Determinants Of Tax Evasion Research Articles

Determinants of Tax Evasion and Detection: Empirical Evidence from India

Determinants of Tax Evasion and Detection: Empirical Evidence from India

Determinants of tax evasion: Empirical evidence from Libya

The issue of tax evasion has always presented a challenge to policymakers in governments all over the world. A developing country's economic stability is almost entirely reliant on taxes and aid from other nations. Effective tax collection and capable tax administration are necessary to generate a sufficient amount of tax revenue. It would be possible to lessen the negative effects brought on by a decrease in tax revenue if governments in both developing and developed nations could better understand the factors that contribute to tax evasion and find effective ways to combat those factors. Numerous economic factors that affect tax evasion behavior have been mentioned in prior literature. However, research on the impact of tax evasion behavior in the Libyan context is lacking. Given this context, the current study, which empirically investigates the effect of education level, tax rate, and penalty rate on tax evasion behavior among self-employed taxpayers in Libya, will likely aid in shedding lighter on the causes of tax evasion. The data is gathered quantitatively by using a questionnaire. This study made use of the SPSS statistical package for social sciences. A framework for the proposed relationship between tax amnesty, educational attainment, tax and penalty rates, and tax evasion among self-employed taxpayers is what this study aims to achieve. The current study adds to the body of theoretical knowledge by highlighting the influences on the relationship between economic factors and tax evasion in Libya. Keywords: Education level, Tax rate, Penalty rate, Tax evasion, Libya context.

Determinan Penggelapan Pajak di KPP Pratama Batam Selatan(studi kasus WPOP di KPP Pratama Batam Selatan)

This research was conducted to analyze the determinants that influence tax evasion. The determinants of tax evasion used include tax discrimination, self-assessment systems and tax sanctions. Types of quantitative assessment. The population determined is a taxpayer registered at KPP Pratama South Batam. The sample is determined by simple random sampling, distributing questionnaires to 400 taxpayers. The data analysis technique uses the linear regression analysis method, classical assumptions, coefficient of determination, T test and F test by applying SPSS version 29. The results of the analysis conclude that tax discrimination has a significant partial effect on tax evasion with tcount 2.240 > ttable 1.966. The self-assessment system has a significant partial effect on tax evasion with tcount 2.295 > ttable 1.966. Tax sanctions have a significant partial effect on tax evasion with tcount 2.851 > ttable 1.966. Simultaneous testing interprets tax discrimination, self-assessment system and tax sanctions have a significant effect on tax evasion with Fcount 4.106 > Ftable 2.605 and a significance of 0.000 <0.05
 
 Keyword : Tax discrimination;Tax Evasion;Tax Sanctions;Self Assessment System

Http://habibiaislamicus.com/index.php/hirj/article/view/170

Tax violation in Pakistan is very high that has led to deteriorated economic situation and lack of public service delivery. The four variables of tax morale are; feelings of guilt and shame; lack of trust on government; perception about other citizens paying taxes; and level of penalties- as determinants of tax evasion in Pakistan. The perception about utilization of money, elements of shame, perception about other citizens’ compliance behavior and level of penalties effect tax violation. However, variables of guilt and perception about corruption do not have significant impact on evasion behavior. Some policy interventions have been suggested to curb the menace of tax violation. These policies include motivating tax payers through methods like hypothecation, imposition of fines and penalties and publishing names of defaulters through media and tax department website. Tax violation is a crime in almost all developed countries, and the guilty party is liable to fines and/or imprisonment. In Pakistan, many acts that would amount to criminal tax violation in other countries are treated as civil matters. Dishonestly misreporting income in a tax return is not necessarily considered a crime. Such matters are handled in the tax courts, not the criminal courts. In Pakistan, however, some tax misconduct (such as the deliberate falsification of records) is criminal. Moreover, civil tax transgressions may give rise to penalties. It is often considered that the extent of violation depends on the severity of punishment for violation.

Determinants of tax evasion in Greece: Econometric analysis of co-integration and causality, variance decomposition and impulse response analysis

The purpose of this paper is tο examine the causality relationships and the degree of interdependence, between the level of tax evasion in Greece and a set of deterministic factors, using annual data for the period 1995 - 2018. The research methodology employed includes testing for stationarity with the Augmented Dickey-Fuller (ADF) test, cointegration test according to Engle-Granger approach, estimation Error Correction Models (ECM) to investigate the short-run and long-run relationships, variance decomposition and impulse response analysis. The results indicate a significant interdependence, which is an important tool for pursuing a targeted and effective policy to fight tax evasion. More specifically, the survey showed that the level of tax rates, the level of unemployment, the Rule of Laws index, the level of GDP, the level of non-performing loans, the government efficiency, the corruption perception index and the level of final consumption expenditure, affect the size of tax evasion in Greece, significantly. In addition, the results of variance decomposition and impulse response analysis, support the above findings, providing a quantitative representation of the causality relationships between the factors under investigation and tax evasion.

