We present an algorithm that can anticipate tax evasion by modeling the co-evolution of tax schemes with auditing policies. Malicious tax non-compliance, or evasion, accounts for billions of lost revenue each year. Unfortunately when tax administrators change the tax laws or auditing procedures to eliminate known fraudulent schemes another potentially more profitable scheme takes it place. Modeling both the tax schemes and auditing policies within a single framework can therefore provide major advantages. In particular we can explore the (...) likely forms of tax schemes in response to changes in audit policies. This can serve as an early warning system to help focus enforcement efforts. In addition, the audit policies can be fine tuned to help improve tax scheme detection. We demonstrate our approach using the iBOB tax scheme and show it can capture the co-evolution between tax evasion and audit policy. Our experiments shows the expected oscillatory behavior of a biological co-evolving system. (shrink)

The purpose of this paper is to examine income tax evasion in Jordan and set forth various cures for this problem.

The paper focuses on the consumer side of consumption tax evasion (CTE), a subcategory of the shadow economy. The ethical dimensions of tax evasion have been effectively captured by the existent literature on tax morale, yet it fails to address the role consumers can play in CTE. Further, there is a shortage of tax morale studies that explore ethical decision making as a process composed of multiple steps and determinants. To bridge these gaps, we turned to the consumer (...) ethics literature and Jones’ issue-contingent model of ethical decision making. We developed the conceptual model of consumer ethical decision making for CTE by incorporating four key elements from the issue-contingent model, i.e. moral recognition, moral judgement, moral intention and moral intensity, while personal moral philosophies were introduced as an antecedent to the consumer ethical decision-making process. The study was conducted on a sample of consumers from Slovenia, where CTE is a widespread phenomenon. The findings confirm that consumers’ recognition of CTE as a moral issue is influenced by their moral philosophy and perceptions regarding the magnitude of CTE’s consequences, their visibility, probability, and temporal immediacy. These perceptions also play an important role in determining consumers’ moral judgements and intentions regarding CTE. Moreover, through the process of moral recognition and moral judgement, consumers form intentions to participate in, or avoid CTE. The study holds important implications for public policy makers who are trying to reduce the tax gap in times of economic instability and fiscal crisis. (shrink)

This paper focuses specifically on how religions shape attitudes towards ethics of tax evasion. Firstly, the paper begins with an overview of the four views on the ethics of tax evasion that have emerged over the centuries, then goes on to review some of the theoretical and empirical literature on the subject. The empirical part of the study examines attitudes toward tax evasion in 57 countries from the perspectives of six religions using the data from Wave 6 (...) of the World Values Survey. The sample population is more than 52,000. More than a dozen demographic variables were examined. The results study found that attitude toward cheating on taxes does differ by religion. (shrink)

The ethics of tax evasion has been discussed sporadically in the theological and philosophical literature for at least 500 years. Martin Crowe wrote a doctoral thesis that reviewed much of that literature in 1944. The debate revolved around about 15 issues. Over the centuries, three main views evolved on the topic. But the business ethics literature has paid scant attention to this issue, perhaps because of the belief that tax evasion is always unethical. This paper reports the results (...) of an empirical study of opinion in Utah and Florida. A survey of accounting students was conducted to determine the extent of their agreement or disagreement with the 15 main issues that Crowe (1944) identified plus three more recent issues. The arguments that have been made over the centuries to justify tax evasion were ranked to determine which arguments are strongest and which are weakest. Scores were compared between samples to determine whether the responses were significantly different. (shrink)

In 1944, Martin Crowe, a Catholic priest, wrote a doctoral dissertation titled The Moral Obligation of Paying Just Taxes. His dissertation summarized and analyzed 500 years of theological and philosophical debate on this topic, much of which took place in Latin. Since Crowe’s dissertation, not much has been written on the topic of tax evasion from an ethical perspective, with a few exceptions. In 1998 and 1999, a few articles were published on the ethics of tax evasion in (...) the Journal of Accounting, Ethics & Public Policy. An edited book on this topic was published in 1998. The present paper summarizes, updates and expands on Crowe’s work and the other more recent work that has been published on this topic. Three basic views on the ethics of tax evasion have emerged over the centuries. This article presents and critiques those three views and raises some questions about points that have not yet been explored in the literature. (shrink)

