Voluntary Tax Research Articles

Tax Knowledge and Voluntary Tax Compliance: The Role of Public Trust in Nigeria

Tax Knowledge and Voluntary Tax Compliance: The Role of Public Trust in Nigeria

Tax Amnesties: Trends and Implication for Taxpayers’ Compliance. A Literature Review

The focus of this paper is to conduct a literature review on tax amnesties and the factors which are necessary for its effective implementation for compliance. The study employed a library based research design which involves desk-review of extant literature. The literature review shows much research attention given to the issue, though the findings are mixed and quite inconclusive. The review also brings up a few issues which are seen as probable weaknesses or inconsistencies in tax amnesty research looking from a tax compliance perspective. First, while there is evidence regarding success of tax amnesties in the developed world, empirical proof on the progress made in developing countries are scarce. Second, although the concept of tax amnesty has been extensively examined in the tax literature, only a few studies have used an experimental approach to examine the long run effect of tax amnesty on voluntary tax compliance. Third, there is still no clear unanimity in the literature regarding how social and psychological factors such as political trust, political will, perceived corruption, and perceptions of justice and punishment objectives influence the implementation of tax amnesties. Finally, the study observes that in tax amnesty research there is always the tendency for majority of prior studies to assume homogeneity in level of compliance whereas significant differences may exist in the degree of compliance between high and low income earners. The study therefore concludes that there is the need for future empirical studies to address these weaknesses and inconsistencies.

Mengupas Kebutuhan Penyuluh Pajak Daerah: Eksplorasi Di Pemerintah Provinsi DKI Jakarta

Local tax revenues in DKI Jakarta Province have not reached their optimal achievement. One of the causes is the low compliance of local taxpayers due to a lack of tax knowledge. Tax administration can improve voluntary tax compliance by providing services and good communication with taxpayers. This role can be carried out through a tax counseling program. This study aims to provide urgency for the functional position of local tax counselors in supporting the resilience of local tax revenues. The research used a qualitative approach with data collection techniques through in-depth interviews, focus group discussions, and literature studies. The study results show that local tax counseling in DKI Jakarta faces obstacles due to a lack of human resources and budget. The absence of a position for tax counselors, currently only limited to task force units, limits the legitimacy of tax counselor authority in carrying out their primary duties and functions. The status of the task force unit has resulted in tax counselors being unable to focus on handling tax counseling in DKI Jakarta because they still have to carry out other administrative duties. Meanwhile, tax counselor officers have a heavy task because they have to master all regulations related to local taxes and the dynamics of its changes and should be able to solve various problems faced by Local Taxpayers. Transferring the tax counselor from the task force unit to a functional position will increase the local tax counselor officers' competence, motivation, and skills to support optimal provincial tax revenues.

Impact of tax reforms: taxpayer behavior and compliance in Latin America

The article analyzes the impact of tax reforms on the economy and business viability of Latin American countries, seeking to answer the question about how the fiscal behavior of taxpayers and tax reforms influence tax collection and local development. Its objective is to analyze the relationship between the fiscal behavior of taxpayers and its impact on tax collection, and how these dynamics influence local development. A qualitative methodology was used in the research. As a result, it stands out that by improving the perception of justice and equity, the formalization of roles, the standardization of processes and the reduction of corruption, the negative impacts of collectivism are counteracted, generating citizen trust, promoting voluntary tax compliance and reducing tax evasion. In conclusion, it is emphasized that awareness about the importance of tax compliance and tax ethics are key elements to establish the desired tax culture.