The co-evolution of tax evasion, social capital and policy responses: a theoretical approach

The dynamic model presented in this paper intends to account for the evidence, which appears to be particularly significant for Italy, of the incidence of tax evasion in a certain region being negatively correlated with the level of social capital existing in that region. Besides including social capital among the determinants of tax evasion, we extend the model so as to incorporate a mechanism whereby the existing volume of opportunistic behavior—which is proxied by the level of tax evasion—has negative effects on the formation of new social capital, thus helping to explain how regional differences in the endowment of social capital and in the incidence of tax evasion co-evolve and why they tend to be highly persistent. The model seeks also to capture the fact that in a democracy the political determination necessary to effectively repress tax evasion depends on the voters’ propensity toward the phenomenon. Hence, one should expect that–in areas where a relatively large (small) number of citizens are tax cheaters—the consensus in favor of tough policies against tax evasion tends to be weak (strong) and short (long) lasting. Consistently with this intuition, the model shows that regions where social capital is relatively low and tax evasion is relatively high can do better in the long run (i.e., they can reach a steady state characterized by a higher level of social capital and a lower level of tax evasion) when tax-enforcement policies are determined at the national level rather than at the regional level. The opposite holds for regions where social capital is relatively high and tax evasion is relatively low.

Regional tax evasion and audit enforcement

ABSTRACTRegional tax evasion and audit enforcement. Regional Studies. Using an original panel dataset on tax gap and audits, this paper sheds light on the impact of audit and enforcement on the Italian regional tax evasion over the period 2001–11. Spatial econometric models were used to model regional tax gaps and to control for endogeneity issues and spatial patterns. Results provide evidence that greater enforcement increases tax compliance. A higher probability of targeted audits and additional schemes to increase the disclosure of declared income decrease the tax gap. The paper provides a general framework to study determinants of tax evasion at the regional level.

Determinants of Tax Evasion: Empirical Evidence from Ghana

For decades, researchers of tax systems and taxation as a whole are in a dilemma on the factors affecting taxpayers’ noncompliant behaviors. Numerous experimental and survey results concluded by tax researchers have identified characteristics of noncompliant taxpayers because tax revenues are seen as a major source of income in funding government expenditures. Globalization has called for a huge demand for numerous public services thereby forcing governments into increasing tax revenues to finance these projects. The demand of public service by government and taxpayers shifts the burden of taxes to taxpayers. The gap between tax revenues and tax expenditures are swelling thereby ensuring unbalanced government budgets due to taxpayers’ noncompliance. Understanding the causes of tax evasion calls for research into taxpayers’ reasons for evading taxes. The main aim of the study is investigating factors that have a detrimental effect on tax evasion in Ghana. In coming out with such factors, this research employed multiple regression techniques and factor analysis. The empirical results obtained from the analysis revealed that taxation and fiscal factors, demographic factors, administrative factors and economics factors are the main factors that have a significant effect on the evasion of taxes.

Balance de cuatro años de reformas en el sistema tributario cubano

This article tracks the key aspects of tax reform in Cuba from 2010 to 2014. Some of the topics considered are the impact of reform on national budget and the redistribution of income, the allocation of special treatments and its implications for investment and competition, fiscal decentralization versus real decentralization, and the determinants of tax evasion.

The Evasional Kuznets Curve: A Possible Shadow Economy Dynamics During The Transition

Using surveys of the Czech Republic we measure how the percentage of tax evaders evolved from 1995 until 2006. We find that at first evasion rose, leveled off, and then fell along an inverse-U path, suggesting the existence of what we call an evasional Kuznets curve. Part of the curve can be explained by conventional tax evasion theories of personal gain and another part of the curve from variables inspired by the Downsian model of political participation. Using this curve we advocate that evasion rises as taxes increase, summed with a curve along which evasion falls as governments become less corrupt and people stop curtail that part of their evasion which acted as a form of political protest. Separating these two curves and estimating their parameters may shed a light on determinants of tax evasion during transition and help policy makers to choose an optimal approach. Yet most of the curve arises from forces still not understood, what we call the dark matter of tax evasion.

