Tax Professionals Research Articles

Digitalization and business model change in small professional service firms: evidence from tax accountants

ABSTRACT Digitalisation offers many business opportunities for professional service firms (PSFs) in general and for tax consulting in particular. Digitalisation is changing the cost structures of PSFs, which affects the scope and scale of PSFs and their service offering. Scope, scale and offered services are part of a business model. Given the increasing importance of PSFs to an economy, it is unfortunate that evidence is lacking on whether and how digitalisation is changing PSFs’ business models. This study provides insights into how tax accountants, as a subgroup of PSFs, are changing their business model in the wake of digitalisation. Tax professionals can respond reactively or proactively to digitisation, either meeting client needs or actively engaging with new technologies. However, smaller accounting firms may face challenges due to resource constraints and lack of expertise, which could be addressed through collaboration, alongside considerations of data security and regulatory compliance.

Study on the regulatory alienation effect of China's Environmental Protection Tax Law during the strict epidemic control period: based on a sample test of 1000 tax personnel

The enactment of the Environmental Protection Tax Law was a major event in the process of China's economic and social development. This law has achieved certain results in the first two years since enactment, but there have also been many problems. During the three-year strict pandemic control period, the normal process of Environmental Protection Tax Law implementation was impacted, causing alienation and reducing the quality of implementation. This study empirically reveals the alienation mechanism in the implementation of the Environmental Protection Tax Law by taking 1000 Chinese tax professionals, and randomly divides the sample equally into two parts, utilizing 500 samples for the initial test and another 500 samples for the robustness test. This research shows that pollutant emission monitoring (correlation coefficient is 0.07), preferential tax policies (correlation coefficient is 0.03) and the quality of tax personnel (correlation coefficient is 0.06) are not conducive to realizing the crowding-out effect of the Environmental Protection Tax Law, while preferential tax policies (correlation coefficient is 0.05), information-sharing platforms (correlation coefficient is 0.06) and the quality of tax personnel (correlation coefficient is 0.05) hinder the incentive effect, and the remaining elements passed the correlation coefficient test within certain confidence intervals. Therefore, the implementation of China's Environmental Protection Tax Law should be improved in the following ways: the accuracy of the environmental protection departments' supervision of pollutant emissions as well as the scientificity and rationality of preferential tax policies should be improved, the construction of environmental protection tax information-sharing platforms should be strengthened, and compound tax collection and management talent should be created.

Enhancing Tax Consultancy Services through an Innovative Website

This paper presents a detailed analysis and report on the development, implementation, and impact of a tax consultancy website aimed at enhancing the efficiency and effectiveness of tax advisory services. The website integrates cutting-edge technologies, user-friendly interfaces, and comprehensive tax-related information to provide a seamless experience for both clients and tax professionals. The study investigates the key features, challenges faced during development, and the overall impact on the tax consultancy sector.

The impact of the effective tax rate change on financial assets of commercial banks: The case of Visegrad group countries

While many tax professionals have discussed corporate taxation in the banking sector and its effectiveness on bank institutions, investment decisions, bank size, asset structure, or bank rentability, there is little evidence of tax efficiency within V-4 Group. The research on banks and tax rates is mainly based on American data. Few papers solved banking stability and corporate taxes within the European countries. This paper examines effective corporate taxation in the banking sector of the V-4 Group and aims to find out how the effective tax rate change affects commercial banks’ financial assets. In this study, we examine the relationship between variables using regression analysis in which we assess the impact of ETR on bank financial assets. We examined data in the consolidated financial statements data of commercial banks and tested their impact on the economy. Our findings supported the theory that ETR impacts the banking sector, particularly capital and equity financing. However, the results did not prove the research hypothesis, in which we assumed that an increase in ETR would lead to an increase in financial assets. Based on our results, it leads to an increase in equity assets (7.34%) and a decline in debt assets (16.83%).

Optimization of Teaching Design for 'Chinese Tax System' Based on the Integration of Law and Business Background

This paper proposes a course design plan for "Chinese Tax System" based on the integration of law and business in response to the demand for tax talent training and the characteristics of the "Chinese Tax System" course. In light of the current teaching design issues, this paper emphasizes the need for practical teaching, including interdisciplinary comprehensive teaching, field trips and visits, as well as information technology-assisted teaching. Additionally, it suggests updating textbooks and curriculum settings, emphasizing the practical application and ability cultivation, interdisciplinary and comprehensive characteristics, as well as fostering students' innovative awareness and practical abilities. Furthermore, innovative teaching methods such as legal case analysis, business simulation exercises, interactive discussions and debates, and innovative project design are proposed. Lastly, a multi-faceted assessment method is recommended, including comprehensive ability assessment, classroom performance assessment, and professional ability assessment. The implementation of these teaching design optimization plans will help improve students' understanding and application abilities of the "Chinese Tax System" course, promote their comprehensive development and enhance their capabilities, providing guidance and reference for the cultivation of high-quality tax professionals.

