Tax Evasion Research Articles

Tax Corruption: Legal Loopholes and Criminal Practices by High-Ranking Officials

Introduction: Tax corruption represents a critical issue that undermines economic stability and public trust, particularly when perpetrated by high-ranking officials. This study addresses the interaction between tax corruption and legal loopholes, highlighting how such gaps in the legal system facilitate criminal practices among powerful individuals.Purposes of the Research: The primary aim of this research is to explore how legal loopholes contribute to tax corruption and to examine the criminal practices of high-ranking officials involved in such activities. The study seeks to understand the systemic issues in tax administration and enforcement that allow these practices to flourish.Methods of the Research: The research employs a mixed-methods approach, combining qualitative analysis through interviews with tax officials and legal experts, with quantitative analysis of case studies involving tax fraud and evasion by high-ranking officials. This methodology provides a comprehensive view of both the legal and practical aspects of tax corruption.Results of the Research: : The findings reveal that significant legal loopholes, coupled with inadequate enforcement mechanisms, create opportunities for high-ranking officials to engage in corrupt practices with minimal repercussions. These corrupt practices undermine public confidence in tax systems and result in considerable revenue losses for the state.Conclusions: The research concludes that addressing tax corruption requires comprehensive legal reforms to close existing loopholes and enhance enforcement capabilities. Strengthening transparency and accountability mechanisms, along with promoting greater public oversight, are essential to mitigating the effects of tax corruption and restoring integrity in tax administration.

Implications of tax avoidance and evasion on tax collection in the Peruvian Amazon

Implications of tax avoidance and evasion on tax collection in the Peruvian Amazon

The possibility of adopting a centralized electronic invoice system and its impact in determining the tax base: An analytical study of the opinions of a sample of academics, professionals and employees of income tax departments - Kurdistan Region of Iraq - Erbil city)

This research aims to demonstrate the extent to which tax departments (income tax) can adopt the central electronic invoice system as one of the modern technological systems that can be used by the tax authority in order to reach a fair tax base for taxpayers. To achieve the research objective, an electronic questionnaire was distributed to a sample of (104) individuals from accounting academics in universities and institutes in Erbil city and professionals and employees of income tax departments. The results were analyzed using the statistical program (SPSS). The research reached several conclusions, including that the central electronic invoice system is an effective tool to enhance transparency and efficiency in the tax system despite potential challenges. In addition, adopting this system will lead to improving the determination of the tax base, reducing tax evasion and stimulating the formal economy. Success in this field requires close cooperation between the government and companies to provide the appropriate technical and legal environment. There is a possibility for tax departments to adopt the electronic invoice system and work on it to develop the process of determining the tax base for taxpayers. The study recommended the necessity of spreading the culture of voluntary commitment to join the electronic invoice system and including the electronic invoice and other accounting programs in the curricula of accounting departments in colleges and institutes and conducting training courses and seminars for the tax community and technical workers on dealing with the electronic invoice system in tax departments.

PENGARUH PENEGAKAN HUKUM, DISKRIMINASI PERPAJAKAN, PEMAHAMAN PERPAJAKAN DAN KEADILAN TERHADAP PENGGELAPAN PAJAK (STUDI EMPIRIS PADA WAJIB PAJAK ORANG PRIBADI DI KPP PRATAMA PONDOK AREN)

This study aims to analyze the Influence of Law Enforcement, Tax Discrimination, Tax Understanding and Justice on Tax Evasion (Tax Evasion) where analyzing Individual Taxpayers at KPP Pratama Pondok Aren, South Tangerang. The sample used in this study was 100 Individual Taxpayers at KPP Pratama Pondok Aren, South Tangerang using accidental sampling technique. The data used in this study are primary data in the form of distributing questionnaires to all Individual Taxpayers at KPP Pratama Pondok Aren, South Tangerang who have been used as research samples. Multiple regression method is used as an analysis technique in this study. Analysis of research results using SPSS 25 software. The results of the study indicate that law enforcement, tax discrimination, tax understanding and justice simultaneously affect tax evasion. Law enforcement partially affects tax evasion. Tax discrimination partially does not affect tax evasion. Tax understanding partially affects tax evasion. Justice partially influences tax evasion

