Tax Advice Research Articles

Perceptions of functional tax advisors on artiicial intelligence-based applications in the context of performance improvement efforts

This study aims to analyze the influence of perceived usefulness and perceived ease of use of Artificial Intelligence (AI)-based applications on the willingness of functional tax instructors to use these AI-based applications. The data used in this study are primary data from questionnaire surveys distributed to functional tax extension officers from all Regional Offices of the Directorate General of Taxes from October to December 2023. In addition, this study also uses secondary data sourced from regulatory documents and other data related to the performance of tax extension officers from the Directorate General of Taxes. Data from 104 respondents were analyzed using multiple linear regression. This study concludes that the perceived usefulness and perceived ease of use of AI-based applications have a positive and significant effect on the willingness of Functional Tax Instructors to use AI-based applications. Functional extension workers need to continue to try to work side by side with technology so that work becomes faster and easier. With the help of AI technology, it is not impossible that the implementation of taxation counseling can be partially delegated to technological assistance so that tax education can be more massive and comprehensive.

Gendered Taxation: IMF Tax Advice and the Unintended Disempowerment of Women

Case research points to the gendered effects of the value added tax (VAT), which may particularly disadvantage women by crowding out their economic participation. A key driver of VAT introductions has been the International Monetary Fund (IMF). To counterbalance of-payments woes, IMF advice for cash-stripped countries has frequently focused on shifting toward broad-based consumption taxes while lowering trade taxes and corporate income taxes. We expect this tax policy advice – while ostensibly gender-blind – to contribute in practice to a deterioration in women’s socioeconomic well-being. To test this hypothesis, we construct a panel dataset for 147 countries from 1980 to 2016 and estimate the effect of IMF programs on women’s economic participation, education and health. Accounting for selection effects, we find that women’s life chances deteriorate relative to men’s if a country undergoes an IMF program with tax conditionality. We corroborate these findings to demonstrate the mechanism underlying these effects by showing a negative effect of IMF-induced de jure VAT adoption on women’s life chances. We provide complementary individual-level evidence from the World Values Surveys based on 98 countries from 1981 to 2019. We show that during an IMF program with tax conditionality, women are significantly less satisfied with home life and report more material hardships. Our results provide evidence of the potential for unintended consequences of IMF revenue prescriptions for women, supporting calls for increased attention to gender-responsive budgeting.

Opinion shopping for tax advice: The effects of client narcissism, social bonds, and message framing

Contentious interactions can arise between a tax professional and client upon disagreement over a tax position. These interpersonal exchanges can lead to “opinion shopping” and represent a threat to voluntary tax compliance and the public interest. Opinion shopping is likely to increase in an era of rising narcissism because antagonistic narcissists are known to react aggressively to rejection of their views. To better understand drivers of opinion shopping, we conduct a quasi-experiment with 222 U.S taxpayers. We find clients with higher (lower) levels of antagonistic narcissism are more (less) likely to opinion shop and switch to another tax preparer. We also examine the efficacy of two theory-motivated moderators of client antagonistic narcissism: [1] tax professional – client social bonds and [2] persuasive messaging by the advisor. By doing so, we respond to calls to explore moderating influences on the undesirable effects of antagonistic narcissism while also providing novel insight into factors influencing taxpayer clients’ decision-making following interpersonal exchanges with a tax advisor. We find that while close social bonds and sanction warnings reduce opinion shopping among participants lower in antagonistic narcissism, they fail to do so among participants higher in antagonistic narcissism. Theory provides no basis for predicting a three-way interaction, and we find none. Contributions to the research literature, as well as implications for tax practice and policy internationally, are also discussed.

The influence of XBRL technology on the quality of financial reporting: exploring mediating variables in the Indian context