광동체제 시기 해관 화폐의 출현 배경

This study analyzes the regulations converting Simayin(司碼銀) and 8-real coin into Kupingyin(庫平銀) and, through the procedures for assessing and converting actual customs duties after the payment of tariffs, examines the Yuehaiguan(粵海關) weights distinguishing them from the Kuping(庫平). The deputy customs duty structure of the Canton System created a subtle weight difference among Hubu(戶部), Yuehaiguan(粵海關), and Hong Merchants(行商). Analyzing this distinction, endeavors were made to trace the roots of the currency used in Chinese Maritime Customs, known as Haiguanliang(海關兩), back to the Canton System. As a result of the analysis, it was confirmed that the independent weights of Yuehaiguan(粵海關) distributed nationwide from Hubu(戶部) were different from Kuping(庫平), and it was conceptualized as ‘Yuehaiguanping(粵海關平)’. Yuehaiguanping(粵海關平) served as the weight standard for foreign trade and customs administration, differing from the certified weighing system represented by Yuehaiguankuping(粵海關庫平) used for accounting purposes. The weight system used by merchants, known as Simaping(司碼平), is considered to have originated from Yuehaiguanping(粵海關平), ultimately concluding that these two systems are essentially identical.“Previous studies on understanding Chinese Maritime Customs' generally share the perspective that, despite subtle differences, the Western-style customs system was introduced to China in a unidirectional process. The emergence of the currency Haiguanliang(海關兩) in Chinese Maritime Customs is considered a crucial mechanism for imperial powers to control Chinese customs. However, if we exclude the wounded pride of the Chinese people from the starting point of semi-colonialism, researchers need to explore the reasons why the Western customs system could seamlessly integrate into China's institutions without encountering significant resistance or conflict. The author aims to present a new approach to understanding Chinese Maritime Customs, which inherits the deputy customs duty structure of the Canton System. The form of outsourcing tax and customs duty operations to the private sector was not unfamiliar in pre-modern China. The idea of entrusting customs administration to tax professionals at that time was quite acceptable and feasible. The dismantling of the Canton System and the emergence of Chinese Maritime Customs signify not only the ultimate end of monopoly trade but also a significant transformation from the traditional Queguantizhi(榷關體制) to the Haiguantizhi(海關體制). This process can be understood as a major shift that could be based on the basic framework of the Canton System.

The Effect of Tax Penalty, Probability of Audit and Fair Treatment on Permanent Voluntary Disclosure: Tax Professionals’ Perspective

This paper examines the effects of tax penalty, the probability of audit and fair treatment to participate in permanent voluntary disclosure (VD), from the perspective of tax professionals. A total of 2,540 questionnaires were distributed to tax professionals in Malaysia using a combination of online and drop-off modes. The potential respondents were selected using a simple random sampling technique. The collected dataset comprised 192 useable questionnaires. To unravel the underlying factors influencing permanent VD, the research employed Smart PLS Version 4.0.9.6 for data analysis. The results revealed that tax penalty and the likelihood of probability of audit are significant in influencing corporate taxpayers’ motivation to partake in permanent VD. Surprisingly, the element of fair treatment towards taxpayers is not significant. In addition, the findings reveal that tax penalty, the probability of audit, and fairness treatment, explain 0.195 of variance (R2) in corporate taxpayers’ motivation towards partaking in permanent VD. The current findings may facilitate policymakers and the tax revenue authority in devising strategies to enhance the attractiveness of permanent VD. An enhanced permanent VD will benefit the tax revenue authority as it saves time and cost of collecting information on tax audits and investigation cases. Our findings contribute to the paucity of published work pertaining to the use of threat and fairness in galvanising participation in permanent VD.

