THE IMPACT OF SOCIAL IDENTITY ON TAX COMPLIANCE IN INDONESIA DURING THE PANDEMIC COVID-19

Purpose: This study aims at examining the impacts of manufacture's social identity on their tax attitudes, and how these effects on firm's tax compliance, and used a qualitative method Theoretical framework: Two techniques are distinguished in Devos' (2014) Compliance Theory: the Economic Deterrence Approach and the Psychological Approach. Research by Scott & Grasmick (1998) as cited in Trivedi, Shehata & Lynn (2003) examined that even if economic elements are crucial for evaluating compliance behavior, they are insufficient to fully explain the level of compliance. Design/methodology/approach: The sample of the study are 101 respondents. This study uses quantitative methods to collect, process, and analyze data to draw empirical conclusions. Findings: The data from 101 respondents reported that membership and identity affect their firm's tax compliance, but not private collective self-esteem and public collective self-esteem. The result shows that dependence on the community and stakeholder views on corporate identity are considered important by companies in order to increase public trust. Meanwhile, private and public collective self-esteem is no longer the key. It implies that the former is more likely to have a higher cost of tax collection to represent tax compliance, which may restrict funds for their public sector and adversely affects its functionality. This is consistent with the previous findings that identity socially impacted tax compliance, instead of self-esteem. Research, Practical & Social implications: Research results for manufacturing managers related to strengthening social identity factors in order to improve overall corporate tax compliance, such as joining tax communities, professional memberships, and the like. By having a clear social identity, managers have channels to discuss tax issues and find solutions to tax problems more easily. Originality/value: The tax compliance issues findings related to self esteem approach having new model for DGT's to optimize tax income strategy during pandemic. © 2023 AOS-Estratagia and Inovacao. All rights reserved.

What determines the tax compliance intention of individual taxpayers receiving COVID-19-related benefits? Insights from Indonesia

PurposeEven as governments worldwide take extraordinary measures and spend unprecedented amounts of their state budgets to combat COVID-19, tax compliance remains challenging. Therefore, this study employs previously identified predictors to investigate the factors that persuade individual taxpayers to comply with the law.Design/methodology/approachIndividual taxpayers in Indonesia (N = 699) who had experienced COVID-19-related benefits were asked to assess the provided evaluation regarding the tax compliance intention and its determinants. The bootstrapping analysis was employed using smart partial least squares (SmartPLS) to test the hypotheses.FindingsThe results suggest that the perceived fiscal exchange, tax morality, tax fairness, tax complexity and the power of authority are significant determinants of tax compliance intention. This study also supports the indirect effects of numerous factors on tax compliance intention through the perceived fiscal exchange and tax morality. In practice, reminding taxpayers of how tax payments fund public services, improving taxpayer morale, increasing the perceived fairness of the tax system, streamlining the tax code and managing the effectiveness of tax administration could all lead to a greater intention to comply with the law.Originality/valueIn addition to highlighting the dynamics of tax compliance amid the unprecedented pandemic crisis, our findings also provide insight into the importance of perceived fiscal exchange and tax morality for achieving and sustaining planned behavior to comply with tax rules.

The Tax Side of the Pandemic: Shifts in Compliance Attitudes and Perceptions in Rwanda

While much knowledge is being generated on the impact of the pandemic, we still know very little on its implications on taxation in lower-income countries. Yet, tax is crucial to fund crisis response and recovery, in addition to broader development plans and expanded government expenditure. This paper starts addressing this gap using an unique dataset of survey data from Rwanda. We document two significant shifts in taxpayers' views during the pandemic: perceptions about the fairness of the tax system improve by 40 per cent, and their attitudes to compliance become more conditional on the provision of public services of sufficiently good quality. We put these results in the broader context of crisis response. We show that they are not simply linked to individual experiences of the crisis or access to relief, but they are more likely linked to generalised improvements in solidarity and patriotism. © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

DIGITALIZATION OF ROMANIAN PUBLIC ADMINISTRATION: A PANEL DATA ANALYSIS AT REGIONAL LEVEL

Digital transformation of public administration creates opportunities for transparency, accountability, efficiency, and better tax collection. Benefits are even more critical considering the coronavirus crisis when millions of people worldwide engage in online solutions. Our research paper offers clear insights into the public administrations' strategic management when it comes to the impact of digitalization upon local tax revenues collection. In this setting, we investigate the effects of the digitalization of the Romanian public sector, focusing on local tax revenues collection covering the period 2015–2021. The data was collected from the national platform for e-payments – ghiseul.ro. To assess the impact of digitalization, we opted for the panel data analysis, complemented by reliability and robustness tests. The local tax revenues are settled as the dependent variable and analysed in relationship with the number of payments made via the above-mentioned platform (assigned as a proxy for digitalization). Gross domestic product per capita, Unemployment rate, and Average net earnings are control variables. Our outcomes show that digitalization impacts local tax revenues, but it differs across the country, the highest impact being registered in the case of macro-region 3. All independent variables are statistically significant, leading to the assumption that the empirical model is accurate. © 2023 The Author(s).