The most disturbing aspects of the growth of underground economies are the interrelated problems of unreported and unrecorded income. A large and growing underground economy can thwart fiscal efforts to establish budget balance and may significantly undermine the veracity of a nation's economic information system. The notion that economic information is itself endogenous raises the possibility that at least part of the economic malaise observed in most Western nations during the past two decades is essentially the result of a statistical (...) illusion. The essays in this 1989 volume examine the problems of defining, measuring and understanding the implications of the underground economies that have emerged in many of the world's developed nations. Empirical chapters examine the conceptual problems of how to measure a phenomenon that attempts to defy detection. Alternative measurement procedures are evaluated. Specific studies are included for the United States, the Netherlands, the United Kingdom, Germany, Sweden, Italy, Norway, Canada, France, the Soviet Union and Hungary. (shrink)

This paper explores attitudes regarding tax evasion and the relationship between personal moral philosophy and such attitudes in a weak tax environment. The results confirm the multidimensionality of tax evasion attitudes. Idealism was negatively related to self-interest tax evasion attitudes while relativism was positively related to such attitudes. Idealism was also positively related to tax evasion attitudes stemming from concerns about the justice of the tax system. Idealists in a weak tax environment seemingly go through a (...) cognitive reframing process where they recognize that the tax system is unfair, and accordingly tax evasion is a way to serve a different moral absolute, that is of equity, rather than another different moral absolute, which is fulfilling obligations to governments. The results are also explained in light of the suggested low moral intensity of tax evasion among respondents. Policy implications are presented. (shrink)

The present research aimed to determine the Machiavellian orientations of tax administration auditors in Tunisia when faced with aggressive tax evasion strategies. To this end, we sent questionnaires to 119 executives of Tunisian tax authorities in charge of the tax auditing missions classified into three categories: central inspector, chief inspector and general inspector. The data were analysed using the structural equation method. Statistical results show that auditors from the tax administration, with weak Machiavellian orientations, ethically judge aggressive tax (...) class='Hi'>evasion strategies and strongly believe in the importance of CSR. Thus, the results show that engagement in CSR practices plays a central role between the Machiavellianism of the tax authorities’ auditors and the dubious practices of tax evasion. The current study is the first attempt to analyse the effect of Machiavellian orientations of professionals and CSR practices on tax evasion in the Tunisian context. (shrink)

In this study, we reconcile conflicting findings from the extant literature on the impact of tax system parameters on tax noncompliance. We argue that social norms play a role of heuristics facilitating tax payers’ response to the instrumental incentives posed by the systemic parameters, such as tax rate and penalties for evasion, and thus moderate the effect of those parameters on willingness to evade taxes. Relying on a unique survey experiment conducted in fourteen countries of Central-Eastern Europe, we demonstrate (...) two types of a conditioning effect of norms. First, the impact of tax rates on respondents’ propensity for tax evasion is moderated by the perceived norms of the society at large. In particular, an increasing tax rate lowers the probability of evasion as long as one views “most others” as honest taxpayers, which highlights the importance of equitability concerns for tax compliance decisions. In contrast, the impact of punishment is moderated by the perceived norms of one’s immediate reference group. Strong subjective compliance norms tend to effectively replace penalties as a mechanism discouraging tax evasion, suggesting that the deterrent effect of a penalty can be entirely suppressed when subjective norms are strong. These findings have important implications for the understanding of tax compliance decisions under different formal and informal regimes. (shrink)

Increasing the tax compliance of self-employed business owners—particularly of trade-specific service providers such as those involved in construction and repair work—remains an ongoing challenge for tax authorities. From a compliance point of view, cash transactions are particularly problematic when services are paid for on the spot, as these exchanges are difficult to audit. We present experimental evidence testing ten different policy strategies rooted in the enforcement, service, and trust/social paradigms, in a setting that allows payment either via a transaction that (...) directly reports income for tax collection purposes or in cash, where taxes are only collected on reported income. Our sample includes both a typical subject pool of students, as used in most previous studies, and non-students who are active within service industries characterised by the opportunity to engage in cash transactions. While our comparative results show that, for both student and non-student participants, interventions that rely on greater enforcement by the tax authority have the greatest effect on compliance in our cash economy setting, treatments involving cooperative elements may be similarly effective in enhancing tax compliance. Given their effectiveness, cooperative approaches should therefore be considered for addition to the policy mix if implemented at relatively low costs, making both carrot and stick approaches promising to increase compliance in an environment where cash-for-service payments offer a common benefit for small businesses and their customers from implicit collusion that enables tax evasion. (shrink)

