The influence of profitability, leverage, firm size and. Tax avoidance lowers your tax bill by structuring your transactions so that you reap. Religiosity and tax avoidance the journal of the american. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of etaxation in 2015 has affected tax revenue, federally collected revenue and taxtogdp ratio. Forum on international tax avoidance and evasion 703 national tax journal vol. Murray abstract a national retail sales tax has surfaced as a potential replacement for the current system of federal income taxation. This paper first presents theoretical models that integrate avoidance and evasion into the overall decision problem faced by individuals. Taxation of corporations and their impact on economic. International journal of the economics of business. This study was on the causes and effect of tax evasion and avoidance on the economy board of internal revenue in abia state. On the contrary, the general feeling among people is that tax avoidance is an unethical behavior, mainly because it is used by large. We provide guidance in this area by summarizing the various measures used, highlighting the difference between measures of conforming and nonconforming tax avoidance, and discussing the benefits and. The journal of international accounting, auditing and taxation publishes articles which deal with most areas of international accounting including auditing, taxation and management accounting.
We document that the probability to use various avoidance techniques rises strongly with wealth, but that tax avoidance is far from systematic even at the very top of the wealth distribution. Taxation, imposition of compulsory levies on individuals or entities by governments. Data were collected through documentary analysis, questionnaires and. For information about journal activity and data, view the journal of the american taxation association journal information packet by clicking the thumbnail above. Pdf tax evasion and avoidance are both phenomena that are probably as old as taxation itself. An analysis of double taxation treaties and their effect on foreign direct investment.
Although from an economic point of view, legal considerations apart, tax avoidance, tax evasion and tax flight have similar effects, namely a reduction of revenue yields, and are based on the same. Tax avoidance generates investment distortion in the form of the purchase of assets exempted from tax or undervalued for tax purposes klabel and nwokah, 2009. A primary concern is that the revenueneutral required tax rate may easily exceed 30 percent, leading to tax. This paper first presents theoretical models that integrate avoidance and evasion into. Expressive law legality moral appeals tax avoidance tax evasion real. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well.
Tax avoidance is not just a financial problem for tax authorities, but one that erodes critical common spaces necessary for the smooth functioning of regulatory compliance, organizational integrity, and society. To read the latest editor report, click the doi link below. Based on explanation above, the fisrt hypothesis of this study is. One reason for the limited role of taxation provisions in iias is that the inclusion of taxation matters can sometimes unduly complicate and draw out iia negotiations and decrease the chances of successful conclusion. Journal of competitiveness taxation of corporations and their impact on economic growth. This study is about the impact of tax evasion on revenue collection performance in tanzania. This paper outlines a general set of principles for tax avoidance. Corporate governance, incentives, and tax avoidance abstract we examine the link between corporate governance, managerial incentives, and corporate tax avoidance. Impact of tax administration on government revenue in a developing economy. The international challenges and finnish corporate taxation.
The effect of corporate governance on tax avoidance. In a perfect capital market, these methods would enable the astute taxpayer to. Basic international taxation second edition volume i. Corporate social responsibility, tax avoidance, and earnings. Gordon keith the impact of the federal tax system on small business has been a matter of increasing interest and concern to many persons durinj the last few years. Avoidance takes the form of investment in arts collection, emigration of persons and capital. The effect of tax evasion and avoidance on nigerias. The purpose of this paper is to examine the ethics of tax avoidance. One of the main trends in finnish corporate taxation during the last ten years has been the lowering of the corporate tax rate. Journal of poverty, investment and development an open access international journal vol. The source4 and residence5 concepts of international taxation have sought to eliminate double taxation and tax. Wooldridge, 2007, lecture notes 14, summer 07, available at pdf, for.
Tax avoidance and multinational firm behavior scott dyreng duke university michelle hanlon mit comments welcome abstract. Institutional shareholders investment horizons and tax. Evidence from a controlled experiment in minnesota, national tax journal. Numerous experimental and survey results concluded by tax researchers have identified characteristics of noncompliant taxpayers because tax revenues are seen as a major source of income in funding government expenditures. Especially taxation of corporations has great importance because a corporate tax. Taxation papers are written by the staff of the european commission s directorategeneral for taxation and customs union, or by experts working in association with them. Most downloaded journal of international accounting, auditing and taxation articles the most downloaded articles from journal of international accounting, auditing and taxation in the last 90 days.
