Evasion Practices Research Articles

The Deterrent Role of Social Norms on Tax Evasion in Indonesia

ABSTRACT Indonesia, as a developing nation, confronts significant challenges with tax evasion, exacerbated by a substantial shadow economy. This phenomenon results in the non-reporting or underreporting of hundreds of trillions of rupiah in income, which should constitute the tax base. Such dynamics create strong incentives for individuals to engage in tax evasion practices. Researchers have extensively examined tax evasion across various disciplines and methodologies, yet each approach has its limitations, leaving the issue incompletely addressed. Hence, this study integrates these shortcomings, encompassing detection risk, fiscal psychological burden, fiscal transparency, and modernization of tax administration as pivotal factors influencing tax evasion. Furthermore, tax evasion in Indonesia often garners negative publicity, particularly involving unscrupulous employees of the Directorate General of Taxes (DJP), thereby contributing to a highly unfavorable societal perception of tax officials. This negative stigma potentially shapes social norms that impact taxpayer compliance behaviors. Consequently, this research employs social norms as a moderating variable. The study gathered valid responses from 418 individual taxpayers through distributed questionnaires, revealing significant impacts of detection risk, fiscal psychological burden, fiscal transparency, and modernization of tax administration on tax evasion. Interestingly, social norms were found to moderate all independent and dependent variables except for the modernization of tax administration.

Comparison of Transfer Pricing methods and their application in disputed tax cases in Indonesian courts

Transfer pricing is a trending topic of taxation in various worlds, not least in Indonesia. Directorate General of Taxation is very aggressive to supervise and monitor the practices of transfer pricing conducted by the taxpayer, because it is not just a case of fictitious tax refunds and tax realtor practices that erode the potential for state revenue from taxes, but the practice of tax evasion in the process transfer pricing is also considered a lot of harm to tax revenue. Transfer pricing practice is actually a common practice and commonly practiced by companies group companies. However, this can be a crucial issue when setting transfer prices is not in accordance with the principle of fairness and business prevalence (PKKU / arm's length principle) which regulated in the Indonesian transfer pricing regulations.. The taxpayer is given the freedom to use their own discretion in deciding the most appropriate method of measuring the transfer price. However, this leads to inconsistencies in the methods applied to arm's length transactions similar by entities from similar industries. Loopholes in this area are vulnerable to tax evasion practices since decades ago. This paper aims to compare the available methods for measurement transfer pricing.

Pengaruh Kepemilikan Asing, Direktur dan Komisaris Asing Terhadap Penghindaran Pajak dimoderasi oleh Profitabilitas

The purpose of this research is to examine the impact of foreign ownership, foreign directors and commissioners on the company's efforts to avoid tax liabilities, taking into account the role of profitability as a moderating factor. The Data used came from 44 companies in the energy sector listed on the Indonesia Stock Exchange in the period 2020-2022. Sampling was carried out through systematic random methods, and regression analysis with the concept of modernization was used to process the data. The findings of this research illustrate that foreign ownership and foreign directors and commissioners have an impact on tax avoidance practices in the corporate environment. It added that the profitability factor plays a crucial role in regulating the relationship between tax evasion and foreign ownership. In more detail, profitability has the potential to amplify the impact of foreign ownership on tax avoidance practices. On the other hand, the profitability factor also has no effect in moderating the relationship between foreign directors and commissioners against tax evasion practices.

The Impact of Changes in Tax Regulations on Corporate Tax Avoidance Practices in Indonesia

Using a quantitative approach using Structural Equation Modeling with Partial Least Squares (SEM-PLS), this study examines the effects of tax law changes on business tax evasion practices in Indonesia. The research delves into the moderating impacts of industry type and economic conditions, in addition to the mediating roles of corporate financial structure and firm size. Each of the 150 companies in the sample, which come from a variety of industries, offers insightful information about their operational and financial traits. The findings show that corporate tax avoidance and changes in tax laws have a substantial positive correlation, which is mediated by company financial structure and business size. The moderating effects of business type and economic conditions are evident, underscoring the significance of industry-specific characteristics and contextual economic factors in comprehending the behavior of corporation taxes. Policymakers, tax authorities, and enterprises can benefit from the findings, which offer practical insights for formulating and enforcing tax policies.