This article begins with a review of the literature on the ethics of tax evasion and identifies the three main views that have emerged over the centuries, namely always ethical, sometimes ethical, and never or almost never ethical. It then reports on the results of a survey of HK and U.S. university business students who were asked to express their opinions on the 15 statements covering the three main views. The data are then analyzed to determine which of the (...) three viewpoints is dominant among the sample population. Although it was found that HK scores were significantly different from the U.S. scores, both HK and U.S. respondents were opposed to the view that tax evasion is always or almost always ethical. The strongest arguments justifying tax evasion were in cases where the government was corrupt, the tax system was unfair and unaffordable. The weakest arguments for justifying tax evasion were in cases where there was a selfish motive. The underlying cultural differences are further explored in hope of accounting for differing perceptions of ethics of tax evasion. Policy implications for increasing people’s awareness of ethics on tax evasion are also highlighted. (shrink)

The motivation to comply or not to comply is considerably influenced by beliefs, attitudes, and social representations of taxpayers. These subjective conceptualizations and evaluations are often not objective or true, but they determine how citizens construct their subjective reality. Attitudes, judgments, and behavior intentions eventually shape people’s behavior which is often more affected by what they think than by what actually is. We first explain what social representations are, how they are related to individual attitudes, and to what extent both (...) social representations and attitudes shape behavior according to the existing psychological literature. In the following section we present three of our own studies on taxpayers’ social representations of taxes and their attitudes towards tax evasion and tax avoidance. These empirical studies identify relevant differences in attitudes between different occupation groups: Self-employed entrepreneurs express less favorable views on taxes and the tax authorities and as a result feel more restricted and hindered in their work, while employed workers focus stronger on the exchange function between tax payments and the resulting provision of public goods. Despite the differences, in all occupation groups tax evasion is not perceived as a severe crime and tax evaders are even judged quite positively and as more intelligent than the typical tax payer. The most recent study suggests that tax evasion might not be evaluated as positive anymore as in earlier studies, but instead tax avoidance seems to be morally accepted and taxpayers engaging in tax avoidance are judged more positive than the typical taxpayer. (shrink)

Economic theory and practice of developed countries have shown that the good functioning of market economies requires the existence of stable institutions that are effective in the application of legal rules as a precondition for the proper functioning of the economic and fiscal system. In the process of building a market economy in Southeast European countries, along with the sector of legal economy there coexists a large sector of shadow economy, tax evasion and high levels of corruption. Analyses made (...) by many authors and relevant national and international institutions estimate that the amount of the shadow economy, tax evasion and corruption in the analyzed countries despite a declining trend in the last decade continues to be at the level of 25-50% compared with the legal sector of the economy. The author aims through a comparative approach to analyze the level of the shadow economy, tax evasion and corruption in the economies of Southeast Europe and provides some recommendations for governments to overcome these negative phenomena. (shrink)

The ethics of tax evasion has been discussed sporadically in the theological and philosophical literature for at least 500 years. Martin Crowe wrote a doctoral thesis that reviewed much of that literature in 1944. The debate revolved around about 15 issues. Over the centuries, three main views evolved on the topic. But the business ethics literature has paid scant attention to this issue, perhaps because of the belief that tax evasion is always unethical. This paper reports the results (...) of an empirical study of opinion in Utah and New Jersey. A survey of business students was conducted to determine the extent of their agreement or disagreement with the 15 main issues that Crowe (1944) identified plus three more recent issues. The arguments that have been made over the centuries to justify tax evasion were ranked to determine which arguments are strongest and which are weakest. Scores were compared between samples to determine whether the responses were significantly different. (shrink)

In this article we argue that puzzle of tax compliance can be explained, at least in part, by recognizing the typically neglected role of ethics in individual behavior; that is, individuals do not always behave as the selfish, rational, self-interested individuals portrayed in the standard neoclassical paradigm, but rather are often motivated by many other factors that have as their main foundation some aspects of “ethics.” We argue that it is not possible to understand fully an individual’s compliance decisions without (...) considering in some form these ethical dimensions. Specifically, we argue here that there is much direct and indirect evidence that ethics differ across individuals and that these differences matter in significant ways for their compliance decisions. We then put this in the larger context of the inability of the standard neoclassical paradigm to explain compliance of at least some individuals, and we suggest several possible avenues by which theory can be expanded to incorporate ethics. We conclude by arguing that a full house of compliance strategies is needed to combat tax evasion, strategies that include the traditional “enforcement” paradigm suggested by and consistent with neoclassical theory, a less traditional “service” paradigm that recognizes the important role of a “kinder and gentler” tax administration in encouraging compliance, and, importantly, a new “trust” paradigm that is built on the foundation of ethics, in which the tax administration must recognize that it can erode the ethics of taxpayers by its own decisions. (shrink)

