taxation system and money ethic have a positive and significant effect on the ethical perception of tax evasion. While the variables of fairness and tax sanctions have a negative effect on the ethical perception of tax evasion. The results of this study also show that the four variables together can influence the ethical perception of tax evasion actions.

Reluctant Compliance and Collaborative Fiscal Disobedience: How Hmong Consumers Evade Value-Added Tax in Vietnam’s Northern Uplands

For decades, the Vietnamese socialist state has failed to enforce taxation on local Hmong in Đồng Văn, a vast karst plateau in the country’s northern upland region. A recent rise in local tax revenue from Value-Added Tax (VAT) is optimistically perceived by state authorities as a turning point in the fiscal relationship between the state and the evasive population. This article shows that what appears to be a ‘success’ of taxation is the result of both reluctant compliance of local Hmong with a new technique of state control that ties consumer desires to the payment of tax, and their continued pursuit of ‘fiscal disobedience’ using various tactics to evade the novel taxing power of the state. Compared to their previous efforts of tax evasion, evading VAT requires fiscal disobedience of a collaborative kind, involving not only Hmong consumers but also vendors and even agents of the state.

THE INFLUENCE OF MONEY ETHICS AND INFORMATION TECHNOLOGY TAXATION TO EMBEZZLEMENT TAX (TAX EVASION) MODERATED WITH RELIGIOSITY

This study aiming to examine the effect of money ethics and tax information technology on tax evasion moderated by religiosity. The population of this study were individual taxpayers located in the areas of Jakarta, Bogor, Depok, Tangerang, Bekasi. This study uses a causal design. The number of individuals taxpayers who were sampled in this study were 145 respondents. The data were processed and analyzed using the Structural Modeling Equating (SEM) technique operated by SmartPLS 4.0 software. Based on the results of the analysis, it shows that money ethics has an effect on tax evasion, tax information technology has no effect on tax evasion, religiosity has note been able to moderate money ethics on tax evasion and religiosity are able to moderate tax information technology on tax evasion.

Automatic Exchange of Financial Information from the Perspective of Tax Fairness and Transparency

<p>Tax fairness and transparency concepts have gained increasing prominence in the global tax and financial regulatory landscape in recent years. Automatic Exchange of Financial Information (AEOI) has proven to be an effective tool for implementing these principles. This executive summary briefly overviews the key role AEOI plays in promoting tax fairness and transparency. It explores the mechanisms and framework behind AEOI and highlights its impact on curbing tax evasion and improving the fair sharing of the tax burden between individuals and businesses. Additionally, this summary highlights the implications of AEOI for financial institutions, governments, and taxpayers, and highlights the challenges and benefits associated with its implementation. By considering AEOI from multiple perspectives, this summary aims to contribute to the ongoing international tax discussion and facilitate further research on the multiple dimensions of tax fairness and transparency in the global financial ecosystem.<em></em></p>

The Scope of AI Applications to Tax Evasion in Enhancing Tax Enforcement Capabilities

The Scope of AI Applications to Tax Evasion in Enhancing Tax Enforcement Capabilities

A Crucible of IoT Applications and Services and the Gambia Revenue Generation

The study investigated the relationship between Internet of Things (IoT) applications and services and The Gambia revenue generation, tax evasion and tax compliance respectively. It identified the challenges impeding the adoption and implementation of IoT applications and services in the revenue generation processes by the Gambia Revenue Authority (GRA). Both primary and secondary data were used in the study. Questionnaire and interview were used to generate the primary data. The study population (2188) comprised senior and mid-tier management personnel from the Ministry of Finance and Economic Affairs (MoFEA), staff members of The Gambia Revenue Authority, and the corporate taxpayers. The sampling approach used in this study was multistage. Personnel from the MoFEA and GRA were purposively selected, while corporate taxpayers were randomly selected. Their populations were then divided into various strata to ensure fair representation. Respondents were randomly picked from each stratum. To ensure an appropriate sample size, 327 individuals were selected. Data obtained were analysed using multiple regression, correlation coefficient, and simple regression analysis. Qualitative analyses were done on the interview responses. The study revealed that connectivity, networking, and data collection improve revenue generation, while increased IoT adoption and higher data utilisation and infrastructure investment reduce tax evasion and boost tax compliance. However, implementation of the IoT has encountered challenges in the form of technological barriers, financial constraints, and skill gaps. In view of these, investment must be made in enhancing connectivity and networking infrastructure, training staff in data analytics and cyber-security to optimise IoT data usage and boost IoT adoption through inducements and awareness programs. The study concluded that IOT applications and services are in the right direction to revolutionise The Gambia revenue generation.