We investigate why temporary booktax differences appear to serve as a useful signal of earnings persistence hanlon 2005. September 2018 and france are doing more tax evasion, while tax evasion is mostly done in flemish, walloons. The culture of tax avoidance by henry ordower ssrn. Tax avoidance is the legitimate minimizing of taxes and maximize after tax income, using methods included in the tax code. Tax avoidance and corp avoidance and corporate capital structure. Although tax avoidance practices are as old as taxes themselves, the ways they are being perpetrated among corporate taxpayers have transmuted so sophisticated in recent times. This study examined the impact of etaxation on nigerias revenue and economic growth. Alexander edwards, casey schwab, and terry shevlin 2016 financial constraints and cash tax savings. Taxation papers are intended to increase awareness of the work being done by the staff and to seek comments and suggestions for further analyses.
An empirical study of tax evasion and tax avoidance. Jun 10, 2016 defining tax avoidance as a sustainability problem offers a broader and more holistic understanding of the organizational and societal consequences of tax avoidance behavior. Effects of tax evasion on government revenue generation in oyo state, nigeria folayan d. Profitability has a negative influence towards tax avoidance. Businesses avoid taxes by taking all legitimate deductions and tax credits and by sheltering income from taxes by setting up employee retirement plans and other means, all legal and under the internal revenue code or state. It examined specific factors for rising tax evasion and establishing mechanism to curb the problem. International tax avoidance and evasion congressional research service 1 introduction the federal government loses both individual and corporate income tax revenue from the shifting of profits and income into low tax countries. All pdf papers are searchable using the find utility in adobe acrobat reader. This paper first presents theoretical models that integrate avoidance and. Luke watson 2015 corporate social responsibility, tax avoidance, and earnings performance. Subsequent research on whether governance curbs tax avoidance is mixed. This study was designed to identify the effects of tax evasion on government revenue generation in oyo state. Impact of tax administration on government revenue in a.
The journal takes a wideangle approach to taxpayers and tax topics, covering individuals and corporations, estates and trusts, partnerships and. Financial constraints and cash tax savings the accounting. An analysis of double taxation treaties and their effect on. Sustainability is also a mature and legitimized concept that can readily incorporate taxation. World tax journal october 2014 243 an economic perspective on double tax treaties within developing countries 1. Corporate governance, incentives, and tax avoidance. Pdf the value implications of tax avoidance across countries. Moser 20 institutional shareholders investment horizons and tax avoidance. The results show that the company tax avoidance in various ways.
Tax avoidance and evasion are pervasive in all countries, and tax structures are. Manasan introduction just as deathand taxes arecertainties in this world, so are ways and meansto minimize ifnot eliminatealtogether ones tax liabilities. The decision to lower the corporate tax rate to 20% from the beginning of 2014 also changed the approach in reforming the corporate taxation as it was decided to stay on the grounds of a broad tax base and not to make loopholes in it with targeted exceptions. One reason for the limited role of taxation provisions in iias is that the inclusion of taxation matters can sometimes unduly complicate and draw. G department of accountancy, osun state college of technology, esaoke, nigeria abstract. Standard models of taxation and their conclusions must reflect these realities. It should be distinguished from tax avoidance, which consists in trying to reduce ones taxable income by exploiting the tax law while staying inside its boundaries. The effects of property taxes and public service benefits on housing values. Wooldridge, 2007, lecture notes 14, summer 07, available at, for.
Taxation 2 iia issues paper series tax provisions do not typically form a principal part of iias, partly owing to the existence of the taxspecific dtts. An economic perspective on double tax treaties within. Tax avoidance and evasion are pervasive in all countries, and tax structures are undoubtedly skewed by this reality. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria. Journal of the australasian tax teachers association 2008 vol. The journal s goal is to bridge the gap between academic researchers and practitioners by publishing papers that. Taxation of corporations and their impact on economic growth. Article pdf available in journal of accounting, auditing and. The economics of tax evasion joel slemrod n o government can announce a tax system and then rely on taxpayers sense of duty to remit what is owed. Why avoidance, evasion and administration are central, not peripheral, concepts. John mclaren the distinction between tax avoidance and tax evasion has been well established in the australian taxation system. Impact of etaxation on nigerias revenue and economic growth.
The article argues that over the past half century or longer, multiple factors have contributed to and fused into a culture of tax avoidance. Tax avoidance and tax evasion what is the difference. Tax evasion is an illegal activity which aims to hide taxable income from the view of the tax authorities. Most of at least the common tax avoidance schemes can be reinterpreted as making use of one or more of these principles. The source4 and residence5 concepts of international taxation have sought to eliminate double taxation and tax avoidance6.