Prior research shows taxpayers’ perceptions of fairness leads to greater cooperation and compliance with tax authorities. Yet our understanding of tax fairness has been hampered by its general reliance upon models and measures of fairness developed by organizational fairness research, even though fairness is a perception subject to contextual influences. Accordingly, we attempt to gain insight into the influence of contextual factors on fairness through the development of a theoretically based and empirically derived model of tax fairness, grounded in organizational (...) literature, but empirically tested in the tax context. Our analysis shows the extent to which items and dimensions found in the organizational fairness literature reflect taxpayers’ perceptions of tax fairness. Most importantly, our findings contribute to fairness research by identifying the role of relevant comparison groups in affecting perceptions of fairness, and thereby extends our understanding of the role of context in affecting fairness perceptions. Furthermore, by identifying the dimensions and items incorporated in perceptions of tax fairness, our study provides a foundation for tax researchers and policy makers to determine how best to promote voluntary taxpayers’ compliance and in so doing, mitigate tax avoidance and tax evasion. (shrink)

This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer “a way out” of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes. This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of (...) the morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity’s tone at the top. The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report. (shrink)

The Umayyad State is widely criticized in the West as well as in its own region. Actually, this is normal situation. Because Hijaz Arabs who had no state experience, built a multinational state in short period of time. Yet, this caused serious matters. The fundamental point of the criticism is the payment of tax, also called jizya, which is taken from residents (mawālī) of Khorasan and Transoxania. However, in most studies on this subject, it is understood that the jizya taken (...) from mawālī is combined jizya and kharja, which is different type of tax. Although mawālī was tested for whether it passes religious criteria in critic periods or not, this situation did not last throughout the entire Umayyad history. It was continued for fifteen and twenty years. In this period, it was understood that the jizya tax taken from the mawālī, was caused by the unlawful practices of some regional governors, most of them were non-Muslim local tax officials and all their purpose was to collect the amount of combined jizya. It cannot be said that the Umayyad caliphs officially ordered written instructions in order to take the conceptual sense from the mawālī part. But some Khorasan governors, who detected that taxes were decreasing, blinked at the collection of the jizya from the mawālī.Summary: The tax policies of a state are of great importance for the political, social, and economic stability. A regular tax system minimizes the problems that the state mechanism might face. The establishment of a fair and just tax scheme is undoubtedly possible with a deep-rooted state experience. It is known that the Umayyad state which is the subject of this research has no state experience. Furthermore, ruling to the area which is on 13 million square kilometers and reaching to Kashgar in the East and to South France in the West and governing this multinational structure who are living on these regions, put the Umayyad government in a very difficult condition. With the vast borders and the stoppage of the conquests, some political, social and economic problems were experienced and these problems deeply affected the government. The groups which had argued with Shiites and Khārijites because of some various reasons led the country into collapsing. It is also known that many plague epidemics in the region of Damascus affected the society in a negative way, changing the capital and changing some of the border cities in favor of the Eastern Roman Empire.All these negativities certainly shaken the Umayyad state economically. It is understood from the data that the instability and political uncertainties in the country led to a decrease in the tax rates. For example, the Umayyad caliph ‘Abd al-Malik İbn Marwān period, only half of the tax was collected at the time of Hazrat ‘Umar could be collected. It can be said that the public who avoided the general policies of the state avoided giving tax, in other words, the tax evasion. Also, the increasing migration from village to city and due to that, the vacancy of tribute tax collected land, failure to obtain expected yield because of rent fights on fertile lands, and conversion process in non-Muslim community are included in other reasons of reduction of taxes.In the Umayyad period, the issue of taking the jizya from the mawālī can be considered in this context. We do not have an independent work or research article on how this practice was initiated, how it was and how it was taken from mawālī, and how it was a state policy, and how long it was sustained. The studies that touch on this subject are far from being holistic. Even in the main sources it is seen that the concepts of kharāj and jizya are not fully understood and therefore used interchangeably. This may be considered normal for the first period in which the concepts are not in place. However, in the following centuries, the works that were copyrighted and, except for a few, instead of understanding and explaining this confusion, chose to use the word jizya from these two words which can be used interchangeably in texts. Therefore, this approach has led to the widespread conviction that the Umayyad state has taken jizya from the mawālī in the conceptual sense.Al-Ḥajjāj ibn Yūsuf is claimed to have started the application of taken jizya from mawālī. However, Haccac aimed to provide the regularity of both agricultural products and the kharāj which is taken from farmers because of the status of the soil by sending Sawad villagers who migrated to the big cities and became Muslims by changing their religions. The status of the lands seized was decisive in taxation. According to this, the conquest and the territorial lands were taxed differently, but in some cases the same tax (kharāj) was taken. Non-Muslims who living in the territory of conquest were demanded jizya per capita. The jizya and kharāj tax collected from this category can be expressed as “joint jizya”. Regardless of whether the person is a Muslim or not, the fact that he was demanded from him due to the status of the land was interpreted by some researchers as juristic. However, in times of political instability, it is also a fact that mawālī is demanding jury in addition to the tribute tax. The point that is misunderstood or interpreted is that this practice was carried out throughout the entire Umayyad territory and the history. When examined, this distorted tax concept is actually concentrated in the area of Transoxania. Although some attempts were made to take the jizya from the mawālī to the country, the Umayyad caliphs have not allowed it. The practice of taking the jizya from the mawālī is actually followed by the killing Qutayba ibn Muslim al-Bāhilī (d. 96/715). This started political instability in the Transoxania and continued by some Khurāsān governors. These governors act according to the provocations of the Turkish governors and tax collectors of the region in order to be able to send their taxes completely. They claimed that the region in the region was not a sincere Muslim and, they continued to take the jizya from them.It can be said that jizya is not demanded as it is taken from non-Muslims in the common meaning from mawālī. Because any Umayyad caliph wrote no written instructions regarding this issue in the sources. It is understood that until the caliphate of ‘Umar b. ‘Abd al-‘Azîz, the Umayyad caliphs were not even aware of this distorted tax policy in the area of Transoxania. To put it once again, this practice was initiated by some Khurāsān governors with the concern that tax revenues might decrease. However, it should not be forgotten that this unfair practice after 96/715 is limited to certain governors. For example, during the tenure of Naṣr b. Seyyâr, the last governor of Khurāsān (120-131 / 738-748), the jizya tax was completely removed from the mawālī. Another activity that shows this action is regional and that was ordered by some governors of Khurāsān. Therefore, this practice does not reflect the Umayyad state policy. This is also apparent in the fact that the Shiites, Kharijites, and those who carried out the Abbasid Revolution for thirty-two years, did not make an anti-Umayyad propaganda with provoking the slave by the way of wrong application. (shrink)

