Tax compliance and social desirability bias of taxpayers: experimental evidence from Indonesia

Iraman, Endra; Ono, Yukiko; Kakinaka, Makoto

doi:10.1017/s0143814x21000040

Cited by 3 publications

(5 citation statements)

References 67 publications

(91 reference statements)

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“…With regards to the Indonesian institutional environment, it is acknowledged that the country's tax compliance is considerably low, standing at about 11 percent (Inasius et al, 2020;Iraman et al, 2021). Further, given the country's relatively weaker institutional landscape, we predict that financial firms operating in Indonesia are exposed to relatively more opportunities to 'benefit' from such an environment, leading them to pursuing aggressive tax planning activities.…”

Section: Literature Review and Hypotheses Development A Financial Fir...mentioning

confidence: 89%

Are Financial Institutions Tax Aggressive? Evidence From Corporate Tax Return Data

Efendi

Darmadi

Czernkowski

2022

BEMP

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This study examines how financial firms’ tax aggressiveness differs from their peers in other sectors. Using confidential tax return data of the 5,968 largest Indonesian firms from 2009 to 2017, our study finds financial firms to have lower tax burdens relative to their non-financial counterparts, suggesting more opportunities for tax avoidance. Further, we document simultaneous use of tax shelters and temporary and permanentdifferences between accounting standards and tax laws, indicating a tendency to use the most sophisticated and less costly techniques in minimising tax burdens. These findings suggest tax aggressiveness may be one important unintended consequence of the government’s conventional prudential policy.

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Section: Literature Review and Hypotheses Development A Financial Fir...mentioning

confidence: 89%

Are Financial Institutions Tax Aggressive? Evidence From Corporate Tax Return Data

Efendi

Darmadi

Czernkowski

2022

BEMP

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“…The third hypothesis was based on the theory that the disclosure of information would enhance users' understanding of the transactions, but tax transactions are not always fully disclosed by companies. Tax is a very secret matter, and, in Indonesia, few taxpayers, whether individuals or corporations, are willing to discuss tax matters in public Iraman, Ono, & Kakinaka, 2022). Indonesia also has a very low rate of taxpayers who voluntarily disclose their tax returns to the public .…”

Section: Discussionmentioning

confidence: 99%

Is Tax Accounting Information Relevant to Users? The Case of Indonesia

Pratama

2022

IJAEFA

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This research aimed to investigate whether the tax accounting contained in financial statements is relevant to users’ decision-making and represents compliance with the tax laws. In this research, tax accounting information is classified into (1) tax recognition items (TRI) and (2) tax disclosure items (TDI). Survey data were collected from 131 professional tax accountants in Indonesia. The study employed two analysis methods: (1) the paired sample test, to determine whether there was any gap between the current condition and the expected condition of tax accounting information; and (2) regression analysis, to establish whether tax accounting information affected the relevance of financial statements. The results showed that (1) there were more gaps in TRI than in TDI; and (2) while TRI created relevance, TDI did not. This result indicates that tax accounting information is essential to improve decision-making. However, there are gaps and inadequate information. These results also imply that the accounting standards setter should improve the standards so that tax accounting provides value to financial statement users.

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“…Motivated tax evaders have caused this. In one survey, 13.4% of Indonesian taxpayers reported underreporting their income tax filings (Iraman et al, 2021). The study claimed that this behaviour depends on individual characteristics, such as gender, ethnicity, and employment status.…”

Section: Tax Compliancementioning

confidence: 99%

“…Those with higher incomes feel they exerted more effort to obtain their financial success. They may also legitimise cheating in order to prevent an unequal transfer of wealth from tax income (Iraman et al, 2021;Batrancea et al, 2019). Therefore, from the above discussion, the second hypothesis has been developed and suggested as below.…”

Section: H1mentioning

confidence: 99%

“…According to Rosli et al (2018), higher-income groups have a tendency for tax evasion through aggressive tax planning. Besides, high-income earners who pay more taxes are more likely to evade tax by choosing to be underreporting their income to stay in the top tier of the next lower income bracket and avoid paying their fair share of tax or pay lower taxes (Durham et al, 2014;Iraman et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Determinants of Tax Compliance among Higher Income Group Earners using Social Influence Theory

Mahmud¹,

Tarmuji²,

Hassan³

2023

IJARAFMS

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The higher-income group earners in Malaysia contribute a significant amount of direct revenue to the government. Hence, it is vital to measure their level of tax compliance by evaluating the variable that determines their compliance behaviour. The purpose of this research, guided by the Social Influence Theory (SIT), is to analyse the impact of morale, social dynamics, and knowledge on tax compliance among the higher income group earners. This study employed a quantitative approach, and the questionnaires were distributed to the higher income group earners in Klang Valley with a total of 116 returned valid responses. The result indicated that there is a significant positive relationship between tax knowledge and tax compliance. Meanwhile, the tax moral and social dynamic elements show an insignificant relationship with tax compliance, implying that such perceptions could not encourage compliance. As a result, these findings may provide some useful information on the psychological aspects that influence the social structure and government income. This highlights the necessity for the government and tax authorities to implement and build a more efficient tax system that effectively includes the wealthiest in the tax system while also raising the country's economic and social position.

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Tax compliance and social desirability bias of taxpayers: experimental evidence from Indonesia

Cited by 3 publications

References 67 publications

Are Financial Institutions Tax Aggressive? Evidence From Corporate Tax Return Data

Are Financial Institutions Tax Aggressive? Evidence From Corporate Tax Return Data

Is Tax Accounting Information Relevant to Users? The Case of Indonesia

Determinants of Tax Compliance among Higher Income Group Earners using Social Influence Theory

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