POWER AND TRUST: A MEDIATOR IN THE RELATIONSHIP BETWEEN PROCEDURAL JUSTICE AND TAX COMPLIANCE IN INDONESIA

This study analyses the connection between procedural justice, trust and power concerning tax compliance in Indonesia and investigates the mediating influence of trust and power tax authorities hold in this relationship. While various factors play a role in tax compliance behaviour in Indonesia, the country still struggles to achieve maximum compliance, falling short of international standards in terms of tax ratio. Only half of Indonesians have confidence in the tax system, and procedural justice is closely linked to power and trust. This study is groundbreaking as it is the first to investigate these three factors simultaneously in Indonesia. A quantitative approach was employed, with data gathered from 371 taxpayers and analyzed using the PLS-SEM method. The findings indicate that legitimate power and trust are positively associated with voluntary tax compliance and function as mediators between procedural justice and tax compliance. However, no correlation was found between procedural justice and tax compliance or between coercive power and tax compliance. To enhance taxpayer compliance in Indonesia, it is recommended to bolster trust in the tax authority and its jurisdictions. This study addresses a gap in the tax compliance literature. It enhances the theoretical framework, providing valuable practical insights for compliance improvement strategies, particularly for the Indonesian Directorate General of Taxes. The findings support developing more effective policies, improving tax education, and promoting transparency to strengthen public trust and compliance.

Stakeholders’ Engagement as A Strategy Toward Optimizing Voluntary Tax Compliance: A Case Study of The Nigerian Tax Administration

Stakeholders’ Engagement as A Strategy Toward Optimizing Voluntary Tax Compliance: A Case Study of The Nigerian Tax Administration

Assessing the Impact of Infrastructure on Tax Structure and Improving Economic Performance: The Case of Nigeria

The relevance of this study is to establish the interactive role of infrastructure on tax composition in stimulating long-term economic performance in Nigeria. However, empirical evidence showed that greater emphasis was placed on studies relating to the impact of taxation on the performance of the economy. The purpose of this study is to examine the impact of infrastructure on tax structure and improving economic performance in Nigeria. The hypothesis - the interactive role of infrastructure on tax composition and the economic performance nexus in Nigeria - was estimated with the Ridge Regression (RR) technique to take care of the incidence of multicollinearity that existed among the study variables using the dataset covering 1993-2022. Also, the study utilized the Barro growth model, which emphasized investment in infrastructure enhanced through taxes as the core endogenous factor that drives growth. The findings revealed that with the presence of infrastructure; value added tax, company tax, customs and excise duties and petroleum profit tax has a positive and significant relationship with economic performance while personal income tax has a positive but insignificant relationship with economic performance in Nigeria within the study period. The study thus concluded that with the presence of infrastructure, tax composition significantly contributed to economic performance in Nigeria within the study period. Based on this finding, this study recommends that policymakers should focus on measures such as tax education and enlightenment to encourage voluntary tax compliance to generate substantial revenue to fund infrastructural development, thus, improving the level of economic performance in Nigeria.

Determinants of Ethical Perception of Tax Evasion and Its Effect On Voluntary Tax Compliance

Bu çalışma idealizm, relativizm, dindarlık, vergi bilgisi ve eğitimin vergi kaçırmanın etik algısı üzerindeki etkisini belirlemeyi amaçlamaktadır. Çalışmada ayrıca vergi kaçırmanın etik algısının gönüllü vergi uyumu üzerindeki etkisi de incelenmektedir. Bu bağlamda Gümüşhane Üniversite’sinde öğrenim gören ve kolayda örnekleme metodu ile seçilen 327 lisans ve yüksek lisans öğrencisinin yer aldığı çalışma yapısal eşitlik modellemesi ile analiz edilmiştir. Bulgular eğitim ve idealizmin vergi kaçırmanın etik algısını istatistiksel olarak anlamlı ve negatif yönde, relativizmin vergi kaçırmanın etik algısını istatistiksel olarak anlamlı ve pozitif yönde etkilediğini göstermektedir. Vergi kaçırmanın etik algısının gönüllü vergi uyumu üzerindeki etkisi beklenildiği şekilde negatiftir. Ele alınan çalışma ile bireylerin hangi koşullarda vergi kaçırmanın etik olduğu algısına sahip olduklarını anlamanın vergi ile ilgili kayıp ve kaçaklarını azaltarak gönüllü vergi uyumunu artıracağı düşünülmektedir.

