Level Of Tax Compliance Research Articles

Joint Tax Audits: Which Countries May Benefit Most?

In their joint fight against tax avoidance and tax evasion, international governance organizations have developed different tools. One of these tools is the joint tax audit, in which two or more countries join together to form a single audit team to examine an issue(s)/transaction(s) of one or more related taxable persons with cross-border business activities. International governance organizations, such as the Organisation for Economic Co-operation and Development (OECD), the European Union and the African Tax Administration Forum (ATAF), promote the use of joint tax audits, amongst others, as a tool in fighting tax fraud, tax evasion and aggressive tax planning. The literature on this phenomenon mainly focuses on the advantages and obstacles of using the instrument, and the need to amend legislation. Moreover, in the literature, guidance for companies invited to participate in a joint tax audit can be found, as well as references to the few joint tax audits conducted and the results of a pilot project conducted by the Netherlands and Germany. The authors’ aim is to answer the question, “Which countries may benefit most from joint tax audits if the arguments raised in the tax literature are valid?”. The authors have identified eight arguments for joint tax audits (arguments (a) – (h), see sections 4.1. and 5.) in the tax literature and have used sixteen different yardsticks (factors 1 – 16, see section 6.) to analyse which countries might benefit most. To make the research project manageable, the research focuses primarily on the situation faced by the European Union’s 28 Member States (hereinafter the “EU-28”) As Croatia joined the European Union as the 28th Member State in 2013, the public finance data provided in this article refer to the EU-27. Eleven of the 16 factors refer to EU-28 public finance data. The exception is the number of taxpayers’ factor because of available data for Croatia before 2013. The remaining 5 provide data before 2013, thus concern to EU-27 (see Table 8). and the 13 associated states. By combining arguments raised in the legal literature about joint audits with what public finance data tell us about, for example, tax compliance costs, the number of active taxpayers per administration employee, the number of mutual agreement procedures, tax compliance and tax moral levels, the authors analyse which of the EU-28 and its associated states might benefit most from joint audits and for what reasons. The analysis strongly supports the international governance initiatives for a multilateral legislative framework on joint audits. As multinational legislation in this field should be drafted with great care, the authors call for more pilot projects with, as their aim, the sharing of know-how and building capacity. The authors also provide some recommendations for the development of the multinational legislative framework and urge tax authorities/the OECD/the European Union to publish statistics on the joint audits performed.

Tingkat Kepatuhan Wajib Pajak Badan Usaha Mikro Kecil dan Menengah Setelah Diberlakukan Tarif 1 % (Final) PPh (Studi Kasus di KPP Pratama Pontianak)

Year 2015 is the year for developing Tax Payer and the year of issuance of GovernmentRegulation No. 46 Year 2013, which imposed 1% tax to SMEs with a turnover (gross income)from Rp 1 to a maximum of Rp 4.8 billion per year. The research problems are formulated: (1)How does the level of tax compliance in KPP Pratama Pontianak before and after the 1% taxpolicies for SME corporate tax payer? (2) What efforts made by the tax authorities in improvingtax payer compliance company in terms of delivering the tax obligations on KPP PratamaPontianak. The research method was an exploratory, descriptive, narrative case study approachto the object KPP Pratama Pontianak. Outcomes of this study are expected KPP PratamaPontianak be an example or reference for other KPP in performing their duties and functions aspublic service on tax. The results showed that there was a slight increase tax payer compliance inKPP Pontianak after their policy of 1% per month tax on turnover (gross income), whencompared with the prior policy. Suggestions for the government, in this case the DirectorateGeneral of Taxation, in formulating tax policy in order to maximize tax revenue.

PENGARUH KEPATUHAN WAJIB PAJAK DAN PENAGIHAN PAJAK TERHADAP PENERIMAAN PPH PASAL 25/29 WAJIB PAJAK BADAN PADA KPP PRATAMA BATANG