The Impact of Corporate Social Responsibility on Tax Avoidance in the Listed Companies on the Iraqi Stock Exchange

This study explores the impact of corporate social responsibility on tax avoidance in the Iraqi listed companies on the Iraqi stock exchange. The sample of companies include companies which are listed on the Iraqi Stock Exchange, numbering (33). Data was taken for the years from 2016 to 2021, and the data was analyzed using multiple regression and panel data analysis.The results indicated (corporate social responsibility) that there is a negative relationship between corporate social responsibility and tax avoidness and Iraqi companies suffer from slight levels of tax avoidance through adopting social responsibility practices. We note from the study that there is a weakness in the application of social responsibility accounting. Commitment to corporate social responsibility leads to reduced tax avoidance. Among the conclusions is the clear weakness in the internal control systems of companies in terms of the extent of commitment to social responsibility and attempts to benefit from tax savings to achieve personal gains. The research came out with a set of recommendations, the most prominent of which is the need to strengthen the supervisory role to reduce tax evasion operations, as using social work as a means of tax evasion harms government revenues in the state’s general budget.

The ‘Airbnbisation’ of European cities: legislation for collaborative accommodations

ABSTRACT This study examines ‘Airbnbisation’ in tourist destinations, where professionally-managed properties have surged, affecting housing availability, prices, and community well-being, along with concerns about tax evasion. Despite platforms like Airbnb intending to support the sharing economy, short-term rental regulations struggle to differentiate between collaborative and professional lodgings, complicating oversight. To address this issue, the study examines regulations in 37 cities and evaluates their effectiveness in differentiating between collaborative and professional accommodations. The research proposes new short-term rental legislation using the results of three quantitative techniques. Data on short-term rental regulations, property locations, features, and host profiles were analyzed. Results show that regulations limiting annual rental days and properties per host encourage collaborative accommodations. However, rules controlling guest numbers, requiring licenses (among others) are not adequate to reduce professionalized lodgings. Collaborative accommodations are often found over 5 km from the cathedral, suggesting they aren't primary contributors to city ‘Airbnbisation’. This research aids policymakers in balancing residents' needs and short-term rental interests.

Tax Evasion in Iraq and its Impact on Social Responsibility Accounting “An Applied Study in the Babylon Tax Department”

Taxes are considered financial revenues because they are one of the sources that can provide revenues that the state relies on to determine its financial policy, in addition to including its economic, political and social goals in order to distribute wealth and stimulate investment and savings. The purpose of the study is to improve corporate social responsibility by raising knowledge and awareness of the significance of tax compliance and its effects on society and the environment, as well as to encourage them to adopt ethical and sustainable tax practices , and enhancing corporate social responsibility and motivating them to adopt sustainable and ethical tax practices, which is an important tool for improving companies' tax performance and enhancing their role in supporting sustainable development and achieving a balance between financial, social and environmental concerns. It is of great importance in enhancing transparency and integrity, which contributes to increasing the level of transparency and integrity in corporate tax operations, which enhances trust between companies and the communities in which they operate. The study relied on the use of a questionnaire based on direct examination to understand the impact of tax evasion on social responsibility accounting for a sample of employees in the Tax Department of Babylon Governorate. 75 questionnaires were distributed to conduct the statistical analysis of the study. By analyzing the questionnaire, conclusions can be drawn about the extent of the impact of tax evasion on social responsibility accounting, and identifying aspects that can be improved or enhanced. Based on the results, the study will provide practical recommendations on the most important treatments that limit tax evasion through the tax law, spreading tax awareness, and explaining the impact of evasion on society and the environment.