Financial development and tax evasion: International evidence from OECD and non-OECD countries

This study investigates the nexus between financial development and tax evasion across 156 countries from 2000 to 2017. In contrast to previous research focusing solely on banks or financial markets’ development, we employ a more comprehensive financial development index introduced by the International Monetary Fund (IMF) in 2016. This index gauges the progress of financial institutions (FI) and financial markets (FM) in terms of depth, access, and efficiency. Our findings underscore a negative correlation between financial development and tax evasion. Enhanced depth, access, and efficiency in both FI and FM correspond to reduced levels of tax evasion. Nevertheless, disparities emerge between the Organization of Economic Cooperation and Development (OECD) and non-OECD countries. While non-OECD countries exhibit negative associations between FI and FM development and tax evasion, in OECD countries, the role of FI assumes greater significance in curtailing tax evasion. Notably, within OECD countries, the depth of FI and FM emerges as the sole influential factor. This contrasts starkly with non-OECD counterparts, where all dimensions − depth, access, and efficiency − negatively influence tax evasion. Our research has noteworthy implications for policymakers in both categories of countries.

Theoretical principles of criminal liability for evasion of taxes, fees (mandatory payments) in the field of housing construction

Theoretical principles of criminal liability for evasion of taxes, fees (mandatory payments) in the field of housing construction

The Impact of Forensic Accountant Characteristics on Reducing Tax Evasion from the Perspective of External Auditors Working in Audit Firms and Companies in the Republic of Yemen: A Field Study

The study aimed to identify and measure the impact of forensic accountant characteristics on reducing tax evasion from the perspective of external auditors working in audit firms and companies in the Republic of Yemen. To achieve the study's objectives, an electronic questionnaire was used as a data collection tool from a population of 384 external auditors in audit firms and companies using a complete enumeration method. The number of retrieved questionnaires was 329, and the number of questionnaires valid for analysis was 260. The data were analyzed using the SPSS, where multiple regression analysis was used to test the hypotheses. The results of the field study showed a positive impact of forensic accountant characteristics (skills and qualifications) on reducing tax evasion. Skills had a high positive impact on reducing tax evasion, followed by qualifications, especially those holding a CFA certificate. The results also showed no impact of forensic accountant characteristics (experience and behaviors) on reducing tax evasion according to the study population's opinion. The study revealed that the most related dimensions to reducing tax evasion, according to the study population's perspective, are the justifications for tax evasion, followed by tax evasion opportunities, tax evasion capabilities, and then tax evasion pressures. The study recommends the need to establish a specialized professional association concerned with organizing the forensic accounting profession in the Republic of Yemen, adopting the forensic accounting subject within accounting curricula, and activating field training for those performing the duties of forensic accountants.

Determinants of Tax Compliance Behavior: A Case Study in Ethiopia

Policymakers and tax authorities in developing countries face challenges in comprehending the determinants of tax-compliance behavior. This study employs empirical investigation to explore the factors that influence taxpayers’ voluntary and enforced tax compliance behaviors. Data were collected through a survey questionnaire distributed to 400 taxpayers using simple random sampling and analyzed using an ordered logit model. The results validate the assumptions of the slippery slope framework, showing that trust significantly impacts voluntary tax compliance and that a strong tax authority’s power contributes to more enforced tax compliance in Ethiopia. Additionally, the interaction between trust and power has a more significant effect on enforced tax compliance. This study also emphasizes the importance of improving trust in increasing tax compliance. Moreover, factors such as equity, fairness, tax knowledge, effective tax usage, and taxpayer morale contribute to tax compliance. By identifying factors that contribute to tax compliance, the findings of this research provide valuable insights for tax authorities in Ethiopia and other developing countries in devising strategies to combat tax evasion. This includes implementing a fair tax regime, enhancing the perceived value of public services financed by tax payments, increasing tax knowledge activities to help people understand the importance of paying taxes, and fortifying frameworks to minimize extravagant spending for maintaining public trust and ensuring effective and efficient use of taxpayers’ money.

PERCEPTIONS OF TAX BURDEN AND ITS INFLUENCE ON TAX EVASION IN KOSOVO

The paper aims to analyze perceptions of tax burden and its influence on tax evasion in Kosovo. 320 respondents were taken in analysis and is used ordinal logistic regression. Based on the analysis of the scientific work it has emerged that, age, marital status, types of taxes paid, application of VAT, non-issuance of fiscal receipt and perceptions of the tax system significantly influence perceptions of tax burden and tax evasion in Kosovo. Other predictors included were not significant, indicating they may not have a strong influence on perceptions. The study has some limitations, this have to do with not including other countries in analyzing their perceptions of tax burden and its influence on tax evasion. However, the finding of the paper may be beneficial to other researchers and policymakers.