We conduct an empirical study on the determinants of the psychological costs of tax evasion, also known as tax morale. As a preliminary step, we build a model of tax evasion including non-monetary considerations, show the relationship between tax compliance and tax morale. In the empirical analysis of tax morale we find, using a binomial logit model, that the justification of tax evasion can be explained by the presence of grievance in absolute terms (those who feel that (...) taxes are too high, those who feel that public funds are wasted, and those who accept underground economic activities); and grievances in relative terms (the suspected level of others’ tax evasion). The sense of duty and the level of solidarity are also relevant factors, but to a lesser extent. (shrink)

This article tackles the issue of offshore tax sheltering from the perspective of normative political realism. Tax sheltering is a pressing contemporary policy challenge, with hundreds of billions in private assets protected in offshore trusts and shell companies. Indeed, tax sheltering produces a variety of empirical dilemmas that render it a distinctive challenge for global governance. Therefore, it is crucial for normative political theorists to confront this problem. A realist approach offers three distinct advantages, elaborated in the three subsequent sections (...) of the article. First, it relaxes the theoretical burden by starting from the real practice of tax evasion rather than from an abstract theory of equality or justice. Second, this approach recognizes that sheltering is a political harm: a threat to the very maintenance of order, not just a problem of inequality or injustice. If politicians fail at such polity maintenance, realism's ethic of responsibility provides clear political reasons why they should be held accountable. Third, realism's focus on power and its acceptance of coercion open up new strategies for addressing the problem that would not be allowed by theories with a stronger emphasis on consensus. (shrink)