The Instruments Used to Counter Illicit Financial Flows at the International Level and Their Application to Matters of Taxation

Tax-related illicit financial flows (TIFFs) deprive states of much-needed public resources and hinder revenue mobilization from achieving sustainable development efforts. Currently, there is no conceptual clarity on the phenomenon of TIFFs, with different definitions and approaches adopted within different regional and international settings. To address the existing gaps, this study starts by mapping the diverse qualifications of TIFFs with particular regard to the different legal statuses that can be attached to behaviour deemed illicit. This requires a clarification of the conceptual differences between tax evasion and tax avoidance, and more specifically, between criminal law and (criminal) tax law. While the international tax law agenda has prioritized countering tax avoidance, the issue of tax evasion remains inadequately addressed within the existing framework. In this regard, this study concludes that when it comes to aligning the notion of tax crimes as predicate offence for existing criminal law, countries should be allowed to keep their de minimis qualifying rules to ensure flexibility and respect national sovereignty, thus ensuring proportionality and the respect for taxpayers’ fundamental rights.

Personality Traits and Tax Evasion Attitude: The Moderating Role of Religiosity

Tax evasion remains a significant issue despite regulatory improvements, with informal sectors, income underreporting, and corruption contributing to the problem. Studies typically focus on economic factors but overlook non-economic influences, such as psychological factors, social norms, and religion. This research explores the impact of religiosity on tax evasion, particularly how it affects the relationship between personality traits and tax evasion behaviors. Using a sample of 443 individuals from salaried and self-employed backgrounds, the study employed survey methodology to gather data. The results of analysis revealed that personality traits like conscientiousness, openness to experience, neuroticism, agreeableness, and extraversion significantly influence tax evasion attitudes. Conscientiousness particularly affects self-interest tax evasion, while religiosity moderates the relationship between extraversion and self-interest tax evasion and between conscientiousness and justice of system tax evasion. The findings suggest that incorporating religious values into tax policy could help reduce tax evasion. Policymakers are advised to enhance tax compliance by promoting tax awareness through educational programs, emphasizing community benefits, and collaborating with religious scholars to foster ethical tax practices. The study underscores the importance of considering religiosity and personality traits in developing strategies to combat tax evasion, especially in developing countries.

Income tax evasion and third‐party reported consumption and wealth: implications for the optimal tax structure

Income tax evasion and third‐party reported consumption and wealth: implications for the optimal tax structure

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

This study explores the expansive scope of artificial intelligence (AI) applications in enhancing tax enforcement capabilities, specifically targeting tax evasion. Through a survey using Smart PLS version (4) to analyze the data. The study highlights how the scope of AI, which is an Exploration of new AI technologies (ENT), Integration with existing systems AI (IES), The overall scope of AI applications (OSA), Perceived scalability AI (PS), can significantly improve the detection and prevention of tax evasion. Findings demonstrate that AI can identify complex patterns of fraudulent activity and predict potential risks more accurately and efficiently than traditional methods. The study also found no statistically significant relationship between integration with existing systems AI and tax evasion in tax enforcement capabilities.

Cultural norms and tax compliance: Evidence from China

Existing studies suggest that formal institutions can effectively constrain corporate tax evasion and increase tax compliance, but little has been said about the role of informal institutions regarding tax compliance. This study empirically examines the long-term effect of Confucian cultural norms on corporate tax compliance using unique cultural and historical data from China. We find that the intergenerational transmission of the Confucian culture can significantly promote the tax compliance of modern firms, thereby effectively reducing tax evasion. Simultaneously, the compliance effect is more pronounced in informal firms, such as small-scale, non-listed, and local firms. In terms of mechanism analysis, the normative effect of the Confucian culture is a key mechanism for explaining variations in corporate tax compliance behaviors under different cultural norms. Overall, this study fills a gap in the research on how informal institutions regulate the behavior of firms to a certain extent, and at the same time supplements the existing literature on understanding the long-term effects of the Confucian culture.

Analysing the impact of the failure to prevent Bribery offence on corporate compliance reporting in the United Kingdom – towards a better model of corporate accountability?