UNDERSTANDING GEN Z TAX COMPLIANCE BEHAVIOUR

This study is to examine the perceptions of Z generations related to peer group influence, digitalization tax service orientation, tax knowledge, and social media platform influence. Changes traditional paradigm of tax compliance in order to improve voluntary tax compliance in Z generation. This research method is a survey method using electronic questionnaires. The respondents (sample) of this study are tax payer with have age under 28 years old. Data was analyzed by using multiple regression analysis. The results of a survey of 142 tax payers indicate that peer group, digitalization tax system, tax knowledge and social media increase tax payer compliance. The contribution of this work is a more brief and straightforward understanding of behavioral accounting, primarily related to the tax compliance of generation Z. In contrast to the overarching goal of prior research , the current study analyzes the impact of tax payer compliance and the other analyze gen Z consumption behavior.

Electronic Taxpayer Education and Tax Compliance of Manufacturing Small and Medium Enterprises in Nairobi City County, Kenya

To enlighten taxpayers regarding their tax information, the Kenyan tax authorities have made tax education a top concern. To promote voluntary tax compliance and boost national revenue, this kind of education is essential. Low tax compliance among SMEs limits revenue generation from the government and, consequently, inefficient government expenditure since it makes it harder for the state to amass family earnings, which are vital assets for speculating. This study sought to investigate how electronic taxpayer education affects the compliance with tax laws of manufacturing SMEs in Nairobi City County, Kenya. The study used a descriptive research approach and 641 manufacturing SMEs in Nairobi were the study's targeted audience. Output showed that electronic taxpayer education positively affected tax compliance in a significant manner as it relates to manufacturing SMEs. The conclusion arising from this outcome is that electronic taxpayer education plays an important role in manufacturing SMEs' tax compliance as most of them can access tax information electronically in their comfort zones. Policy makers should increase the utilization of electronic means to educate taxpayers on the need to pay taxes and the consequences of non-compliance to tax laws in Kenya. It is recommended that the Kenya tax authority should enhance the education of taxpayers via electronic means as most of the participants in the manufacturing SMEs are said to easily access electronic media that would enhance their competitive advantage over other firms in Kenya.

Why do audit clients voluntarily disclose the compliance and planning components of auditor provided tax services?

Criticisms of audit firms marketing and devising tax avoidance strategies for their audit clients have led to calls from regulators, investors, and proxy advisors for more detailed disclosures on the composition of tax non-audit services (NAS). Using a hand-collected dataset, we examine the determinants of audit clients’ voluntary bifurcation of total tax NAS fees into the tax planning and compliance components, and the effect of these voluntary disclosures on firm value. We find that firms with higher levels of tax NAS are more likely to provide this disclosure, as well as firms that engage in higher levels of tax avoidance and have accounting experts serve on the audit committee. Using textual analysis, we find that among voluntary tax NAS fee breakdown disclosers, firms with higher total tax and, specifically, tax planning NAS fees have longer and less similar tax NAS fee disclosures relative to the prior period disclosure. Our firm value analyses indicate higher valuations for firms providing voluntary breakdown disclosures when these disclosures reveal high tax NAS fees generally, and high tax planning NAS fees specifically. The firm valuation effects are incrementally more pronounced when voluntary tax NAS fee breakdown firms report higher tax avoidance and expert audit committee oversight. Our results suggest that the voluntary disclosure of private information regarding the nature of tax NAS is one mechanism through which firms facing scrutiny over the implications of these services can alleviate information asymmetry and stakeholder skepticism of tax NAS.