Widespread tax evasion and avoidance have recently led to both significant reforms of international tax governance and increased attention from theorists of global tax justice. Against the background of an analysis of the double challenge of effectiveness and distribution facing the taxation of multinational enterprises, this paper puts forward a taxonomy of recent contributions of the tax justice literature. This taxonomy not only opens up an original angle of interpretation on global tax justice, but also provides a vantage point (...) from which to evaluate recent reforms by the Organisation for Economic Co-operation and Development. (shrink)

The relationship between tax authorities and taxpayers is essential for tax compliance. The aim of the present paper was to explore systematically the determinants of this relationship and related tax compliance behaviors based on the extended slippery slope framework. We used in-depth qualitative interviews with 33 self-employed taxpayers and 30 tax auditors. Interviewees described the tax relationship along the extended slippery slope framework concepts of power and trust. However, also novel sub-categories of power (e.g., setting deadlines) and trust (e.g., personal (...) assistance) were mentioned. Furthermore, also little-studied categories of tax behavior emerged, such as accepting tax behavior e.g., being available to the tax authorities, or stalling tax behavior e.g., the intentional creation of complexity. The results comprehensively summarize the determinants of the tax relationship and tax compliance behaviors. Additionally, results highlight future research possibilities and illustrate policy interventions. (shrink)

This study reports findings of gender differences in tax attitude changes influenced by better tax knowledge. Male students are more exposed to tax knowledge in a way that makes them reconsider more easily their attitudes towards their own tax evasion, i.e. tax ethics, than their female peers. Male students get a significantly stricter attitude towards their own tax evasion. On the other hand, female students are more exposed to tax knowledge in a way that makes them reconsider their (...) attitude towards other people's tax evasion than their male peers, i.e. they get a significantly stricter attitude towards others tax evasion. Improved tax knowledge significantly changed both male and female students attitude towards the fairness of the tax system, i.e. they considered the tax system to be more fair. Implications for ethical behaviour of taxpayers are highlighted. (shrink)

The issue how to reduce of tax evasion is widely discussed in the literature. A public authority may affect the behavior of taxpayers, not only through economic factors, but also by strengthen fiscal discipline. In this process especially role play such issues as tax morale, tax mentality and perceived tax justice. The purpose of the study was to identify groups of taxpayers with similar attitudes towards taxes and similar tax behaviors. Cluster analysis elicited four types of tax payers: Intrinsic (...) Tax Payer, External Tax Payer, Intrinsic Tax Evader, External Tax Evader. In the study the most common were the first two types of taxpayers. Elicited types correspond with motivational tax postures identified by Braithwaite and Torgler. The conclusions sum up the key issues discussed, policy implications and the limitation of the analysis. (shrink)

Tax havens and tax secrecy have risen to the top of the global policy agenda and may constitute the most important impediment for reducing inequalities. Moreover, complex corporate structures allow charging for services undertaken in various countries through one low-tax country. Transferring profits to low-tax jurisdictions will significantly reduce a multinational corporation’s overall tax burden. Individuals are assisted in opening shell corporations that officially own bank accounts where the real owner is not revealed. Reducing this practice of tax dodging has (...) proven to be difficult, despite substantial efforts by several international organizations and states over the last decade. It is too easy to be removed from the list of tax havens; mere membership in OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes qualifies. Tax dodgers add to global inequalities and severely weaken states’ capacity to undertake their task of creating a solid tax base, embedded in the principle that all actors are taxed according to the income generated in each country. A weak tax base will lead to less trust, more violence and more deaths. Keywords: country-by-country reporting, EU, OECD, tax avoidance, tax evasion, tax havens. (shrink)

Tax compliance has been extensively researched. Yet, the classic question ‘why do people pay taxes?’ remains unanswered. In Jordan, tax evasion is widespread. The state and citizens have been trapped in a continuous hide-and-seek game, which has taken the form of a virtuous cycle. This paper investigates tax evasion along with the most noticeable features of the Jordanian tax system. It also highlights how the virtuous cycle of tax evasion has been established and what could possibly be (...) a way out of it. We argue that sociocultural values are the most prominent cause for tax evasion. That is, the procedures of state formation and functionality in Jordan have created mutual distrust between the state and its citizens. Having been raised in a community characterized by deep distrust, tax evasion is no longer considered immoral by substantial numbers of the Jordanian population. We argue that successive governments need to create a high-trust-based culture and formulate strategies that serve to acquire normative ethical values in order to enhance voluntary compliance. The way to accomplish this necessity is through enforcing the state’s transparency and accountability. The taxation system needs to concentrate on income tax rather than raise tax rates on essential commodities to collect substantial tax revenues. Thus, further reform of the taxation system along with a reduction in tax incentives need to be considered. Moreover, lowering the exceptionally high personal income tax threshold would bring Jordan in line with its peers, expand the base, and introduce more progressivity. There would also be a scope to introduce a minimum tax based on sales as a tool to address tax evasion. (shrink)