ABSTRACT The UK Bribery Act (2010) and its failure to prevent the (FtP) model represent a novel approach to corporate accountability. This approach is gaining traction in other issue areas and jurisdictions as a mechanism to incentivise robust corporate compliance policies. Australia now has a comparable offence of Failure to Prevent Foreign Bribery and the model has also been applied to tax evasion and fraud in the UK. As such, the FtP model is developing into an important feature of the corporate accountability landscape. There have been suggestions that the FtP model should be expanded to address social and environmental harms resulting from transnational business practices and corporate liability for failure to prevent corruption is even being considered under international law, as part of an the effort to establish an International Anti-Corruption Court with jurisdiction over individuals and corporations. However, there remains limited empirical research documenting the actual impact of the FtP Bribery on corporate behaviour. This article remedies this gap in scholarship, providing novel insights by analysing for the first time the impact of the FtP bribery offence on publicly available annual reports. It establishes a foundation for further empirical research on the impact of the FtP model beyond reporting, to corporate practices and decision-making.

Global tax avoidance and evasion: A landscape through insights from a systematic literature review and bibliometric analysis

This research aims to comprehensively investigate contemporary practices and factors influencing global tax avoidance and evasion through a systematic literature review (SLR) and bibliometric analysis. This study methodology uses SLR with bibliometric analysis to map this research trend. Relevant literature was collected and systematically analyzed to identify key themes, methodologies, and findings regarding tax avoidance and evasion. The study’s findings identify various tax avoidance practices, including profit shifting, transfer pricing strategies, and the use of tax havens by multinational corporations. The report also highlights various forms of tax evasion, such as money laundering and illicit financial flows. Key factors influencing tax behavior are ethical considerations, government policies, economic factors, and corporate governance practices. This analysis highlights the complex interactions between these factors in shaping tax practices globally. The study’s conclusions show that effective tax governance requires a multifaceted approach integrating ethical standards, a strong regulatory framework, and international cooperation. Ethical corporate behavior and transparent reporting are essential in promoting tax compliance and fairness. This study emphasizes the critical role of policymakers in designing and enforcing tax policies that discourage aggressive tax planning while encouraging economic growth and equality. Recommendations from these findings are to increase transparency in multinational operations, strengthen international tax cooperation, and improve global tax administration capabilities. In addition, increasing taxpayer education and awareness can foster a culture of compliance and ethical tax practices. Future research should prioritize longitudinal studies and case-specific analyses to deepen understanding and develop targeted interventions to address tax avoidance and evasion challenges.

Artificial Intelligence Model for Detecting Tax Evasion Involving Complex Network Schemes

Tax evasion through complex network schemes poses a significant challenge to tax authorities, leading to substantial revenue losses. This paper aims to develop and evaluate an artificial intelligence model designed to detect tax evasion within complex corporate networks, providing a comprehensive overview and prediction of tax avoidance behaviors. Employing a systematic literature review and document analysis of applicable tax regulations, the study utilizes Social Network Analysis (SNA) as a primary technique for mapping and analyzing taxpayer networks. The process involves matching taxable identities, constructing taxpayer graphs, extracting features, and developing a machine learning model. The proposed architectures and processes demonstrate the potential for tax authorities to enhance their capabilities in detecting tax evasion involving complex networks, with the machine learning model effectively identifying features related to both individual and network characteristics of taxpayers. The findings suggest that the integration of artificial intelligence and big data analytics can significantly improve the detection of tax evasion in complex corporate structures, offering valuable tools for tax authorities to better enforce tax compliance.

Facing the economic tribunal: how calculative techniques impede effective finance capital taxation in Europe

ABSTRACT The rise of new financial transaction schemes enabled new forms of tax fraud in Europe in the 2010s. Despite extensive public attention to this issue, the political measures adopted to strengthen taxation control have remained remarkably lax. The article analyses the emergence and spread of US neoliberal problematisations of administrative burdens to the OECD, and how these problematisations coalesced with the development of standardized regulatory cost‒benefit techniques. Focusing on the Danish case, this constellation of problematizations and techniques is argued to have worked as an economic tribunal, effectively obstructing the control of tax dividend reclaims.