Forensic accounting, socio-economic factors and value added tax evasion in emerging economies: evidence from Jordan

Purpose This study aims to determine the impact of forensic accounting, probability of detections, tax penalties, government spending, tax justice and tax ethics on value-added tax (VAT) evasion. Design/methodology/approach The study uses partial least squares-structural equation modeling to examine the connection between tax sanction, probability of detection, tax ethics, tax justice, forensic accounting and government spending on VAT evasion based on 248 responses collected from the retail industry in Jordan. Findings The findings also demonstrate that there is a negative correlation between tax sanctions, probability of detection, tax ethics, tax justice, forensic accounting, government spending and VAT evasion efficiency. Practical implications The results, considering forensic accounting and government expenditure considerations, may emphasize the importance of the tax sanction, probability of detection, tax ethics, adoption of tax justice in the public sector and tax authority. Additionally, the findings are important for regulators and decision-makers in announcing new laws and strategies for VAT evasion. Social implications It turns out that the tax authority and public sector can definitely improve their capacity to protect public funds and limit VAT evasion practices within SMEs by adopting increased tax sanctions, probability of detection, tax ethics, tax justice, forensic accounting and government spending. Originality/value Numerous studies have been conducted at the individual level in the context of income tax on the link between tax punishment, probability of detection, tax ethics, tax justice, forensic accounting and tax evasion. This study expands on the scant evidence of this connection to the retail business in the context of VAT avoidance. Additionally, it advances prior studies by integrating fresh elements, such as forensic accounting and government expenditure, that have never been considered in connection to VAT evasion in the retail sector.

Multinational Corporations transfer Pricing Policies and Economic Growth in Nigeria

With Nigeria's abundant natural resources the control of a substantial portion of oil production by multinational corporations (MNCs) raises concerns about transfer pricing manipulation. Part of revenue leakages of the government in Nigeria which are needed to boost economic growth can be attributed to tax evasion practices by MNCs through their transfer pricing activities. Studies that focused on tax evasion practices of MNCs such as sharp practices in the area of transfer pricing practices in Nigeria are scarce. This study examined the effect of multinational corporations transfer pricing policies, corruption and economic growth in Nigeria from 1986 to 2022. The study adopts an ex-post factor research design, utilizing an autoregressive distributed lag modelling and bound testing cointegration as the estimation techniques. The inferences were made at 5% significant level. The inferences were made at 5% significant level. The findings revealed that domestic non-oil revenue shows a significant and positive effect on Gross Domestic Product, suggesting a potential positive association between domestic non-oil revenue and Gross Domestic Product over the long term. In the short run lagged differences in Gross Domestic Product exhibit a positive and marginally significant coefficient, suggesting a persistence effect. In conclusion, in the examination of transfer pricing policy on Gross Domestic Product, the long-run estimates reveal a significant effect of transfer pricing on Gross Domestic Product (Adj. R2= 0.229, F (4,37) = 30.94, p< 0.05)), The study concluded that transfer pricing contributes valuable insights to the on economic growth in Nigeria. The study recommended that policy maker should center on promoting transparency and fairness in multinational corporations' transfer pricing practices through the implementation of stringent regulations and monitoring mechanisms, collaboration between domestic and international tax authorities to detect and deter potential manipulations, and the fostering of international cooperation to establish standardized guidelines, aiming for an equitable and consistent approach across jurisdictions.