Auditors’ and Tax Specialists’ Interprofessional Collaboration during Audit Engagements: Implications for Audit Production and Audit Quality

ABSTRACT Tax specialists are often part of interprofessional teams that conduct financial statement audits, yet little is documented about their role and collaboration with auditors during these engagements or their contributions to audit quality. Our interviews with 33 highly experienced audit and tax professionals reveal variation in tax specialists’ roles during audits. Further, we find that auditors and tax specialists perceive a greater need for interdependence of expertise, particularly across different types of tax experts, due to increased tax specialization and global tax complexity. However, our interviewees acknowledge that power dynamics and differing attitudes toward shared goals and partnership affect the collaboration process. Interviewees also report instances where ineffective collaboration impacted audit quality. Collectively, we document how auditor and tax specialists’ collaboration (or lack of) influences both audit production and quality, providing insight for practice, regulators, and research regarding tax specialists’ audit involvement and extending the interprofessional collaboration literature to accounting. JEL Classifications: L84; M40; M42.

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.

Unveiling the Motivations Behind Malaysian Taxpayer Participation in Voluntary Disclosure Programme

In the pursuit of enhanced tax compliance, voluntary disclosure programmes (VDP) serve as valuable tools when executed effectively. This study delves into tax professionals’ perspectives on factors influencing taxpayer participation in Malaysia’s VDP when first introduced in 2015 to boost revenue and compliance. This survey of 135 tax practitioners from prominent firms in Johor Bahru and Kuala Lumpur sheds light on critical VDP participation drivers. The findings indicate that the VDP’s success hinges on several factors. Foremost among these is the size of penalty reduction, which holds the greatest sway in motivating participation. Following closely is the apprehension of further audits, while fear of detection and punishment ranks third. The efforts made by the Inland Revenue Board of Malaysia in promoting the VDP emerge as the fourth significant driver. This study, among the first to explore VDP implementation in Malaysia, anticipates inspiring future research and policy refinements in the realm of tax compliance.

Effect of Tax Compliance Costs on Tax Evasion by Small and Medium Enterprises

This study examined the effect of tax compliance costs on tax evasion by small and medium scale enterprises (SMEs) in Akwa Ibom State. Survey research design was adopted in realising the objectives of the study. The population (1,887) of the study consists of all SMEs in Akwa Ibom, from where a sample size of 330 was drawn using Taro Yamane model. 330 copies of questionnaire were administered to Accountants and owner/managers of the selected SMEs across the three senatorial districts of Akwa Ibom State. The questionnaire was constructed on a 5-point Likert scale and was analysed using non-parametric tests such as mean, standard deviation and percentages. The questions in the questionnaire centred around tax evasion as dependent variable while independent variables were proxied as cost of registration for tax purposes; cost incurred in engaging tax professionals; complexity in the tax system; cost incurred in keeping books and accounting records for tax purposes; cost incurred in obtaining tax education information and changes in tax policy; time spent for tax purposes and cost implication of such time element. The findings of the study shows that 90% of the respondents agreed that the cost incurred by SMEs in registration for tax purposes is high and that this high costs leads to tax evasion. Also, 91% are in agreed that the complexity in the tax system is the reason why SMEs engage the services of external tax professionals to assist in tax matters and this leads to high compliance cost and the attendant tax evasion. 88% of the respondents agreed that high costs of keeping books and accounting records for tax purpose while those on obtaining information on tax policy is 94%. Also, 93% of the respondents agreed that the time spent by SMEs exclusively for tax purposes encourages tax evasion Finally, 89% of the respondents agree that the combined effect of all costs, other than tax liability, and the time spent in tax processes contributed to tax evasion by SMEs. Based on these findings it was concluded that there is a strong indication that compliance costs greatly affect tax evasion. It was recommended that Government should simplify tax policies in order to reduce compliance costs incurred by SMEs and tax professionals should reduce their charges for SMEs as a way of reducing their compliance costs.

The Functioning of Tax Authorities in Countries of the European Union

The paper delves into an insightful analysis of tax authority operations in various European Union (EU) member states, including Poland, Sweden, Germany, and France. This study seeks to extract valuable lessons from their practices and apply them to the context of Ukraine. Poland's tax authority, governed by the Tax Ordinance, serves as an interesting starting point for the investigation. Sweden's National Tax Agency, operating under the Swedish Ministry of Finance but independently of the government, takes centre stage as a model of centralised tax administration based on functional principles. In contrast, France's tax system integrates its state tax service into the Ministry of Economy, Finance, and Budget, showcasing a unique structural arrangement. Notably, Germany stands out with its highly proficient tax service, emphasising the importance of professional expertise in tax administration. In conclusion, this study underscores the universal nature of lessons learned from the organisational activities of tax authorities in EU member states. By implementing these insights, Ukraine can take significant steps toward optimising its tax administration, fostering trust between taxpayers and authorities, and aligning its practices with international standards. Ultimately, the paper serves as a valuable resource for policymakers and tax professionals seeking to enhance Ukraine's tax authority operations.