Good Governance and Voluntary Tax Compliance Behaviour in Lagos State, Nigeria: An Empirical Analysis

Globally, Voluntary Tax Compliance (VTC) behaviour level has become a major concern to policy makers, government and tax consultants. Constant loss of tax revenue due to bad governance, mistrust, or misrule are perceived to have adversely affected state economic growth, financial viability and infrastructural development. Many researches have been conducted on VTC behaviour, but not many considered the effect of Good Governance (GG) in their study. This study examined the probable influence of GG on taxpayers VTC behaviour in Lagos state, Nigeria. The study employed survey research design and random sampling techniques. Seven hundred and fifty questionnaire were administered for data gathering while 82.8% response rate was achieved. The study employed descriptive and inferential statistics to analyze the data at 5% level of significance. The study shows that GG positively influenced VTC among individual taxpayers in Lagos state, Nigeria (Adj. R2 =0.101, F(4, 619)=18.35, p=0.000). There was evidence that trust in government, transparency and rule of law have significant relationship with VTC behaviour in Lagos state, Nigeria while accountability has insignificant relationship with VTC behaviour. The study concluded that GG influenced individual VTC behaviour in Lagos state, Nigeria. Therefore, the mechanism for GG should be entrenched to reduce revenue loss. Also government should provide quality service with timely rendering of government account for citizens informed decision. Tax law should be simple, fair, and unambiguous. Above all, tax revenue should be invested on public goods of utmost importance while tax payment culture should be institutionalized.

The importance of perceived fairness regarding tax burden in compliance behavior: a qualitative study using the Delphi method in Morocco

Purpose This study aims to understand the interaction between tax fairness perceptions, equitable tax burden distribution and tax compliance within Morocco’s unique socio-economic context, with the goal of uncovering strategies to enhance tax compliance. Design/methodology/approach Using the Delphi method, this study engaged tax experts in the Moroccan context to explore the impact of taxpayers’ perception of fairness, tax rates and tax burden on compliance. Their responses were gathered and analyzed with the aid of IRaMuTeQ software, which helped the authors identify themes relevant to the research question. Findings The preliminary results indicate a positive correlation between perceptions of tax fairness and compliance behavior, corroborating earlier studies conducted in different contexts. Notably, a substantial majority of Moroccan taxpayers perceive the current tax system as inequitable, deeming tax rates too high and the tax burden unfairly distributed among various taxpayer categories. This perception potentially influences their voluntary tax compliance behavior. Practical implications The findings have significant policy implications for the Moroccan Government and stakeholders. They suggest that by improving tax fairness, particularly by aligning tax assessment and payment modalities for employees, civil servants and small to medium enterprises, policymakers can encourage higher voluntary tax compliance, thereby potentially enhancing the efficiency of the Moroccan tax system. Originality/value This study adds to the existing body of knowledge by exploring the dynamics of tax fairness and compliance behavior in Morocco, a context which has been significantly understudied.

Justice, power and voluntary tax compliance: a moderation analysis among taxpayers in Addis Ababa, Ethiopia

PurposeThe aim of this study was to examine the moderating roles of the legitimate power and distributive justice of the tax authority on the effect of procedural justice on the voluntary tax compliance of taxpayers in Addis Ababa, the capital of Ethiopia, by using survey data collected from taxpayers in the city.Design/methodology/approachData for the study were collected from 800 sample taxpayers who were drawn by using a systematic sampling technique. The variables of the study were constructed as indices from composing the scale items developed and tested for their validity by prior researchers. Having collected the data by using a 7-point Likert scale questionnaire and forming the latent variables, hierarchical multiple regressions were applied to determine the moderating effects of the two variables (i.e. legitimate power and distributive justice) on the effect of procedural justice on voluntary tax compliance.FindingsThe author found that both the legitimate power of the tax authority and distributive justice of the authority moderate the effect of procedural justice on voluntary tax compliance. The moderating roles of the two variables appear to be opposite in that low (but not high) distributive justice and high (but not low) legitimate power of the tax authority stimulate the effect of procedural justice on voluntary tax compliance.Research limitations/implicationsThe first limitation is that the data used in this study are self-reported data while the subject of the study is sensitive subject about which respondents are not believed to provide genuine responses. This is presumably because taxpayers are less likely to confess their tax evasion as they fear legal actions following their self-report. Hence, other controlled methods such as the experimental design are recommended to replicate the results of this study. The second limitation is that data for the study were gathered through a one-time cross-sectional survey and hence it would not warrant a causal claim between the study variables. Consequently, other research with a longitudinal or experimental design might warrant a causal relationship between the variables.Practical implicationsTherefore, the tax authorities must endeavor to attain high legitimacy by doing “the right things” as perceived by the taxpayers so that their tax-related decisions gain acceptance from the decision recipients. Tax policy makers as well ought to consider the importance of and the relationship between procedural justice, distributive justice and legitimate power of the tax authority in order to attain the maximum possible voluntary compliance of taxpayers that significantly reduces the administrative cost of taxes.Social implicationsThe study benefits society by enhancing tax compliance and hence helping the government secure a better amount of tax revenue and provide better public goods and services.Originality/valueThe findings of this study are of high theoretical and policy significance. Theoretically, the findings contribute to the integrative literature on economic deterrence and social-psychological factors that are responsible for voluntary tax compliance decisions. The parallel moderating roles of the two variables on the relationship between procedural justice and voluntary cooperation in a single model and in the tax compliance context are novel. In terms of applicability to policy formulations, they shed light on the need for a shift from a pure focus on aggressive tax audits and penalties, especially in emerging economies to a combination of the tax audits and the nurturing of the voluntary deference of taxpayers to the tax authority's decisions. Caution must, however, be taken that the results of this study may not be applicable to tax environments in other countries.