Professionals’ Perspective of Tax Evasion: Some Evidence from Nigeria

Tax revenues constitute a major source of income for governments in most countries. However, the increasing concern on the extent of tax evasion has induced a lot of studies in different countries on the amount of unreported incomes and factors accounting for this phenomenon especially in emerging economies. To analyse this topic, Nigeria has been chosen as a reference point. In order to enhance objectivity, an empirical study has been carried out through a structured survey directed at tax professionals. This information was collected in order to explain the determinants of tax evasion. The results show that tax evasion in Nigeria is largely influenced by complexity in the tax structure, perceived financial and economic benefits associated with tax evasion, and lack of trust in governance over financial resource utilization. This outcome suggest that there should be adequate implementation of appropriate recommendations made in this study towards enhancing a better tax policy and improved tax administration in the country. The study also provides information for future research that might contribute to establish the most adequate mechanisms for taxation.

Determinants of Tax Evasion on Imported Vehicles

The importance of taxation as a major public finance to developed and developing countries is non-debatable. The issue of smuggling activities related to the indirect taxation had caused a great lost to the government not only in term of monetary aspect, but also non-monetary aspects such as quotas, embargo and product quality. However, the study of a tax evasion and smuggling activities in the indirect taxation have received less attention among the researchers and legislators. Hence, the current study aims to examine factors affecting the tax evasion on excise duties for importation of vehicles that can be associated with smuggling activities in Malaysia. The study has indentified several potential determinants related to tax evasion on imported vehicles, such as the tax rate, penalty structure, the car's brand and size of the business of car importers. To achieve the objectives, this study used sample data from vehicles smuggling cases investigated by the tax authorities in Malaysia. The hypotheses were tested using both univariate and multivariate statistical methods. The statistical results provided evidence on the significant values of evaded excise duties, whereby the excise duties and penalty rates are the contributing factors for the tax evasion in vehicles smuggling activities. Hence, this study contributes towards the body of literature in the discussed area and also provides strategic information to the policymakers in reviewing the tax policy related to excise duties on imported vehicles in the future.

Does political intention affect tax evasion?

For quite sometime, tax evasion has attracted many researchers’ attention in the field of public finance. Not enough attention, however, has been paid to the effects of political factors on tax evasion. This paper intends to provide an economic model of tax evasion, considering the interactions between tax authority and its sovereign government. It shows that tax evasion is influenced by the government's intention to control the economy, controlling for other determinants of tax evasion. The theoretical predictions are examined with annual data from the competitiveness reports published by the IMD and the WEF. The empirical evidence supports the theoretical model to a large extent.

Cheating Ourselves: The Economics of Tax Evasion

No government can announce a tax system and then rely on taxpayers' sense of duty to remit what is owed. Some dutiful people will undoubtedly pay what they owe, but many others will not. Over time the ranks of the dutiful will shrink, as they see how they are being taken advantage of by the others. Thus, paying taxes must be made a legal responsibility of citizens, with penalties attendant on noncompliance. But even in the face of those penalties, substantial tax evasion exists. Tax evasion is widespread, always has been, and probably always will be. This essay reviews what is known about the magnitude, nature, and determinants of tax evasion, with an emphasis on the U.S. income tax. It then places this information into a conceptual context, examining various models and theories, and considers policy implications.

Income Tax Evasion Revisited: The Impact of Interest Rate Yields on Tax-Free Municipal Bonds