Tax Compliance Costs for SMEs: A Survey of Tax Professionals in Ghana on External Cost of Compliance

The study sought to ascertain the magnitude of the external tax compliance costs incurred by SMEs in Ghana from the perspective of the tax professionals who provide the service. Tax professional firms were selected from the Institute of Chartered Accountants and the Chartered Institute of Taxation for the study. The study distinguished between the average annual costs for small, medium and larger firms to compute and file returns, deal with tax authorities, implement changes in tax laws, and maintain records for tax purposes on behalf of their clients. The cost was found to be regressive in nature, indicating that the burden was relatively higher for small businesses.

Taxation in the Digital Age: An Examination of the Necessity, Feasibility, and Implications of Taxing Virtual Infrastructures

This research paper explores the feasibility, methods, and implications of taxing virtual infrastructures within the evolving digital landscape and economy; considering the proliferation of digital assets, online transactions, and virtual entities, the taxation of virtual infrastructures becomes imminent as an avenue for government to accumulate revenue for effective government administration. The paper examined the objectives of the study through primary data collected from 320 tax professionals and 297 IT experts to explore the impact of virtual infrastructure taxation on government revenues, the feasibility of taxation models, its effects on innovation and investment in the digital sector, and the challenges of cross-border tax strategies. Findings show that although taxation of virtual infrastructures significantly enhances government revenues, contributing to fiscal sustainability and the funding of public services and infrastructure projects, measures must be put in place to cushion the effect of such taxation on investment and innovation in the digital economy, as the taxation of virtual infrastructures were found to hamper investment and innovation significantly. Also, the implementation of modified traditional and emerging taxation models is shown to increase the feasibility of taxing virtual infrastructures, offering opportunities to enhance government revenues while fostering digital innovation. Data analysis, including Pearson correlation and linear regression methods, was employed to assess the relationships between the variables. Moreover, cross-border tax strategies are found to have negative implications for the taxation of virtual infrastructures, including profit shifting, transfer pricing, and competition among countries to attract digital firms. International cooperation and comprehensive tax reforms are suggested to address these challenges and ensure equitable tax contributions. The study underscores the significance of global collaboration in addressing cross-border taxation challenges and recommends the integration of modern tools and technologies to streamline tax processes while developing modified tax methodologies and policies that suit the digital economy.

Determinant Factors of Tax Digitalization Adoption: Towards Sustainable Tax Profession

The rapid advancement of digital technology has significantly impacted various industries, including taxation. Tax digitization contributes many benefits such as streamlining tax processes, reducing administrative burden, enhancing efficiency, and increasing data security. To date, tax professionals in advanced economies have drawn attention to digitalization to compensate for their work's complexity and ensure the profession's sustainability. However, Malaysian tax professionals are still at the beginning of the transformation process towards a modern digitally oriented system. Considering this issue, the study aims to propose factors that would expedite the adoption of tax digitalization among tax professionals. By examining performance expectancy, effort expectancy, social influence, and facilitating conditions, policymakers, professional bodies, and tax authorities can formulate strategies to promote widespread adoption, leading be more efficient and sustainable tax profession. This move aligns with the Malaysian government's aspirations and the United Nations' Sustainable Development Goal 9, fostering inclusive and sustainable industry growth through innovation.

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.

Perceptions of the textile industry stakeholders on a multi-slab goods and services tax system in India

Purpose The purpose of this paper is to present the perception of the textile industry stakeholders (manufacturers, wholesalers, retailers, consumers and tax professionals) on India’s new goods and services tax (GST) system and find whether the introduction of GST has made doing business easier or not. Design/methodology/approach The researchers used interviews and surveys to capture the perceptions of the textile industry stakeholders at Surat, a major textile hub in India. To econometrically verify the perceptions, the researchers used a logit regression model. Findings The researchers found that the provision of monthly tax filing has increased textile businesses’ dependency on tax professionals, which increased business costs. Also, the GST system has made tax compliance easier and is user-friendly. However, tax refund-related issues are a significant factor that negatively impacts the ease of doing business post-GST. Research limitations/implications The findings of the research shall be helpful for the GST Council of India and policymakers to understand the problems faced by the textile businesses and cater to their problems. Originality/value To the best of the authors’ knowledge, this study is original as none of the available studies captures the perception of all the textile industry stakeholders, namely, manufacturers, wholesalers, retailers, consumers and tax professionals, on the GST system applying econometric techniques to validate the perceptions.