Factors influencing Voluntary Tax Compliance Among Small and Medium sized Enterprises in Kenya

Tax compliance is essential for generating revenue to fund government activities and public services. Despite the efforts of the Kenyan Revenue Authority (KRA), compliance remains a challenge due to factors such as complex tax systems, high compliance costs, and negative taxpayer attitudes. The study examines the factors that influence voluntary tax compliance, including information availability, tax compliance costs, and individual attitudes and perceptions. It delves into tax compliance theories, such as the Contingency Theory of Taxation and the Ability to Pay Theory, shedding light on their impact on organizational behavior and financial performance. Empirical evidence from previous studies is discussed, highlighting the importance of tax education and the perception of tax fairness in promoting compliance. The study also identifies challenges specific to Kenya, such as a complex tax system, high compliance costs, and negative attitudes toward taxation, which hinder compliance, particularly among SMEs. It underscores the efforts made by the Kenyan Revenue Authority (KRA) to enhance compliance but acknowledges the persistence of challenges. The abstract concludes by emphasizing the need for a comprehensive understanding of tax compliance to ensure an equitable and efficient tax system that supports economic growth and national development in Kenya and other developing nations.

Justice, Trust, Perceived of Risk and Voluntary Tax Compliance in MSME

Background: Tax compliance has become a focused problem in various countries. Especially for developing countries with inadequate law enforcement, tax systems, and taxpayer awareness, this will indirectly impact high rates of taxpayer non-compliance. The issue of low taxpayer compliance is not a significant problem to solve, considering that the domino effect will cause more critical issues in the future. Objective: This study tries to demonstrate additional elements that affect tax compliance, such as the psychological factors of taxpayers and to find out the motives that influence taxpayers. It becomes essential to consider how a person's behavior is influenced by self-perception regarding the system, beliefs, and sanctions before the taxpayer finally voluntarily fulfills their tax obligations. Method: Through the use of a survey, this study employs a quantitative methodology. The poll was conducted via distributing Google forms with questionnaires for respondents to complete on their own. Then, using AMOS Graphic, structural equation modeling (SEM) analytic techniques were used to analyze the data. Results: This study demonstrates that trust and voluntary tax compliance are unaffected by conceptions of fairness (procedural justice, distributive justice, and retributive justice). Meanwhile, perceptions of risk and trust affect voluntary tax compliance. Conclusion: This shows that MSME taxpayers carry out voluntary tax compliance because they believe that the tax authority can detect non-compliance. In addition, MSME taxpayers increase voluntary tax compliance to avoid penalties due to tax risks arising from the internal and external risks they have. Keywords: voluntary tax compliance; perceptions of justice; trust; perception of risk; MSME

The Effects of Taxpayer Education Programs on Voluntary Tax Compliance amongst SMEs in the Fast Foods Industry in Zimbabwe: Systematic Literature Review