PurposeThis study aims to examine the impact of extensible business reporting language (XBRL) technology and its functionality on various aspects of financial reporting and its overall quality.Design/methodology/approachTo conduct this study, data was collected from a variety of professionals, including accountants, auditors, tax advisors and others. A structured research instrument was developed, and the collected data were analysed using structural equation modelling and mediation analysis techniques.FindingsThe study’s results showed that XBRL technology and its functionality have a noteworthy impact on different aspects of financial reporting. Moreover, the various aspects of financial reporting positively affect the overall quality of financial reporting.Research limitations/implicationsThis study solely relied on the opinions of various professionals regarding the current issue under investigation and did not empirically assess the reporting practices of companies by examining their XBRL-based reports. Additionally, it concentrated solely on financial reporting aspects and did not account for non-financial aspects. The main theoretical contributions of this paper to technology in financial reporting, XBRL and accounting literature are that it sheds light on the influence of the use of technologies in the business reporting process and their influence on various aspects of business reporting, which has only received confined focus from earlier studies so far.Practical implicationsThis study’s findings could provide valuable insights to the managerial teams of organizations seeking to digitize their business reporting practices, specifically in areas such as regulatory compliance, integrated reporting and timely dissemination of reports in a sustainable way. Furthermore, it could help these teams reap the benefits of technology for various regulatory compliance matters.Originality/valueThis study could assist business organizations and regulatory authorities in adopting and implementing technology such as XBRL for accounting and business reporting. Furthermore, the study’s findings can aid in enhancing financial reporting practices by considering emerging aspects such as ESG and sustainability aspects.

Shareholder perceptions of external tax advisors in corporate tax planning

AbstractWe examine shareholders' perceptions about how external tax advisors contribute to corporate tax planning. As residual claimants of corporate tax planning, shareholders benefit from lower corporate taxes, but also bear the financial and reputational costs of subsequent tax enforcement. Despite the influential advisory role of external tax advisors in corporate tax planning, existing research on how shareholders perceive this role is limited. Using event study methods and exploiting the heightened regulation of tax advice through the covered opinion rules as a setting, we observe average and cross‐sectional stock returns consistent with shareholders perceiving external tax advisors as contributing unfavorably to tax planning by promoting excessively risky strategies. We further find that risky and overall tax planning declined across firms after the enactment of the rules, consistent with shareholders' perceptions about tax advisors' contributions to firms' tax planning. Overall, our findings contribute to research on shareholder perceptions and valuation of tax planning, and have important implications for practice, where regulatory oversight of external tax advisors remains a significant concern.

AI Assistance in Providing Tax Advice – A Practical Study

Gen-AI has been identified as a potential useful tool in providing legal advice. The purpose of this article is to investigate the use of Gen-AI as a tool to provide tax advice. The answers provided to tax questions by the various tools are analysed and the opportunities and limits of the Gen-AI tools are explored.

Tax-Motivated Income Shifting in Audit-Firm Networks: Comparing Big 4 and Non-Big 4 Firms

Recent research provides evidence consistent with tax-motivated income shifting taking place in Big 4 networks. Non-Big 4 networks have global footprints and audit a significant proportion of private-firm clients. Thus, we cannot make sense of audit-firm networks’ tax avoidance proclivities and the impacts their tax advice may have on aggregate client-firm income-shifting figures without examining non-Big 4 affiliates’ tax planning strategies. This study uses a private-firm dataset of Big 4 and non-Big 4 associated firms from 26 European countries finding evidence consistent with non-Big 4 affiliates being more aggressive income shifters than their Big 4 counterparts. Using a battery of supplemental analyses we demonstrate that the negative association between Big 4 membership and tax-motivated income shifting is weaker when network exposure to the political costs of aggressive tax planning is lower. We also show that political cost considerations are more likely to moderate debt allocation policies in Big 4 than non-Big 4 networks. Our findings suggest that political cost considerations are an important driver of the relation between Big 4 affiliation and tax-motivated income shifting even in our setting where firm size is strongly positively associated with tax expertise, political power, and global footprint and have important implications for anti-avoidance legislation.

The Gig Is Up: Examining Side Gig Income and Allowable Deductions

ABSTRACT The expansion of the gig economy has provided opportunities and challenges for tax professionals. In this case study, a rideshare driver receives a Form 1099-K for side gig income and seeks tax advice from a friend, ultimately deciding to consult with a tax professional (the student) for income tax preparation. The friend provides a video that describes misleading information giving the students a chance to consider authoritative sources as they research appropriate reporting on an individual income tax return. The case learning objectives are: (1) distinguish between credible and noncredible sources of information; (2) evaluate expenses and income to determine the taxable nature of each item; (3) analyze data for completeness in order to compile all relevant data needed for compliance reporting; (4) apply authoritative sources to resolve tax issues; (5) prepare an accurate individual income tax return; and (6) demonstrate effective written communication skills for business documentation.