Tax provisions do not typically form a principal part of iias, partly owing to the existence of the tax specific dtts. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. Defining tax avoidance as a sustainability problem offers a. We first test and show that temporary booktax differences provide incremental information over the magnitude of accruals for the persistence of earnings and accruals. This study thus proposes models for empirical investigations into the relationship between corporate ownership structure and corporate tax avoidance in malaysia.
Some dutiful people will undoubtedly pay what they owe, but many others will not. Because wealthy individuals are generally believed to have more tax avoidance opportunities than others and because, within the population of wealthy tax evaders, we should expect the evaders with more avoidance opportunities to be. Journal of international accounting, auditing and taxation 36, 100270. Effects of tax evasion in the united states an honors thesis presented to the department of accounting. Tax avoidance tax avoidance may simply be defined as the reduction or minimization of a persons tax liability by carefully arranging ones affairs in such a way as to take advantage of loopholes in the tax law provisions. Introduction taxation as defined by anyanwu 1997 is a compulsory levy by the government on individuals, companies, goods and services to raise revenue for its.
We characterize optimal individual tax evasion and avoidance when taxpayers narrow bracket the joint avoidanceevasion decision by exhausting all gainful methods for legal avoidance before choosi. Corporate social responsibility, tax avoidance, and. The reason for these agreements coming into play was in cases where a person having source of income in india was the resident of another country. Pdf this study examines the various measures of corporate tax avoidance that have. The article addresses general anti avoidance rules as evidence of the prevalence of intensive outside the united states and works in greater detail with swedish and german aggressive tax planning.
Calls for linking taxation, tax avoidance, and human. The journals goal is to bridge the gap between academic researchers and practitioners by publishing papers that. Attempts to escape the tax net may take any one of two forms. Apr 09, 2012 a separate branch in the law of taxation has been developed in india after a number of dtaas double taxation avoidance agreements entered into by india with several foreign countries. The journal of taxation is your trusted resource for new tax law developments, including court decisions, treasuryirs rulings, legislation and other issues that may impact you and your clients. Tax avoidance, agency costs, institutional ownership. Hanlon and heitzman 2010 proposed a measure for the conforming tax avoidance, which has not receivedany empirical investigation. The effect of tax evasion and avoidance on nigerias economic. Tax avoidance as a sustainability problem springerlink. Tax evasion in the philippines, 19811985 rosario g.
Apr 28, 2010 the article addresses general anti avoidance rules as evidence of the prevalence of intensive outside the united states and works in greater detail with swedish and german aggressive tax planning. Allingham and agnar sandmo university of pennsylvania, philadelphia, u. Department of accounting, kogi state university, anyigba, nigeria. The journal of the american taxation association, vol. Tax avoidance, large positive temporary booktax differences. We find that 1 evasion is an increasing function of the audit probability when the latter is low enough, yet tax avoidance is always decreasing in the probability of audit. This manuscript proposes that tax avoidance can be better understood and mitigated as a sustainability problem. The tax avoidance involves the use of tax shelters, and immediate benefits include higher profit margins and likelihood of meeting or beating analyst expectations. Similar to other investment opportunities that involve risky expected cash flows, unresolved agency problems. We document that the probability to use various avoidance techniques rises strongly with wealth, but that tax avoidance is far from systematic even at. Collectively the results shed light on the effect of increased ownership concentration on tax avoidance. The journal s goal is to bridge the gap between academic researchers and practitioners by publishing. Institutional ownership and corporate tax avoidance.
The individual income tax, national tax journal, 421 pp. Consequences and evidence of tax evasion and avoidance. Tax evasion and avoidance have adverse effect on government revenue. Firms with an ongoing focus of general tax avoidance may be willing. The advantages of efficiency and lower cost to run business of the person in one part of the world can be earned in any part of the world. For decades, researchers of tax systems and taxation as a whole are in a dilemma on the factors affecting taxpayers noncompliant behaviors. International journal of business and social science vol. Journal of the house of representatives of the state of vermont. A primary issue in the empirical tax avoidance literature is the researchers definition and measurement of tax avoidance.
Journal of international accounting, auditing and taxation. The case of eu countries baranova veronika, janickova lenka abstract one of the most debated questions in economy is the relationship between tax rates and economic growth. The nigerian tax codes have neither defined nor drawn any distinction between tax evasion and tax avoidance. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria.
143 1611 816 1517 731 1125 307 921 717 624 267 448 579 898 992 351 632 231 1427 1412 1154 1586 53 506 149 578 695 1552 568 871 455 948 615 1120 714 979 330 1216 1308 648 230 663