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What’s in it for me? The potential for managerial benefits to improve tax compliance

Published on 01 Jul 18 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

A value-added tax (VAT) may induce businesses to make a clear decision as to operating outside the formal economy, with the VAT seen as a real cost. It is suggested that small and medium enterprises (SMEs) are more likely to contribute to the cash economy, so it is important to have a greater understanding of the factors that may make SMEs more tax compliant, especially with VAT. Potential motivators for complying with a VAT are the managerial benefits that arise from keeping tax records.

This article reports the findings from a survey of 240 SMEs in a developing country, with the findings suggesting that for non-compliant taxpayers, being aware of the potential managerial benefits from complying with VAT appears to be more persuasive than the imposition of penalties. In this way, compliance may be improved if taxpayers see "what’s in it for me" in terms of complying with a country’s VAT system.

 

Author profiles

Dr Brett Freudenberg CTA
Photo of author, Brett FREUDENBERG Brett Freudenberg is an Associate Professor – Taxation at Griffith University (Australia). Brett is known for his research expertise in the tax law and policy issues facing private enterprises, as evidenced by his Fulbright Scholarship (2006) and over 50 refereed publications in leading Australian and international journals. Associate Professor Freudenberg’s research has analysed whether Australia should introduce a tax flow-through company (S Corporation), the tax treatment of discretionary trusts and the motivation for choice of business structure. Associate Professor Freudenberg’s research has informed government policy as he was invited to present his PhD research findings to the Australian Treasury as part of the Henry Tax Review. Brett is passionate about education being a transformative process, and his effectiveness as a teacher has been recognised through five national awards (including the award of two Australian Learning and Teaching Council citations: 2008 & 2011). - Current at 29 May 2017
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Tapan Sarker
Tapan works for Department of International Business & Asian Studies, Griffith Business School, Griffith University.
Current at 1 May 2014
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Nahida Faridy
Nahida works for Department of Accounting, Finance and Economics, Griffith Business School, Griffith University.
  • Current at 1 May 2014
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