One of the things that influence the most of the acceptance of income tax article 25/29corporate taxpayers is the level of tax compliance, especially in BatangPratama Tax Office. The large amount of income tax revenue of article 25/29 corporate taxpayers nothing to do with the level of tax compliance, ie whether or not the obedient corporate taxpayers in paying taxes. The purpose of this study was to determine the effect of tax compliance and tax collection on income tax receipts article 25/29 corporate taxpayers in the BatangPratamaTax Office period 2008-2012. The survey was conducted at the BatangPratamaTax Office and units of analysis are secondary data from reports of receipts of income tax article 25/29 corporate taxpayers the period 2008-2012. Regression models were used in compliance with the classical assumption test. The data analysis technique used is the technique of multiple linear regression analysis using SPSS version 16.0 The results showed that in the period of 5 (five) years ie 2008 to 2012, the amount of income tax revenue of article 25/29 corporate taxpayers in the BatangPratama Tax Office continued to increase from year to year, tax compliance and collection tax simultaneously and partially significant effect on income tax receipts article 25/29 taxpayers on BatangPratamaTax Office period 2008-2012. Keywords: Taxpayer Compliance, Tax Billing, Tax Receipts Article 25/29, the Taxpayer.

Tax compliance and psychic costs: Behavioral experimental evidence using a physiological marker

Although paying taxes is a key element of a well-functioning society, there is still limited understanding as to why people actually pay their taxes. Models emphasizing that taxpayers make strategic, financially motivated compliance decisions seemingly assume an overly restrictive view of human nature. Law abidance may be more accurately explained by social norms, a concept that has gained growing importance as research attempts to understand the tax compliance puzzle. This study analyzes the influence of psychic stress generated by the possibility of breaking social norms in the tax compliance context. We measure psychic stress using heart rate variability (HRV), which captures the psychobiological or neural equivalents of psychic stress that may arise from the contemplation of real or imagined actions, producing immediate physiologic discomfort. The results of our laboratory experiments provide empirical evidence of a positive correlation between psychic stress and tax compliance, thus underscoring the importance of moral sentiments for tax compliance. We also identify three distinct types of individuals who differ in their levels of psychic stress, tax morale, and tax compliance.

Interacting Role of Perceived Service Orientation on Work Family Conflict, Fuel Subsidy Removal and Tax Compliance Behaviour: Evidence from Nigerian SMEs

The paper examined the interacting role of perceived service orientation on the relationship between work family conflict, fuel subsidy removal and tax compliance behaviour in Nigeria. The aim of this paper is to establish whether the interacting role of perceived service orientation will further help in explaining the puzzle of tax compliance in relation to SMEs taxpayers. A total of 281 questionnaires from SMEs in Kaduna and Kano states, North West Nigeria were utilised in this study. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to test the study hypotheses. As predicted, the findings supported the interacting effect of perceived service orientation on the relationship between work family conflict and tax compliance behaviour, while no interacting effect was found between fuel subsidy removal and tax compliance behaviour. The results have practical implications for relevant tax authorities in creating a new paradigm shift that will ensure effective service orientation in the form of tax education and other form of tax services that could go a long way in minimising the tendency of low level of tax compliance.

Determinants of Personal Income Tax Compliance: Perception of Nigerian Tax Payers

This study examines the Determinants of Personal Income Tax Compliance. The study anchors on the fiscal exchange theory and social & psychological theory to predict the determinants of personal income tax compliance. The survey research design was adopted and questionnaire was distributed to elicit responses from self-employed persons. The ordered logistic regression was used to analyse the data gathered and was done electronically using the SPSS and Eviews 7 software. The findings show that there is a significant positive relationship between tax rate and personal income tax compliance; the perception of taxpayers’ of the Government of the day has a significant impact on how they comply with personal income taxation; taxpayers’ income has a significant impact on personal income tax compliance; the gender of the taxpayer has no significant positive relationship with his/her level of tax compliance; and the attitude of taxpayers to the tax system has a significant impact on personal income tax compliance. The study therefore concludes that the psychological aspects of taxpayers such as taxpayers’ perception and attitude have a more fundamental impact on personal income tax compliance than deterrent tax measures. Based on these, the study recommends amongst others that deterrent tax measures such as fines and penalties should incorporate the psychological aspect of taxpayers. That is, tax administrators should know when and how to combine strict deterrent measures with persuasive measures (education).