Examining The Relationship Between Economic, Demographic, Legal And Institutional Variables Towards Tax Evasion : A Case Study In West Kalimantan

Tax evasion, one of the most common crimes in the world. There are so many cases of tax evasion that are not known by the public, in fact there are many cases of tax evasion that are closed and only revealed a few years later. This is also happened in Indonesia. Without exception, Indonesia is also one of the countries with the most tax evasion practices. To examine which factor, affect the tax evasion practice the most, this problem needs to be studied further. This research aims to examine and reveals how the economic variable, demographic variable, and legal and institutional variable affect tax evasion practice with West Kalimantan, Indonesia as the studied area. This research uses the multiple regression analysis as its research method. Questionnaire was used for the data collection where the questionnaire succeeded to obtain 120 respondents as research population, then 100 sample gained after screening process . The result of this research is that the economic variable and the legal and institutional variable has a positive effect on tax evasion practice and the demographic variable has a negative effect on tax evasion practice.

Features of credit behavior of Russian youth: trends and risks

The article discusses the current aspects of the credit behavior of Russians, including changes in the volume of borrowings over the past 4 years, as well as the dynamics of indebtedness, including overdue loans. Based on the results of the author’s sociological research (two measurements — in 2022 and 2023), the features of active actions and attitudes of young people in the field of debt behavior are identified. The analysis showed strengthening of the vector on the willingness to involve this age group of the population in credit practices. There was carried out a comparison of the attitudes of young people regarding the conditions under which evasion of obligations to repay debts is justified: 1) debts to credit institutions; 2) to relatives and acquaintances. The views of Russian youth on the censure for such evasion practices in Russian society are examined. The survey results show that the presence of a loan agreement of respondents contributes to formation of a more responsible behavior regarding compliance with payment deadlines, in contrast to the situation of the absence of debt (only with the intention to enter into debt relations). The position of young people in relation to the violation of loan repayment terms is different in different groups: the youngest respondents (17–20 years old) see more reasons for the possibility of non-repayment of the loan. Among the reasons why it is permissible, in the opinion of young people, not to repay debts, the most compelling for respondents are the situations when the loan was issued by fraudsters without the consent of the person himself (67%), in case of serious health problems and the need to spend on treatment (38%), if the lender increased the interest on the loan unilaterally (34%), in case of job loss (26%). Credit risks typical not only for young people, but also for all age groups of Russians are highlighted: deterioration of the “credit quality” of borrowers and risks of breach of obligations (non-payment and violation of repayment terms) on loans due to a decrease in real income.

ANALISIS PROFITABILITAS, LEVERAGE, SALES GROWTH, DAN CAPITAL INTENSITY TERHADAP PENGHINDARAN PAJAK PADA PERUSAHAAN PROPERTI DAN REAL ESTAT DI BEI PERIODE 2018-2019

This study aims to analyze the impact of factors on tax evasion in the property and real estate sector companies listed on the Indonesia Stock Exchange (IDX) during 2018-2019. Tax avoidance is the dependent variable, while profitability, leverage, and sales growth are the independent variables. Through purposive sampling, 106 data points from 52 companies that met the research criteria were analyzed using multiple regression analysis and SPSS 25 software. The results indicate that profitability significantly affects tax evasion, while leverage, sales growth, and capital intensity have no significant impact on tax evasion. In conclusion, this research enhances our understanding of tax evasion determinants in the Indonesian property and real estate sector. The findings suggest that companies with higher profitability are more likely to engage in tax evasion practices. Policymakers and tax authorities can utilize these insights to design targeted strategies against tax evasion in this specific industry. However, limitations in sample scope and time period necessitate caution in generalizing the results, warranting further research.

Reducing Socio-economic Disparities in Indonesia: Strengthening the Taxation Sector in Indonesia

This legal research aims to analyze the strengthening of the tax sector in Indonesia to overcome the socio-economic disparities in the era of the Industrial Revolution 4.0. The research methodology used is descriptive qualitative research using a normative legal approach and documentary data collection techniques. The research model focuses on analyzing tax policy and related literature to understand the problem and provide solutions to address the problem. This research identifies tax evasion and corruption in the tax sector as the main factors contributing to Indonesia's low tax revenue. This research suggests that tax law reform and institutional transformation are needed to strengthen the capacity of tax institutions and improve tax administration, human resources, and information technology infrastructure to increase tax revenue and reduce tax evasion practices. Increased public confidence in the tax system can improve tax fairness and equity at all levels of society.

A cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small and medium sized enterprises

PurposeThe issue of tax evasion through fraudulent financial reporting committed by companies is a major concern facing the tax authority in Malaysia. As such, the purpose of this study is to propose a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst small- and medium-sized enterprise (SME) taxpayers.Design/methodology/approachThe proposed model for this study is designed to explore the extent of the relationships between the independent variables: family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits and the moderating variable, i.e. tax audit officers’ level of competence; and the dependent variable, i.e. tax evasion from the perspective of fraudulent financial reporting. This study is grounded on four theories: agency theory, political cost theory, economic deterrence theory and competency theory. Data will be gathered from actual audit cases resolved by the Inland Revenue Board of Malaysia. Ordinary least square regression analysis is proposed for the investigation.FindingsThis study anticipates that family ownership firms, company size, presence of tax professionals, company’s duration in business and frequency of tax audits could be associated with tax evasion amongst SMEs in Malaysia. This study further proposes that highly competent tax audit officers could mitigate the relationship between frequency of tax audits and tax evasion practices amongst SMEs in Malaysia.Originality/valueThis study should be able to provide a cohesive model of predicting tax evasion from the perspective of fraudulent financial reporting amongst SMEs in Malaysia. Research on fraudulent financial reporting amongst SMEs is very limited, especially involving the level of competence of the tax audit officers; therefore, this study should contribute to the tax evasion literature by providing a comprehensive model of predicting tax evasion through fraudulent financial reporting using a Malaysian tax setting.

Tax evasion through fraudulent financial reporting amongst SMEs in Malaysia

PurposeThe purpose of this paper is to tackle one of the issues in tax evasion, that is from the perspective of fraudulent financial reporting amongst small and medium-sized enterprises (SMEs) in Malaysia. This study is intended to examine the relationships between certain company attributes, namely, company ownership structure, the size of company and the frequency of tax audits and how they relate to tax evasion practices amongst SMEs in Malaysia.Design/methodology/approachThis paper examined 397 companies which have been audited by the Inland Revenue Board of Malaysia (IRBM) during the years 2016 and 2017. A research model was developed and the authors use ordinary least square regression analysis to examine the effect of three prominent independent variables, which are company ownership structure, the size of company and the frequency of tax audits on SMEs’ tax evasion practices in Malaysia.FindingsThe authors find that family ownership firms and company size have statistically significant positive relationship with tax evasion practices detected during tax audits. The results also show that the frequency of tax audits conducted positively affect the increase of tax evasion activities amongst SMEs in Malaysia.Originality/valueTo the best of the authors’ knowledge, this study could be the first in Malaysia that uses the actual audited data examining the fraudulent financial reporting cases amongst SMEs, and this could provide important insights to the IRBM to enable this tax authority to improve its policy-making decisions in relation to selecting the right companies for audits in the future and subsequently may assist its collection department in generating additional income for the nation.