Analysing BEPS Action 7 in the Context of Agency PEs

This article considers whether the revisions to the dependent agent permanent establishment (DAPE) provisions in the OECD Model Convention (as a result of BEPS Action 7) provide a framework for solving the problem of artificial avoidance of DAPE status. It argues that the ‘avoidance’ was not so much the use of artificial structures but the lack of guidance over the appropriate interpretational approach to be adopted in applying the provisions. Solving the problem then required redrafting them in order to provide substantial interpretative guidance on adopting a substance-based interpretational approach. An analysis of the redrafted provisions and an examination of the interpretational issues arising from them shows that the larger problem of avoidance of DAPE status is not truly addressed because they continue to privilege legal concepts rather than commercial concepts. The result is that the changes to Article 5(5) do effectively address the specific problem of commissionnaires, but they fail to provide enough guidance to adjudicators to adopt a substance-based approach towards handling newer structures that will undoubtedly be devised by tax advisors. At the same time, the changes to Article 5(6) appear to draw some boundaries on the ability of multinational groups to avoid DAPE status; however, this is again not a solution that appears to be justified in principle. Ultimately, by adopting a patchwork of solutions to tackle specific problems, the BEPS rewrite may perhaps have missed an opportunity to clarify the underlying interpretative approach and cannot be truly said to have solved the problem of artificial avoidance of DAPE status at a more general level. Permanent establishments, dependent agent PEs, BEPS Action 7, independent agents

SOLIQ MASLAHATI TUSHUNCHASINING NAZARIY-HUQUQIY JIHATLARI

It is known that tax authorities and websites only provide information about taxes, fees, and changes in tax laws, so many taxpayers need tax advice from impartial experts. Currently, special tax consulting firms mainly provide advice on general issues, such as filling out tax returns, the procedure for incurring and paying taxes and fees, the taxpayer’s right to use tax benefits, and the procedure for their realization. Due to the insufficient and unsatisfactory legal literacy of taxpayers, there are many cases of untimely or incomplete payment of taxes, various mistakes in filling out declarations, correct and legal use of tax benefits. It should be noted here that tax counseling should act as a unique and suitable legal intermediary between taxpayers and tax authorities, providing practical assistance in the correct application and interpretation of tax legislation. This article analyzes the interpretation of the concept of tax consulting in our national legislation and the opinions of scholars on this concept.

Unfollow the money: mapping the micro agents of international tax

Financial globalization has enabled multinational corporations to shift profits between jurisdictions to lower their tax rate, undermining public finances and concerning policy makers. While policy efforts have focused on the jurisdictions that enable lower taxes, scholars increasingly recognize the importance of micro-level actors. We geographically map corporate tax advisors, influential micro-level actors in tax avoidance, using a novel empirical approach based on LinkedIn. We show that tax advisors are generally located in large cities in the EU and OECD, rather than in places targeted as ‘tax havens’. Using multiple regression analysis, we find that the location of tax advisors is not correlated with the location of corporate profits, financial secrecy, or economic activity. Rather, it correlates with managerial and financial activity. We find that tax advisors are disproportionately placed in the countries writing the blacklists rather than the countries blacklisted. We argue that effective regulation of tax avoidance needs to focus on tax advisors, not only on the destination of financial flows.

Asset managers and withholding tax : Problems, options and best practices for asset managers on withholding tax processing

This paper presents a detailed analysis of the critical role and complications surrounding withholding tax processing in the asset management industry. The paper first explores the substantial losses incurred by the industry due to a lack of proper attention and expertise in withholding tax matters, demonstrating the urgency of this issue. It then examines the current approach of relying predominantly on custodian banks for managing these issues, highlighting the shortcomings and risks inherent in this practice. The paper further investigates the current state of asset management companies, revealing their limited capabilities in managing withholding tax efficiently due to various factors including cost pressures, technological gaps and lack of awareness. To address these challenges, the paper proposes two primary options for asset managers: increased collaboration with tax advisers, and automation through software solutions. A detailed comparison is made on the pros and cons of these options. Collaborating with tax consultants, while beneficial in many ways, might fall short due to the complexity and volume of the withholding tax challenges. On the other hand, automation can provide significant benefits in terms of efficiency, accuracy, scalability, compliance and cost-effectiveness, although challenges related to implementation and integration exist. The paper concludes with a checklist of critical success factors for selecting, implementing and operating withholding tax processing software, providing practical guidance for asset management companies seeking to improve their handling of withholding tax matters. These findings underline the importance of a proactive approach and the necessity for asset managers to explore the potential of technology-based solutions in this crucial area.