Effect of Economic Factors on Tax Compliance in Kenya: A Survey of Limited Liability Companies within Eldoret Municipality

The problem of tax compliance is as old as taxes themselves. Characterizing and explaining the observed patterns of tax noncompliance and ultimately finding ways to reduce it are of obvious importance to nations around the world. As a public finance topic, tax compliance spans the notions of equity, efficiency and incidence. Low tax compliance is one of the internal factors affecting the ability of the Kenyan government to raise direct tax revenues and thus meet its recurrent and development expenditure. Therefore, this study assessed the economic factors affecting tax compliance among various limited liability companies within the municipality of Eldoret. The general objective of the study was to assess the economic factors affecting tax compliance among various limited Liability Companies within Eldoret Municipality. The study specifically sought to determine the effect of tax rates, tax audits, and level of actual income, fines and penalties on tax compliance. The study adopted survey design. Stratified random sampling was used to select a sample of 320 companies drawn from the target population of 1,470 limited companies. Data was collected using structured questionnaire, coded, keyed and analyzed quantitatively using both descriptive and inferential statistics. The study findings showed that tax audits had the highest positive effect on level of tax compliance followed by tax rate, fines and penalties. Tax incentives and level of actual income had the least positive effect on tax compliance .Based on these findings, the study concludes that reducing tax rate, ensuring Kenya Revenue Authority tax auditors to educate taxpayers; enforcing fines and penalties, provision of tax incentives and considering the level of actual income of the taxpayers will improve tax compliance. The study recommends that Kenya Revenue Authority management can improve the level of tax compliance by ensuring favorable and fair tax rates. Tax audits findings should be made available to the taxpayers, while fines and penalties need to be enforced effectively. The authority should also improve tax incentives and consider level of income of the taxpayers in its policy formulation. All these can be achieved through an elaborate taxpayer’s education.

Can Auditing Backfire? A Country-Level Analysis of Tax Compliance During 2003-2012

In numerous countries, enforcement strategies rely on the idea that higher auditing levels lead to higher levels of tax compliance. However, a growing body of research indicates that the effect of auditing on compliance is not necessarily positive. Following theoretical advances in this area, we expect that the effect of auditing on compliance is positive until a certain auditing level is reached, and negative beyond that level (i.e., higher auditing levels have a backfiring effect on compliance). To test this hypothesis we employ data of 47 countries for the period 2003-2012, and use three indicators of non-compliance: business people’s perception of tax evasion, the estimated size of the shadow economy, and year-end tax debt. The auditing level is measured as the number of verification actions taken by tax authorities per 100 taxpayers in each country (e.g., audits, investigations). The results show that auditing has a “U-shaped” association with tax evasion and tax debt. This indicates that enforcement strategies based on continuously increasing auditing levels are not necessarily optimal.

Analisis Faktor-Faktor yang Memengaruhi Tingkat Kepatuhan Wajib Pajak Orang Pribadi di Lingkungan Kantor Pelayanan Pajak Pratama, Tigaraksa Tangerang

Tax collection is not an easy matter. Active participation from the tax authorities also requires the willingness of the taxpayer. A public reaction can be seen from the taxpayer’s willingness to pay taxes. Willingness and awareness to pay taxes represent a value contributed by someone (which has been determined by regulation). Tax is used to finance public expenditures without any direct benefit. Taxpayer’s awareness about taxation functions as state funding is needed to improve tax compliance and to determine the level of tax compliance in implementing their tax obligations. Limitation of the scope of this study is the effect of the level of awareness of paying taxes, taxpayer’s understanding about tax benefits, tax penalties, and understanding of service quality to the tax authorities of individual taxpayer compliance in the fulfillment of tax obligations, as well as restricted to data obtained through questionnaires received and filled by the individual taxpayer of Tigaraksa Pratama Tax Office area. Data were obtained through questionnaire and processed and analyzed using parametric statistical tests and multiple linear regression with 4 independent variables and one dependent variable resulted in the conclusion that the factors that most influence taxpayer compliance in carrying out its tax liability is the use of sanctions against taxpayers who do not carry out its obligations under applicable legislation.

Tax Compliance and Corporate Income Tax – The Case of Slovenia

In this paper, we examine corporate income tax compliance dependence in the case of Slovenia by applying regression analysis. We have found that both penalty activities and audits are statistically significant. Moreover, in terms of the most important variables, both of the tax administration’s activities had varying effects. While penalties showed a positive impact and fell behind the macroeconomic explanatory variables, we could also observe that the effects of audit measures had a negligible influence on the dependant variable. Such a result is not in accordance with the results of other studies that investigated the influence of audits on the level of tax compliance.