1. IntroductionIncome tax evasion remains a timely issue, as evidenced by recently published studies (e.g., see Feige 1989, 1994; Alm, Jackson, and McKee 1992; Pestieau, Possen, and Slutsky 1994; Cebula 1997, 2001; Alm, McClelland, and Schulze 1999; Atkins 1999; Panteghini 2000; Ali, Cecil, and Knoblett 2001; Saltz 2001). In an effort to provide further insight into the determinants of tax evasion, this study hypothesizes that the tax-evasion decision may include an assessment of the tax-free interest rate yield on, say, high-grade municipal bonds relative to the taxable interest rate yield on alternative high-quality bond issues, such as 10-year Treasury notes. Presumably, the higher the interest rate yield on high-grade municipals (whose interest is legally exempt from federal income taxation) relative to the taxable interest rate yield on 10-year Treasury notes, the more attractive those municipals become, ceteris paribus. In effect, the interest paid on tax-free bonds, especially for households in higher tax brackets, may offer an attractive legal alternative (income tax avoidance) to illegal income tax evasion.1 Thus, it is hypothesized that the higher the tax-free interest rate yield on high-grade municipals relative to the taxable yield on 10-year Treasury notes (or equivalent taxable issues), the less the incentive for and, hence, the less the degree of income tax evasion.This study investigates empirically whether higher yields on tax-free municipals (relative to the taxable yields on 10-year Treasury notes) reduce the degree of aggregate federal personal income tax evasion. Section 2 provides the model, which includes a variety of variables already established in the literature to affect tax evasion. Section 3 describes the data. Sections 4 and 5 provide the empirical findings and concluding remarks.2. The ModelThe economy consists of agents who generate economic value that is reflected in the form of income and choose whether to report none, some, or all of their income to the Internal Revenue Service (IRS).The probability that the representative economic agent will not report taxable income, pnr, is treated as an increasing function of the expected gross benefits to the agent of not reporting income, eb, and a decreasing function of the expected gross costs to the agent of not reporting income, ec:(Formula Omitted. See article image.)The expected gross benefits from not reporting income to the IRS are hypothesized to be an increasing function of income tax rates. Unlike previous studies, this study focuses on both the average effective federal personal income tax rate (AEPT) and the maximum marginal federal personal income tax rate (MAX), such that(Formula Omitted. See article image.)Furthermore, as suggested by Feige (1994) and Cebula (2001), the higher the level of public dissatisfaction (DIS) with the perceived performance of government employees and elected government officials, the greater the subjective benefit taxpayers derive from tax evasion. Accordingly, becomes(Formula Omitted. See article image.)Finally, as explained in section 1, it is hypothesized in this study that the higher the tax-free interest rate yield on high-grade municipal bonds (TF) relative to the taxable interest rate yield on 10-year Treasury notes (TEN), the greater the incentive to engage in legal tax avoidance and the lower the incentive to engage in tax evasion. Thus, becomes(Formula Omitted. See article image.)The expected gross costs of not reporting income to the IRS are hypothesized to be an increasing function of the expected risks thereof. In this study, to the representative economic agent, the expected penalty from not reporting taxable income to the IRS, if said activity is detected by the IRS, is measured in part by the total pecuniary penalties (including both penalties per se and interest) previously assessed by the IRS on audited tax returns (PEN). …

L'evasione in Italia e nei paesi OCSE: evidenze empiriche, determinanti ed effetti economici (Evasion in Italy and in OECD countries: empirical evidence, determinants and economic effects)

The paper analyses evasion in terms of size and its main determinants, and discusses some of the measures to reduce its extension. Instead of attempting a new estimate of evasion, the author uses the many existing estimates and compares them, highlighting their strengths and weaknesses. The available data on the underground economy and fiscal evasion in Italy and in major OECD countries is shown. Then, after recalling its effects on public budgets, the other economic effects of evasion are discussed. Some determinants of tax evasion, in particular those that appear most significant for our country, are then analysed. Finally, major issues of economic policy and measures to reduce tax evasion are discussed. JEL: H26

Determinants of tax evasion and compliance

AbstractThe problem of tax evasion and subsequent revenue loss is an important one for our nation. Noncompliance with tax laws causes multibillion dollar annual losses for the U.S. treasury. An investigation of psychological variables is suggested as the most promising route to increase tax compliance. Hence, a review of the legal, economic, sociological, and psychological literature concerning the motivation and causes of noncompliance with tax laws is presented. Theoretical models and empirical studies addressing the issue of tax evasion are reviewed. An individual's feelings of equity and sense of norm commitment may be the crucial factors in the decision to comply or evade legally mandated taxes, superseding the notion of sanctions as the most effective deterrent. A legal reasoning model is one suggested alternative in the search for a causal explanation of noncompliance.

Determinants of tax evasion and compliance

The problem of tax evasion and subsequent revenue loss is an important one for our nation. Noncompliance with tax laws causes multibillion dollar annual losses for the U.S. treasury. An investigation of psychological variables is suggested as the most promising route to increase tax compliance. Hence, a review of the legal, economic, sociological, and psychological literature concerning the motivation and causes of noncompliance with tax laws is presented. Theoretical models and empirical studies addressing the issue of tax evasion are reviewed. An individual's feelings of equity and sense of norm commitment may be the crucial factors in the decision to comply or evade legally mandated taxes, superseding the notion of sanctions as the most effective deterrent. A legal reasoning model is one suggested alternative in the search for a causal explanation of noncompliance.