The Influence Of Behavior, Motivation, And Independence Of Tax Inspectors On The Quality Of Tax Audits With Performance As An Intervening Variable

This study aims to analyze the influence of behavior, work motivation, and independence of tax inspectors on the quality of tax audits through tax inspector performance intermediaries. This research is included in descriptive quantitative research that prioritizes in-depth analysis of the data and facts found. The sampling technique uses the purposive sampling method for tax practitioners registered as members of the Indonesian Association of Academics and Tax Professionals, both employees who work in a company and tax consultants who have represented taxpayers in the tax audit process in DKI Jakarta with at least 3 years of work experience collected using questionnaires. The analysis technique used is Structural Equation Modeling (SEM). The results of the study show that behavior, work motivation,n, and independence have a positive and significant effect on the quality of tax audits. In addition, the performance of tax inspectors is only able to mediate the relationship between behavior and independence of the quality of tax whereas the performance of tax inspectors cannot mediate the relationship between work motivation and the quality of tax audits

Assessing Taxation Revenue and Perceptions of Tax Reforms in Post-Demonetization India

This research paper endeavors to provide a comprehensive analysis of taxation revenue in India, specifically focusing on Income Tax and Goods and Services Tax (GST), during the post-demonetization era. Additionally, it seeks to explore the perceptions of three key stakeholder groups taxpayers, tax professionals, and government officials—regarding tax reforms and their influence on tax evasion in India. The study commences by evaluating the taxation revenue of the Government of India in the aftermath of the historic 2016 demonetization move. It scrutinizes the impact of tax reforms such as the introduction of GST and changes in Income Tax regulations on revenue generation. By employing empirical data and statistical analysis, this research aims to shed light on the effectiveness of these reforms in enhancing government revenue collection, promoting fiscal transparency, and curbing tax evasion. Furthermore, this paper delves into the perceptions of taxpayers, tax professionals, and government officials concerning tax reforms and their implications for tax evasion in India. Through surveys, interviews, and qualitative analysis, it investigates the diverse viewpoints held by these stakeholders. This qualitative dimension of the study provides a nuanced understanding of how tax reforms are perceived and whether they have altered the behavior of taxpayers and the enforcement strategies of government officials.
 The outcomes of this research hold significance for both policy formulation and academic discourse. Insights derived from the analysis of taxation revenue can guide policymakers in refining tax policies, optimizing revenue collection, and fostering economic growth. Simultaneously, an exploration of perceptions surrounding tax reforms offers valuable insights into the behavioral dynamics of taxpayers, the challenges faced by tax professionals, and the strategies employed by government officials in enforcing tax regulations. this paper Demonstrate a holistic examination of taxation revenue in post-demonetization India, with a specific focus on Income Tax and GST. It also provides a unique perspective by investigating the perceptions of taxpayers, tax professionals, and government officials regarding tax reforms and their impact on tax evasion. By combining empirical data with qualitative insights, this research contributes to a more comprehensive understanding of the complex relationship between taxation revenue, tax reforms, and stakeholder perceptions in the Indian context.

CORPORATE TAX COMPLIANCE AND MEDIATING ROLE OF PERSONAL TAX COMPLIANCE AMONG MALAYSIAN IN-HOUSE TAX PROFESSIONALS

Studies relating to tax compliance disclose that there is much likelihood of the corporate tax compliance behaviour getting influenced by the tax compliance behaviour of the in-house tax professionals. However, no studies have investigated the nexus between the personal tax compliance and the corporate tax compliance so far. Therefore, this study aims at investigating the link between the above two tax compliance behaviours and the mediating effect of the personal tax compliance behaviour of the in-house tax professionals on their corporate tax compliance behaviour. A sequential explanatory design is chosen to collect data from 392 in-house tax professionals through a survey questionnaire, and the findings obtained from the survey are supported further by the supplementary findings made by nine (9) tax experts from the tax authority, tax agency, and tax scholars of the institutions in Malaysia. Structural equation modelling is used to analyse the data taken from the findings that reveal that the factors that contribute to the tax compliance behaviour have strong influence on the personal tax compliance of the in-house tax professionals. Interestingly, their tax compliance behaviour strongly influences their corporate tax compliance as well. Further, the bootstrapping test reveals that personal tax compliance behaviour has a significant indirect effect on the corporate tax compliance. The empirical findings give a clue to the tax authorities to identify the root cause for the corporate tax non-compliance by investigating the decision makers’ tax compliance pattern. The researchers of the future studies are encouraged to follow the same method of data collection, along with the sequential explanatory design, and to consider the moderation effect of the financial constraints on the tax compliance behaviour.