PERAN AEOI DALAM KETERBUKAAN INFORMASI PAJAK UNTUK MENINGKATKAN PENERIMAAN PAJAK DI INDONESIA

In the era of globalization and technological advances, global economic integration has an impact on Indonesia's taxation sector. Writing this journal discusses the role of AEoI in disclosing tax information to increase tax revenue in Indonesia. The research objective is to study and analyze the role of the AEoI in increasing state revenue from the tax sector in Indonesia. Research using literature studies, based on the data obtained and studied, it can be seen through the AEoI that information disclosure occurs which can increase tax revenue. The convenience provided by technology has a positive impact on taxpayers, but it cannot be denied that there are negative taxpayer practices such as tax avoidance and tax evasion which can lead to a decrease in potential tax revenue. Tax avoidance and evasion practices involve tax haven countries which make it difficult to eradicate domestic institutions. Cooperation between countries in the field of taxation is needed to overcome tax avoidance and evasion practices through the OECD program related to transparency and automatic disclosure of information, namely the Automatic Exchange of Information (AEoI). One form of Indonesia's commitment in implementing AEoI is to issue PERPPU No. 1 of 2017 concerning Access to Financial Information for Taxation Purposes. The application of AEoI in Indonesia can strengthen the tax base so that state revenue from the tax sector becomes more optimal.

Evasive shareholder meetings and corporate fraud

We examine how evasive shareholder meetings are related to the likelihood of committing corporate fraud. In this study, we use changes in corporate policy to hold an AGM on certain popular dates as a proxy for evasive management practices. We find that the positive implications of strategic AGM scheduling for committing corporate fraud are greater for firms that hold their AGM away from headquarters, firms managed by professional CEOs, and firms whose AGM agendas include audit election or dismissal. The positive correlations are, however, less likely when evasive practices are spread throughout the same industry.

The influence of internal and external rewards on people’s behavior regarding tax evasion practices in Brazil

ABSTRACT This research aimed to identify the factors that influence people’s behavior with regard to tax evasion practices in Brazil based on an analysis of the internal and external rewards. The study analyzes internal and external rewards as a determining factor of tax evasion, unlike other studies that have focused on analyzing economic and social factors. The topic is addressed from a contemporary perspective, based on a behavioral analysis of economic and social factors. The paper contributes with its conceptual refinement and assumptions that may strengthen the foundations for studying the factors that influence tax evasion. The data collection was carried out by means of a quasi-experiment followed by the application of a questionnaire, in the period from November of 2016 to September of 2017, in loco, with 800 data collection instruments in all the geographic regions of the country, 598 of which were validated. Measures were adopted to ensure the content, criteria, and construct validities. The reliability test resulted in a Cronbach’s alpha of 0.63 and the composite reliability was higher than 0.60. The data were analyzed based on descriptive statistics and using the binary logistic regression model. The results of this research illustrate, by means of the logistic regression analysis using a univariate approach, that external rewards - punishment - and internal rewards - self-concept, social norms, fiscal transparency, and cost of compliance - influence people’s dishonest behavior with regards to tax evasion practices in the sample studied. The study analyzes tax evasion based on an interdisciplinary approach, cooperating with the public administration in determining actions that can discourage evasion, by implementing strategies that include behavioral factors relating to the taxpayer.

The Effect of Tax Evaluation Trials and Community Social Views on Tax Evasion Practices

This research aims to determine the effect of Tax Payer of trust and Social Opinion to the Tax Evasion. The object of this research is Kebayoran Lama Traditional Market in South Jakarta. The research design used is causal research. The sampling technique used is accidental sampling. This study was conducted during the period January 2018 until May 2018 with a sample 100 people listed on is Kebayoran Lama Traditional Market in South Jakarta. The data used in this study is primary data obtained from spread of the questionnaire. Data analysis method used is panel data regression analysis method with the help of SPSS 21.0 software. The results of this study indicate that the Tax Payer of Trust have an effect on Tax Evasion of the company in Kebayoran Lama Traditional Market South Jakarta. However, that the Social Opinion have an effect too on Tax Evasion of the company in Kebayoran Lama Traditional Market South Jakarta. Keywords : Tax Payer of Trust, Social Opinion, and Tax Evasion. DOI: 10.7176/RJFA/11-16-09 Publication date: August 31 st 2020

Analysis of article 69-B of the CFF and the tax culture

The economic situation in our country, the emergence of new companies and the disappearance of others, makes many taxpayers resort to unconventional strategies, in order to avoid compliance with tax obligations as established in the regulations, to improve their finances , This, many of the times they do it by resorting to some figures inherent to evasion practices, those that imitate and others that give tax effects, the authority colloquially calls them EFOS and EDOS, Companies that Invoice Simulated Operations and Companies that Deduct Simulated Operations . The taxpayer who resorts to the use of this evasion practice and who is identified by the competent authority, will have to abide by the procedure established in article 69-B of the Federal Tax Code. The work shows the analysis of this procedure, and the relationship that it has with an adequate Tax Culture, through the implementation of an adequate Fiscal Citizenship.