An Empirical Analysis of Tax Evasion among Companies Engaged in Stablecoin Transactions

This research investigates the relationship between stablecoin usage and tax evasion. We present a model that includes variables related to transactions such as intensity, frequency, environment on-chain (P2P) vs. off-chain (IntraVasp), and company characteristics such as age, sector, and size. Our model was empirically tested using a logistic regression based on data from the Brazilian Federal Revenue Service (Receita Federal do Brasil (RFB)) in 2021. This novel approach aims to understand the tax behaviours associated with stablecoin use in corporate financial practices. Our results indicate that the intensity, frequency, environment of transactions (specifically IntraVasp and P2P transactions), age, sector, and size are factors significantly associated with tax evasion behaviour. However, we found no evidence to suggest that firms engaging in only P2P transactions have a higher propensity for tax evasion than those engaging only in IntraVasp transactions. Our findings reveal that younger and medium-sized companies with intensive use of stablecoin, with high stablecoin transaction frequency, engaging in IntraVasp and P2P transactions, and belonging to the service sector are more likely to evade tax. Therefore, our research provides a detailed understanding of how digital financial practices with crypto assets (blockchain-based technology) intersect with corporate tax strategies, which can offer valuable insights for regulators, industry practitioners, and policymakers.

Leaders’ capabilities and organizational efficiency: Evidence from the national taxation bureaucracy in China

Tax authority leaders have a significant impact on organizational efficiency, which is mainly manifested in tax collection efficiency. Based on provincial tax administrative data and data on listed companies from 1998 to 2017, we examine the impact of the capabilities of leaders of the National Taxation Bureaucracy (NTB) on tax collection efficiency. We adopt the fixed effects approach and isolate the individual effects of NTB directors as a proxy of leaders’ capabilities. We find that directors with stronger capabilities enhance tax revenue growth and complete tax revenue tasks by affecting corporate income taxes. The findings suggest that more capable directors are found to severely combat tax evasion and avoidance. Specifically, taxable income approved by the NTB, preferential tax policies and tax auditing have been used to combat tax evasion. We also clarify the boundaries of leaders’ capabilities. We provide supportive evidence for leaders’ individual impact on tax collection efficiency and enrich the study of tax collection and administration.

Evasión tributaria y cumplimiento de obligaciones tributarias en el Parque Industrial de Huaycán de Ate Vitarte

The objective of the investigation was to determine the relationship between tax evasion and compliance with tax obligations in the Huaycán de Ate Vitarte Industrial Park. For this, a basic quantitative methodology was used, of a non-experimental and transversal type, using the survey technique through two questionnaires administered to 30 members of the industrial park association. The results revealed that the two-sided significance values were 0.000, below the threshold of 0.05. This indicates a significant and high relationship between tax evasion and compliance with tax obligations in the Huaycán Industrial Park, with a Rho correlation coefficient of 0.728. In conclusion, it was evident that there is a significant relationship between tax evasion and compliance with tax obligations in the Huaycán Industrial Park in Ate Vitarte. This suggests that partners who evade taxes have a tendency to be less compliant with their tax obligations, indicating a lack of tax ethics and a perception of impunity in compliance with tax laws.

Coming clean on your taxes

This paper develops a simple model to explore whether a higher detection probability of tax evaders—e.g., because of improved exchange of information between countries and/or due to digitalization of tax administrations—renders it optimal for governments to introduce a voluntary disclosure program (VDP) and, if so, under what terms. We find that if the VDP is unanticipated, it is likely to be optimal for a revenue-maximizing government to introduce a VDP with relatively generous terms, i.e., a low or even negative penalty. When anticipated, however, the VDP is neither incentive compatible nor optimal, as it induces otherwise compliant taxpayers to evade tax. A VDP can then only be beneficial if tax evasion induces an external social cost beyond the direct revenue foregone, e.g., due to adverse effects on overall tax morale. In contrast to the common view that VDPs should come along with additional enforcement effort, we find that governments should relax enforcement if the VDP itself provides more powerful incentives to come clean.