Tax evasion in a behaviorally heterogeneous society: An evolutionary analysis

We focus on the tax evasion dynamics emerging from repeated interaction of three types of taxpayers: cheaters, honest citizens and punishers. By assuming that cultural evolution is driven by material payoffs only, we show that a long overlooked behavioral attitude towards taxation such as tax morale is important to dynamically induce higher levels of tax compliance within a large-scale population. The results of our evolutionary analysis reveal that the presence of taxpayers who both act honestly in the first place and are willing to costly sanction cheaters plays an important role for the long-run success of the social battle against tax evasion.

Tax compliance under horizontal and vertical equity conditions: An experimental approach

Tax compliance is a complex phenomenon, which requires to be addressed from different perspectives. We report the results of a real-effort experiment aiming at testing the effect of different equity conditions on individual tax compliance levels. We show that equity considerations seem to change individual behaviour only when a vertically unfair tax system is implemented. Also, random effects Tobit estimations show that being audited in the previous period has a negative effect on tax evasion, whereas the level of the fine paid in the previous period positively affects income underreporting. Also, we find that when subjects are in the vertical inequity condition they are significantly more likely to fully evade taxes than in the equity condition, whereas such result cannot be found in the horizontal inequity condition. Finally, we find a standard gender effect showing that female participants are less likely to evade taxes than man and that risk aversion negatively affect tax evasion behaviour.

Recession and Tax Compliance – The Case of Slovenia

In this paper, we focus on the area of public finances, where the consequences of recession and government's responses to its effects significantly influenced some macroeconomic categories. Government deficits and government debts increased and collected revenues dropped. In addition, the economic crisis influenced a basic element of modern tax systems, i.e. tax compliance, where the consequence has been an increase in the tax debt. Data for Slovenia show that the amount of outstanding tax obligations during the recession increases, while the amount of collected revenues simultaneously drops. Thus, in 2011, the amount of tax debt grew to over 0.9 billion EUR, which is equivalent to the deficit in the general public finance budget.In our analysis, we examine the influence the recession has had on tax compliance in Slovenia. As a measure for non-compliance, we used data on tax debt (unpaid taxes). On the basis of the tax debt fluctuations and the results of regression model, we have discovered that economic fluctuations have significantly influenced the level of tax compliance. As significant explanatory variables, we point to the fluctuations of the average wages in the private sector and also the unemployment rate, which has been steadily increasing during the course of the recession. We also believe that the possibility for less restrictive measures of fiscal policy during the times of economic recession (tax enforcement activities, temporary reprieves, and instalment plans) is worth discussing.DOI: http://dx.doi.org/10.5755/j01.ee.25.2.1743

Understanding the tax compliance culture of private sector tax practitioners in South Africa

The paper presents the findings of a private sector tax practitioners segmentation survey conducted by South Africa Revenue Service to understand their tax compliance culture, appropriateness of SARS services to them and their client service needs. A set of structured questionnaires were administered to seven hundred and three tax practitioners in nine provinces which included open and closed questions. The level of tax compliance by the tax practitioner’s organization varies from province to province. Roughly, more than ninety percent of tax practitioners’ organizations that filed or submitted their organizations tax returns did so on time. Private sector tax practitioners are good e-filers. On average, assistance provided by SARS officials is considered to be very helpful. They prefer communication via email, internet, letters in the post, television and telephone calls. Most would like a dedicated SARS unit to serve them.

Perspectivity: A Theoretical Analysis of Probability Measures for Tax Compliance Models

The IRS’s audit enforcement policy is based on the principle that audits deter taxpayers from cheating and therefore increase voluntary tax compliance. For more than forty years, however, there has been considerable debate over whether higher audit rates actually contribute to increased voluntary tax compliance. Many scholars today believe that this “deterrence theory” is incorrect since the overall data does not comport with the theory. Taxpayers, therefore, must voluntarily comply with their tax obligations for reasons other than an increased probability of getting audited. While this conclusion might be true for individual income tax returns overall, it appears there are certain sub-categories of tax returns for which audits actually do matter. For these groups, audits might affect voluntary tax compliance levels more directly.