Evasion of value added tax (VAT) is a pressing criminal justice problem; however, there still are no theoretical studies on the specific nature of this offense and the basis of its legal evaluation. This article is an attempt to explain the preconditions of the origin of this type of fraud and its connection with the Value Added Tax Law, to formulate the conceptual understanding of the offense, to reveal the important aspects of its legal evaluation and to discuss relevant (...) examples from the case-law. The preconditions of VAT fraud lie in the legal nature of tax administration and the particularity of VAT regulation creating opportunities to abuse the right of deducting the overpayment from the budget or reducing the tax payable. The system of tax crimes stipulated in the Criminal Code is not sufficient to properly assess the impact and danger of VAT fraud. The judicial practice considering VAT deception as property fraud is theoretically justified and welcome. (shrink)

In order to understand how the environment influences business owner/managers’ attitudes towards tax morale, we build a theoretical model based on a neo-institutionalist framework. Our model combines three complementary perspectives on institutions—normative, cultural–cognitive and regulatory–instrumental. This enables a broader understanding of factors that influence business owner–managers’ attitudes towards tax evasion. We test the resulting hypotheses using regression analysis on survey data on business owner/managers in Latvia—a transition country, which has undergone massive institutional changes since it was part of the (...) Soviet Union over 25 years ago. We find that legitimacy of the tax authorities and the government, feeling of belonging to the nation and perceptions of the risk and severity of punishment are all associated with higher tax morale for business owners and managers. (shrink)

Any system of taxation depends on a substantial degree of compliance from the taxpayer. But do ethical considerations stop at obeying the letter of the tax law, or do they drive one to take a more critical and socially responsible attitude towards tax avoidance as well as evasion? Dr Alan Stainer is Head of Engineering Management at Middlesex University, Bounds Green Road, London N11 2NQ, and Founder Director of the International Society for Productivity & Quality Research; Lorice Stainer is (...) Senior Lecturer in Business Ethics at the University of Hertfordshire Business School and a Business Ethics Consultant; and Alexandra Segal is a Chartered Accountant, Taxation Manager with Keelings Chartered Accountants, London, and a Taxation Consultant. (shrink)

Any system of taxation depends on a substantial degree of compliance from the taxpayer. But do ethical considerations stop at obeying the letter of the tax law, or do they drive one to take a more critical and socially responsible attitude towards tax avoidance as well as evasion? Dr Alan Stainer is Head of Engineering Management at Middlesex University, Bounds Green Road, London N11 2NQ, and Founder Director of the International Society for Productivity & Quality Research; Lorice Stainer is (...) Senior Lecturer in Business Ethics at the University of Hertfordshire Business School and a Business Ethics Consultant; and Alexandra Segal is a Chartered Accountant, Taxation Manager with Keelings Chartered Accountants, London, and a Taxation Consultant. (shrink)

Recent scandals involving accounting firms raise serious concerns about ethical attitudes in the provision of professional tax services. Enhancing the ethics education of prospective tax professionals presents a means through which this situation can be improved. In order to promote such educational development, this study describes the infusion of an ethics intervention in a tax planning course at a university in Hong Kong. Also, the findings of an exploratory survey into theeffect of the course on student attitudes towards the ethicality (...) of tax avoidance and evasion are reported. The findings show that student attitudes towards the ethicality of tax avoidance, but not towards tax evasion, became more critical following the course. Several opportunities for future research are proposed. (shrink)

In a previous article I argued that tipping facilitates tax evasion, hurts employees’ financial security in the long run, and is a form of negative externality imposed by wealthy people on the rest of society. In this Article I try to understand the reasons for the greater popularity of the norm in the U.S. compared to other countries, suggesting it may be related to the U.S. cultural preference for linking redistribution with work requirements, relatively high income inequality and consumerism. (...) To that end, I further develop the negative externality argument suggested in the previous article by looking at trends in income inequality in the U.S. and by interpreting the global distribution of the norm through the prism of my inequality/negative externality argument. I then look at the tax treatment of tips in various countries in search of a pattern that supports the differences in social norms. (shrink)