Increasing Awareness of Tax Obligations for MSME Actors

This community service activity aims to provide education and assistance to Micro, Small and Medium Enterprises (MSMEs) by providing an understanding of the basic concepts of taxation, tax rights, and obligations for MSMEs. The method of implementing community service activities is carried out in several stages. The first stage is the planning stage through observation and preliminary interviews on the subject of community service. The second stage is the implementation of activities in the form of training, which is carried out through the presentation of materials, calculation practice, reporting, and tax payment procedures, as well as discussions. The third stage is monitoring, which aims to address the problems faced by MSMEs in fulfilling their tax obligations independently. MSME owners need to be equipped with adequate tax knowledge to increase their awareness of MSME tax compliance. Moreover, limited knowledge is one of the obstacles to the development of MSMEs. Through continuous participation in tax socialization activities such as tax advice and seminars, MSME taxpayers using e-commerce will increase their awareness and compliance. Based on the activities carried out, MSME owners (actors) in Pare Kediri as MSME business operations managers gain a significant understanding of MSME tax rights and obligations. The community service activities still need follow-up activities to ensure that the MSME actors have correctly calculated their tax obligations and have fulfilled their tax obligations by the applicable regulations. Therefore, the community service activities can be continued in the following year's activities.

Is aggressive tax planning a failure of tax adviser integrity?

PurposeThis paper aims to address the fundamentals of tax planning and seeks to focus on the opportunities and root causes for tax planning.Design/methodology/approachThe paper reviews the current state of tax planning with case studies that reveal fundamental statutory structural opportunities.FindingsWhile some, possibly many, tax advisers lack integrity and recommend tax structures to their clients that are inconsistent with reasonable interpretations of the tax law, most advisers, even very aggressive and creative advisers, probably do not. The paper suggests that it may be futile to seek to deter tax professionals from designing and marketing tax plans unless legislation makes tax advisers jointly responsible with their clients for their clients’ tax underpayments.Practical implicationsShort of such a radical approach, governments must commit first to altering the basic structure of their tax laws to make aggressive tax planning uninviting.Originality/valueThe paper offers original insights into the inseparability of the legislative process from the creation of unnecessary tax planning opportunities.

Formal advisors and succession process in family firms

PurposeThis study explores the roles of formal advisors (FAs) in the succession process of family firms and the factors that determine them.Design/methodology/approachData for this study were collected through interviews with 38 FAs, including lawyers, tax advisors, financial ad-visors and others.FindingsFAs play multiple roles simultaneously in succession processes (both internal and external), which the authors call role hybridity. Among them, the authors differentiated roles, such as educators, sherpas, initiators, experts, managers, consiglieres and protectors. Additionally, the authors demonstrated that the critical factors shaping these roles are trust, communication, human capital and willingness to take on the role. To explain the role hybridity phenomenon, the authors used stewardship theory's assumptions and formulated propositions for further research.Originality/valueThis study provides insight into both internal and external succession processes from the perspective of various types of FAs. The authors indicate their roles and the factors that determine them.

Making Migration Work: The Roles of Commercial Actors in Hong Kong’s Outmigration

This article examines the roles of commercial agents in driving the wave of emigration from Hong Kong since 2019. Human outflows from Hong Kong in recent years have been supported by a booming migration industry involving property agents, education consultants, financial planners, and tax advisors—the “PEFTs”—whose activities and effects on migration processes have been underappreciated in public discourses. Drawing on interviews with PEFTs in Hong Kong, potential migrants and migrants who have moved to the United Kingdom, as well as field research on activities of the PEFTs, this article argues that the PEFTs, through the products, services, and advice they provide, have created new interest, discussions, and even anticipation and excitement about emigration in Hong Kong. This research has three main findings: first, the PEFTs assume the roles of promotors, facilitators, and problem solvers in migratory processes; second, the ways in which the PEFTs operate cannot be studied in isolation as they are linked to existing structural characteristics of the polity in which they operate; third, the PEFTs have helped create and sustain a migration environment in Hong Kong in which political forces account for only one of the many drivers of emigration.