This literature review critically assesses the impact of taxpayer education programs on tax compliance by Small and Medium Enterprises (SMEs) in Zimbabwe's fast-food industry. Given the sector's economic importance, the study aims to synthesize existing research on how these programs affect SMEs' understanding of tax regulations, awareness of compliance benefits, and intentions to comply. It systematically analyses methodologies, findings, and limitations of prior studies, employing meta-analysis for quantitative research and qualitative assessment for deeper insights. This review highlights the potential of taxpayer education to enhance voluntary tax compliance among SMEs in Zimbabwe's fast-food industry. Its findings have implications for policymakers, tax authorities, and practitioners seeking to improve tax compliance strategies. These insights can inform more tailored and effective educational interventions, ultimately benefiting government revenue, business sustainability, and economic growth in Zimbabwe.

Fostering a Culture of Voluntary Tax Compliance among the Construction Contractors; Drivers and Barriers at Firm and Policy Level

Effective tax money collection is crucial for any modern sphere of economic development. This research explores the unique challenges faced by construction contractors in meeting tax obligations and the factors that drive their compliance behavior. The study investigates the reasons behind noncompliance, including factors such as complex tax codes, financial constraints, inadequate knowledge and understanding of tax requirements, and perceived unfairness in the tax system. Additionally, the research explores factors that can encourage contractors to voluntarily comply with tax obligations, such as the benefits of maintaining a good reputation, avoiding penalties, and accessing government incentives. A literature survey was undertaken to identify drivers and barriers behind voluntary tax compliance. A questionnaire was piloted on five (5) senior construction practitioners those who have more than 25 years working experience to establish the appropriateness of the questions and alleviate the inconsistencies, if any. A structured questionnaire survey was subsequently carried out to test the reality on the ground. Based on the findings, the study suggests 13 key determinants inspiring voluntary tax compliance, 8 drivers that effectively encourage voluntary tax compliance and 19 reasons behind tax evasion in the construction industry. By addressing these drivers and barriers, this research aims to foster a tax system that enhances voluntary compliance at two tiers namely, firm and policy.

THE INFLUENCE OF SUBJECTIVE NORMS, TAX SOCIALIZATION AND TAX ADMINISTRATION SERVICES TO MSMES INDIVIDUAL TAX COMPLIANCE WHO REGISTERED AT NORTH JAKARTA REGIONAL TAX OFFICE

Indonesia's tax ratio is at a lower level compared to countries that are members of the G-20 and ASEAN, the Covid-19 pandemic has leads Internal Service Revenue to make a reform from digitizing tax administration services and tax socialization. Tax incentives provided for all Indonesian people who get affected by Covid-19 is expected to increase the subjective norms of the society, especially MSME individual’s voluntary tax compliance level. This Study was conducted on individual MSME taxpayers registered at the North Jakarta IRS, and has a hypothesis that subjective norms, tax socialization and tax administration services have a positive and significant effect on the tax compliance of MSME individual taxpayers. The results of data analysis with Smart PLS 4.0, the result indicates that the hypothesis can be accepted and supported except for tax socialization.

Tax Compliance Challenge through Taxpayers’ Typology

Tax compliance has become a very popular academic research topic. Understandably so, as all modern societies face the challenge of limiting tax evasion and the losses this phenomenon causes to government revenues. Given the increase in duties in the aftermath of the economic downturn affected by COVID-19, increasing taxpayer compliance is one of the main tasks for governments worldwide. This study aimed to identify critical gaps in understanding taxpayer heterogeneity. For this purpose, an exploratory factor analysis of taxpayer perceptual and attitudinal elements was carried out. Our analysis revealed six factors influencing taxpayer compliance with the tax system. Furthermore, the cluster analysis identified four groups of taxpayers, and significant differences between the clusters and the descriptive profile of each cluster were also found. The specificities of these clusters point to a conclusion that the time has come for policy makers to employ strategies that stimulate voluntary tax compliance with minimum cost to the tax system.