A compliance and audit model for tackling tax evasion in Nigeria

Tax evasion remains a significant challenge for Nigeria, undermining economic stability and reducing public revenue. This paper proposes a comprehensive compliance and audit model designed to address tax evasion in Nigeria. The model integrates enhanced compliance strategies, advanced audit procedures, and the strategic use of technology to create a robust framework for tackling tax evasion. The proposed model emphasizes proactive measures to improve taxpayer compliance through targeted education and outreach programs, streamlined reporting processes, and incentivization. On the audit front, it advocates for the adoption of sophisticated audit techniques and technologies, including data analytics and automated systems, to detect and address evasion more effectively. The implementation framework outlines a phased approach involving key stakeholders such as the Federal Inland Revenue Service (FIRS), local tax authorities, and the private sector. By examining domestic and international case studies, the paper highlights successful practices and potential challenges, providing actionable insights for adapting these strategies to the Nigerian context. Evaluation metrics are proposed to assess the model’s effectiveness, with expected outcomes including improved tax revenue, enhanced compliance rates, and strengthened public trust in the tax system. The study concludes with recommendations for further research and policy adjustments to refine and expand the model's application. This approach aims to not only mitigate tax evasion but also contribute to a more transparent and equitable tax system in Nigeria.

The Weakening of Taxpayer Rights in the Exchange of Information between Tax Authorities

Developments in international legislation and the growing digitalization of tax law support the development of global networks between tax authorities. We are witnessing an integration of databases that will lead to increasingly intense coordination of the fight against tax evasion at a supranational level. As in social networks and digital commerce, databases are increasingly enriched, contain increasingly precise information on the individual taxpayer and use common languages that allow for automated exchanges of information. While waiting for the creation of a global database – not conditioned by the constraints of reciprocity and abstractly usable by all authorized entities who need it – the first risks of limitation of the taxpayer’s rights are emerging. In fact, these phenomena have dark sides that are starting to emerge in use, at a national level and with respect to individual taxpayers, of interpolated databases. Moreover, a growing amount of information flows from heterogeneous and increasingly widespread sources, sometimes not protected by the requirements of professionalism, legality and public trust since data collection and entry can be delegated to economic entities, intermediaries and consultants. The absence of an authority responsible for the unitary management of global databases and for the resolution of their conflicts, the slow and timid affirmation (only in some national systems) of the taxpayer’s right of access to information concerning them, the difficult configuration of the faculty to request the correction of erroneous data and of the specular public power to remove the reported inaccuracies, weaken the system of protections gradually erected to protect the taxpayer’s position. In this way, the coordination of national systems that contemporary tax law creates is strongly unbalanced on the side of the protection of tax interests. International and European tax law should instead provide greater guarantees in favor of the taxpayers, defending their right to fair taxation.

The trifecta against financial crime: A collaborative analysis of the roles of banks, consulting firms, and governments

The roles of banks, consulting firms and governments are intertwined in combating financial crime. Banks are on the frontlines as they process financial transactions and engage directly with customers. Banks are extraordinarily strategic because they interface with customers and are heavily involved in handling financial transactions worldwide. They watch accounts for any suspicious activity and report such activities to the legal bodies as expected under AML regulations. Consulting firms help banks, as well as other financial organizations to create various tools for evaluating threats and devising strategies for firms to conform to. They also do training in the area of financial crime prevention. Governments put in place measures in the form of legislation that seeks to prevent and curtail acts such as money laundering, financing of terrorism and tax evasion among others. Materials and Methods: The study’s literature was obtained from electronic databases. Only the articles that investigated the effectiveness and efficiency of anti-money laundering/counter-terrorist financing policies and regulations and/or sources that compared financial institutions’ cooperation with consulting companies and governmental agencies were included. Among the reviewed sources 53 from 1980 till 2023, which included academic books, journal articles, government and international organization reports. Results: The literature shows that relying on the regulation is inadequate for controlling finance related crimes. Banks have a profit-driven culture and it lacks scrupulousness towards integrity risks. For the same purpose, prescriptive regulations increase disproportionate compliance costs for small jurisdictions and financial institutions. Companies seeking risk management services get these from consulting firms that also profit from molding compliance frameworks. Syndication enables the employment of unique features possessed by each party. While the banks have an effective network and reach, the consulting firms can analyze data accurately, and the government has statutory power and control. Discussion: Shifting social norms are another driver: peoples’ behavior in financial markets today is a shift from that of even a decade ago and there is a need to address financial crime in a shared manner and increase cooperation at a global level. To put measures in place, the roles and responsibilities should be well defined based on strengths of each of the entities. Banks are also in good shape for transaction monitoring although they need some regulation to do so. Analyzing the motives for consulting firms, it is possible to state that the provision of technical solutions is possible only if there are factors that guarantee the transparency of actions. Governments provided the blueprint in achieving the proportionate, risk adjusted policies while leaving it to the private sector to drive the processes. This is because we have seen that financial globalization means that nations have to ideally move in synchrony. International agencies such as the UN, FATF, FSB, IMF and others have contributed to the development of international standards, whereas in national situations, the effects vary from one country to another. Conclusion: It can therefore be seen that no single entity can deal with such complicated concepts of transnational financial crimes in isolation. The utilization of the mandated strategies by banks, consulting companies and governments as essential collaborators in tandem with their core competencies is the most useful approach. This triumvirate, therefore, has great potential to add real value to anti-financial crime efficiency when properly aligned and adequately supervised in a manner consistently and holistically operationalized.