ANALISIS TINGKAT KEPATUHAN WAJIB PAJAK DALAM MEMBAYAR PAJAK BUMI DAN BANGUNAN DI KANTOR PAJAK PRATAMA MANADO

In accordance with the decision of the finance minister 34/PMK.03/2005 UN taxation philosophy about sharing property tax revenues between the central government and local governments that receive the proceeds of land and building tax is directed for the purpose of public interest, then the proceeds from the PBB constitutes acceptance of the State which must be shared between the central government and local governments. The purpose of this study was to determine the level of tax compliance in Target and Realization of Land and Building Tax payments. Sources of data used in this study is secondary data is data that comes from the Tax Office Primary service Manado. The results showed that the Land and Building Tax Revenue in theperiod of four years from 2008-2011 continued to increase except in the year 2009. In general, most people are aware of their obligations as citizens of Indonesia are good and they are aware that taxes are a form of public participation in local development to better developed and developing countries. Also there is a small community is not aware of its obligations as a taxpayer PBB.

Analisis Pengaruh Sikap, Norma Subyektif, Dan Kontrol Keperilakuan Terhadap Perilaku Kepatuhan Wajib Pajak Restoran Di Surabaya

AbstractTax arrears increased area in Surabaya. One of the biggest delinquent taxes derived from the Restaurant. It is proved that the level of tax compliance is lacking Restaurant. This study examines the behavior of tax compliance by using variable bebas Attiude, Subjective Norms, and Behavioral control. The purpose of this study is to determine how much influence attitudes, subjective norms, and behavioral control toward tax compliance behavior Restaurant taxpayer in Surabaya. The population in this study are all Restaurants taxpayer in Surabaya. The sample used was 94 Taxpayer Restaurant. The data analysis technique used in this study multiple linear regression. Based on the results of the analysis carried out it could be concluded that attitudes, subjective norms and behavioral control significantly positive effect on taxcompliance behavior Restaurant.

The Relationship Between Political Ideology and Attitudes Toward Tax Compliance: The Case of Italian Taxpayers

Research on tax behaviour or attitudes towards tax evasion has rarely taken into account the political preferences of taxpayers. The present research aimed to explore the relationship between political ideology and attitudes toward tax compliance within the “slippery slope framework” (Kirchler, Hoelzl, & Wahl, 2008). We conducted a quantitative survey (N = 272) and two online focus groups with self-employed taxpayers in Italy, and found significant differences between left-leaning and right-leaning taxpayers. These two groups were characterized by two different pathways that lead to greater tax compliance, and attached different meanings and values to tax behaviours. In particular, left-leaning taxpayers expressed higher levels of voluntary cooperation and showed reactance to the coercive power of authorities, whereas right-leaning taxpayers expressed higher levels of enforced tax compliance and were more averse to tax evasion with increased trust in authorities and institutions. Although further research on this topic is advisable, these results bear relevant theoretical and practical implications.

Learning in experiments: Dynamic interaction of policy variables designed to deter tax evasion

While neoclassical economic theory sheds insight into the way that audit rates and penalty rates interact when individuals decide to declare income for taxation, it predicts far lower levels of compliance than observed levels of compliance. This paper analyses experimental responses to explore a dynamic interaction between audit and penalty rates as individuals learn how to comply with taxation. It compares the responses of subjects in experiments with responses that are predicted when individuals rely on an adaptive learning process (that offers information feedback about decision payoffs). This comparison suggests that learning is an important consideration when explaining differences between predicted and observed levels of tax compliance.

PENGARUH PERSEPSI KEADILAN PAJAK WAJIB PAJAK ORANG PRIBADI TERHADAP PERILAKU KEPATUHAN FORMAL

This study aims first to examine whether there is the influence of perceived tax fairness on 
 individual taxpayers compliance behaviour. The second bjective is to examine whether there is a 
 moderating role of financial condition in the relation of perceived tax fairness on individual 
 taxpayers compliance behaviour. The study was conducted in KPP Pratama Sidoarjo Utara by 
 questionnaire survey method to 100 individual taxpayers. Moderated Regression Analysis was 
 used to identify the study variables (perceived tax fairness, financial condition, and tax 
 compliance). The results of this study indicate that there is a statistically ignificant influence of 
 perceived tax fairness to the level of tax compliance behavior. The subvariabels of tax fairness 
 identified are general tax fairness, tax rate structure, self interest, and special provisions, but the 
 taxpayers consider the exchange with government is not fair enough. The financial condition also 
 has a significant moderating influence of perceived tax fairness to the level of tax compliance 
 behaviour.