This work aims to solve the complex problems of non-linearity, instability, and multiple economic factors in the tax forecast of the ceramic industry to ensure the sustainable development of the ceramic industry. The key influential indicators of the tax forecast are obtained by analyzing the principal components affecting the tax index. In addition, a human-computer interaction system is established based on cognitive psychology theory to improve the user-friendliness of tax analysis. At the same time, the tax data of the ceramic (...) industry in Jingdezhen City, Jiangxi Province in different years are used for the empirical analysis of the tax prediction of different prediction models, including particle swarm optimization algorithm, and fusion algorithm, and support vector machine. This work comprehensively analyzes the influence of the optimized tax supervision mode on the economic development of the ceramic industry and provides ideas for the development of the ceramic industry in Jingdezhen. The research results demonstrate that the main indicator affecting tax revenue is the added value of the primary and secondary industries. The optimized SVM based on grid search method can provide a comprehensive data base for tax forecasting. The optimization of the computer system based on cognitive psychology improves the model prediction accuracy by 10%, and the absolute error decreases from 6.9 to 1.8%. The tax forecast results indicate that the tax imbalance in Jingdezhen is increasing. Therefore, the government needs to attach great importance to the development of the ceramic industry and strictly implement the tax policy. The tax supervision model can alleviate the problems of low fiscal contribution rate, tax evasion, and management loopholes. In addition, the SVM tax prediction model optimized by grid search method will lay a theoretical foundation for the research and application of taxation in the ceramic industry. (shrink)

Businesses that rely heavily on cash transactions have been found to be particularly susceptible to low tax ethics. Recent research indicates that cash is a highly powerful and tempting reward, which elicits a strong emotional response. In this article, we investigate how emotions affect tax ethics in a series of experimental studies. Specifically, we show that affective priming and the ease with which tax information is retrieved moderate tax ethics. We also show that the relative effectiveness of deterrence, such as (...) audit probabilities and tax fines, is moderated by affect. These results point toward a complex picture of tax ethics, requiring a multifaceted policy approach that emphasizes not only enforcement, but also cognitive and affective aspects of human behavior. (shrink)

Considering the lack of substantive scientific or theoretical studies about ethics in small and medium sized enterprises (SMEs) in Latin America, this paper examines the context of an existent paradox, based upon the perspective of experts and academicians of Latin America and the Caribbean. These countries live different realities, due to their respective European cultural influences, as well as to racial and economic issues. Such facts impact the size and characteristics of their industries. On the other hand, the SMEs face (...) more similarities in the region, so they will be treated as a group in the discussion of ethics and corporate social responsibility (CSR) in Latin American SMEs. As this topic has not been sufficiently investigated in this geographic area, the objective of this exploratory study is to offer a contribution for future research. It raises the main dilemmas and intends to explain how legislation and common practices enable and perhaps lead SMEs to choose unethical strategies to survive and compete in the market. These enterprises are growing in number and in job creation, but do not participate in the Gross National Product in the same proportion. Informality, tax evasion and corruption are gradually caused or erode morality in business, but can contribute to corporate social responsibility in the region. The paper tries to show positive and negative aspects of apparently unethical practices and discusses challenging ways to solve complex problems that are common in most Latin America. (shrink)

According to the Catholic Social Teaching, tax evasion is ethically reprehensible and people who do it commit sin. The Catholic Church based its opinion first of all on the Holy Scripture (the teaching of Jesus, St. Peter’s and St. Paul’s). Also pope John Paul II, primate of Poland Stefan cardinal Wyszyński and Joseph cardinal Höffner objected to tax frauds. The survey was conducted among the students of the University of Lodz and of the Medical University of Lodz. Its aim (...) was to examine the students’ opinion about tax evasion. The students’ answers were grouped with regard to church attendance in order to trace if there exists a correlation between church attendance and tax morality. Statistical analysis indicated a connection between church attendance and tax morality. The highest tax morality was noticed in the group of regularly practising Catholics, a bit smaller in the non-practising or unbelieving group of people and the least tax morality was noticed among the irregularly practising group of Catholics. According to the students’ opinion, the main reason to pay taxes is for fear of financial sanction. Among other reasons the respondents listed that it is a national duty or that it is necessary to cover national expenditures. It is optimistic, however, that most of the students declared to pay the taxes fairly, if they run their own corporations in the future. (shrink)