Bridging the Gap Between Distant Disciplines

At Taxfix, we specialise in providing consumer-facing tax services at scale, for the German market. Achieving this requires close collaboration between tax advisors and service designers. Tax advisors are traditionally trained to be precise, avoid mistakes and vigilantly guard against errors. This contrasts sharply with service designers, who are inclined to take risks, embrace uncertainty, and value creative experimentation. In this article, we share insights on our recipe for how to find a productive mode of collaboration between two disiplines which on the face of it seem to be worlds apart.

Authority and Responsibilities of Tax Consultants in terms of Pmk No. 175/Pmk.01/2022 Regarding Amendment to Financial Regulation Number 111/Pmk.03/2014 Concerning Tax Consultants

This research was conducted with the aim of analyzing and describing the role of tax advisers in the taxation system in Indonesia and the efforts that can be made to maintain the ethical professionalism of tax advisers as partners of taxpayers and the government. The success of state tax revenue will only be realized if it has the support of all parties, without exception, from the government, tax authorities, to taxpayers and society in general, including tax advisers. The method used in this research is normative legal research. Normative legal research, namely a search based on literature or excavation of documents and library materials or document studies, which is carried out in an effort to obtain the necessary data related to the problem. This type of research is descriptive qualitative research using taxation secondary data from internet research. Qualitative techniques are used in data analysis, with the stages of data collection, data reduction, and inference

The morality and tax avoidance: A sentiment and position taking analysis.

This paper examines the moral and legal underpinnings of corporate tax avoidance. Cast in terms of a totemic symbol that brand tax avoidance as within the purview of the law, the paper invokes the attributional frames of the new sociology of morality to examine the position of both the moral advocates and the amoral critics of aggressive tax avoidance. The paper uses the United Kingdom as a jurisdiction where complex tax planning by tax advisors serves as a measure of protection for corporations who may have already conceived that they are paying too much tax. Data for the paper came from semi-structured interviews conducted with tax accountants, consultants, parliamentarians, and government officials. To supplement the interviews, data from the Parliamentary Commission on Banking Standards were collected and analyzed to provide useful insights. The findings reveal that through effective tax planning, companies can reduce the present values of future tax payments. Given the singular justification of their actions within the contours of the tax rules, the moral culpability of organized tax avoidance is minimized, with very little liability attached. Tax avoidance is a morally charged area that is slowly drifting away from conventional social norms of what is right or wrong. It is hard not to see those in charge of tax regulation not using the findings of this paper to provide a more nuanced understanding of the intractable problems associated with corporate tax avoidance and use it as a reference point for regulatory reforms.

The Professionalism of Tax Advisors In Indonesia Through Football Tournament Analogy in the Context of Social Contract Theory

Purpose: The aim of this study is to provide a new understanding of the behavior of tax advisers in Indonesia based on their awareness as citizens and professionals. By analogizing it with a football tournament, we used social contract theory as a theoretical lens and professional ethics. Theoretical framework: Social contract theory is used to explore the professionalism of tax consultants in balancing the interests of themselves, their clients, and the state in Indonesia through the analogy of a soccer tournament. Tax is one of the obligations of citizens towards the state. In addition, in the opinion of Thomas Hobbes, the theory of social contracts in professional communities requires professional membership, and failure to do so can be punished by law. Design/methodology/approach: This is done with interpretive approach by the discussion storytelling flow method. This study reconstructs routine interactions between tax advisers, clients, and tax authorities with football tournaments to make it easier for informants to explain their professionalism. Findings: Recent legislation in Indonesia concerning professional tax services has yet to regulate tax advisors' rights and obligations comprehensively. That leads to competitive rivalries but tends to break the rules among tax advisors. Tax advisors compare their professionalism to that of "coaches" of taxpayers in the football tournament against the tax authorities. The informants still believe in tax authorities, especially the tax court, and maintain fair play under normal circumstances. Even though tax advisors can raise citizen awareness by providing tax compliance education and prioritizing clients, they continue to serve clients who engage in tax-aggressive behavior. The consequences of business operations, professional awareness as a citizen, culture, and religious dogmas are the restriction of commercialization of tax advisors' professionalism. Research, Practical & Social implications: The most significant consideration of tax advisors to provide advice and advisor is economical and legal considerations. The findings can be a consideration by an authority authorized to regulate the profession of tax consultants and tax academics. Originality/value: This study investigated the perceptions of the professionalism of tax advisors and their awareness as citizens through the social contract theory lens and reconstructed it with football tournaments.