La calidad de la Educación Superior en Colombia: algunas prácticas estratégicas de evasión

La calidad de la Educación Superior en Colombia: algunas prácticas estratégicas de evasión

The Tax Collection Capacity of Afghanistan: An Answer in the Light of Rampant Tax Evasion Practices

Afghanistan has taken a number of measures to combat tax evasion, however, they have not led to strengthening tax compliance in the country. This is due to the prevalence of economic crimes and the weaknesses in the state’s tax model. This article argues that these problems present the greatest hurdle in Afghanistan's quest towards a tax compliant society. By considering Kabul and Kandahar as its case study provinces, the article employs several methods to investigate tax evasion practices in the two provinces. In doing so, twelve indicators were developed as constructs to identify instances of tax evasion. The intention of this article is not to provide a comprehensive overview of estimates of every tax evasion component, nor of every tax evasion channel, but to specifically identify the common tax evasion practices in the two provinces. The findings suggest that as a result of the hierarchisation of the Afghan tribal society, the state co-opted tribal leaders and appointed them as local representatives, in charge of gathering taxes and duties from fellow tribesmen. This, the interviews revealed, has resulted in an obstacle for the state as the only sovereign with the monopoly to collect tax. Particularly in instances where the tribal leaders go far beyond their duty to collect tax and not remit it to the state. The resulting fragmented political structure that sits between local tribal leaders and state institutions have made it difficult for the Afghan government to get the local communities to remit taxes. Interviews with government officers, individuals and corporations in Kabul and Kandahar confirm that the rise of the underground economy due to poverty, warlord directives, contest between state and tribal leadership and insecurity has contributed to high incidences of smuggling, trade in narcotics, corruption, and money laundering. Political interference further prevents full disclosure on transactions and weak implementation of reporting standards.

Evaluasi Pelaksanaan Program Amnesti Pajak Tahun 2016 Di Indonesia

Income from the tax sector is generally the main income for all countries in the world in order to finance its activities. Increased revenue from the tax sector is often hampered, due to the large tax evasion and tax avoidance activities. Tax evasion and tax avoidance practices are triggered by the practice of low tax rates and other facilities provided by the tax heaven countries. In order to combat tax evasion and tax avoidance, the approach taken by each country is different. But basically approach done can be distinguished on soft apporach and hard approach. One approach that is classified as a soft approach is a tax amnesty program. In 2016 the Government of Indonesia is implementing a tax amnesty program based on Law Number 11 of 2016 concerning Tax Amnesty applied from 1 July 2016 to 31 March 2017. This paper will evaluate the successful implementation of the tax amnesty program that has been implemented in Indonesia. Evaluation is based on the achievement of 3 objectives, namely the repatriation of assets from abroad, expansion of the tax base and increase in tax revenue for the short and long term. From the point of asset repatriation, the tax amnesty program is considered quite successful, because although the target of asset repatriation is not achieved, but the asset repatriation has reached 30.54% of the estimated financial assets abroad. From the point of view of the expansion of the tax base, the number of declarations and repatriation reaches Rp. 4,737.56 trillion has exceeded the target. Meanwhile, from the point of view of increasing short-term tax revenues, the objective of the amnesty program can be considered quite successful, because it contributes 10.15% to the average amount of tax revenue in 2016 and 2017, although it has not been able to raise the growth rate of overall tax revenue for the year 2016 and 2017. Increased tax revenues for the long term can not be evaluated, because the tax amnesty program was completed 1 year ago.