Cooperative Tax Compliance — A Path to Fiscal Sustainability?

The idea of cooperative tax compliance promotes a partnership relationship between the tax authority and taxpayers, aiming to improve tax compliance. Fair, efficient, and sustainable taxation is central in delivering a greener and more digital world, especially in the recovery process from the fallout of the COVID-19 crisis. Based on the methodology of structured interviews, the paper explores the perception of taxpayers and the tax authority participating in the Slovenian cooperative compliance programme. The results revealed the attitude towards internal tax control mechanisms, the relationship between stakeholders, the advantages and disadvantages of the programme, and the perception of tax inspections on both sides of this relationship. Based on those, the challenges of internal control mechanism implementation and constant improvement as well as the tax authority experts’ competences were exposed as the most important inhibitory factors of the programme. Additionally, the paper highlights the recommendations for collaboration improvement and an increased number of taxpayers entering the status in the future. © 2022, Babes-Bolyai University. All rights reserved.

The economic crisis during the COVID-19 pandemic has a negative effect on tax compliance: Results from a scenario study in Austria.

In a scenario study with 1200 Austrian taxpayers, we examined how tax compliance is affected by the economic crisis related to the COVID-19 pandemic. Moreover, we investigated the potential of trust in government, attitude towards taxes, and justice perceptions in mitigating potential effects. The results suggest a strong effect of the economic environment on tax compliance. Specifically, tax compliance was lower in scenarios where the pandemic had a negative effect on the economy than in scenarios with no negative effect. However, for individuals with a positive attitude towards taxes, compliance was not lower in a negative economic environment than in pre-COVID-19 times. Moreover, we found that taxpayers who were not affected economically, taxpayers with a positive attitude towards taxes, and taxpayers with a low propensity to take risks generally indicated higher levels of tax compliance. Exploratory analyses indicate that taxpayers who change their compliance behavior in response to the economic environment are, on average, younger, less educated, more strongly affected economically, and more uncertain about their current economic situation than taxpayers with stable compliance levels. Policy interventions should target these groups to strengthen tax compliance in times of crisis.

Tax compliance, public spending and happiness in Europe

Purpose>This study aims to analyze whether tax compliance is the basis for the short-run dynamics of the development of welfare and happiness. The strengthening of tax compliance of corporates and citizens is not only important to achieve the goals assumed by fiscal policy but also is part of the values that can generate a higher level of welfare and happiness in Europe.Design/methodology/approach>This study uses a dynamic factor model to offer new indexes that allow to monitor tax compliance, public spending and happiness trajectories and to evaluate their short-run relationships. Next, an analysis of the cyclical characteristics in terms of duration, amplitude and intensity is provided using the Harding and Pagan method (2002).Findings>The empirical findings show that the European countries were able to reinforce tax compliance during the expansionary periods of the economy, and this has made it possible to increase public spending, and indirectly, happiness. Otherwise, this paper shows that the contractions of public resources during the global crisis, such as the case in the COVID-19, reduced the possibilities of well-being in Europe and made it more difficult to increase public spending and happiness.Research limitations/implications>This study tries to analyze the transmission channels and relationships of three very complex variables: tax compliance, public spending and happiness. Incorporating these three variables into this research, with a short-run perspective, the authors have opened a new line of research that enriched the previous analysis. Therefore, the authors’ results should be considered the first step, that this study is going to continue to unravel the complexity of these relationships.Practical implications>The design of policies aimed at improving individual, corporate and the well-being of nations needs them to incorporate elements of tax compliance as an objective that has economic and social implications. Individuals and corporates contribute to a fairer and more equitable society through compliance with tax obligations.Originality/value>To the best of the authors’ knowledge, this is the first paper that offers evidence on the short-run dynamics of tax revenue, public spending and happiness for a better understanding of their relationships and behavior during the different periods of the economy.

Tax Sustainability: Tax Transparency in Latin America and the Chilean Case

This study is based on a sample of the thirty Chilean companies with the highest stock presence and which demonstrate opacity problems in their tax sustainability related to the GRI 207 standard available since 2019 (which emphasizes the disclosure of tax strategies to stakeholders, especially as regards any links with their small and medium-sized enterprises (SMEs)). The study also explores the literature related to tax transparency and its evolution in Latin America. Significantly different performances were found among the tax sustainability reports. The reasons for these differences are related to the fact that some demand simple declarations of principles, while others require both reporting of evidence in front of the interest groups and revealing of the tax strategy. As a result, taxpayers seem to use their corporate social responsibility activities more to moderate reputation risk than to aim at tax transparency. At the same time, the findings reveal that the actions toward tax transparency which have defined the tributary administrations of Latin American countries since the 2018 Punta del Este Global Forum do not consider the possibility of public disclosure. In this sense, the evidence highlights the need for Latin American policymakers to introduce, at the normative level, integrated tax transparency cooperation mechanisms between state administrations and regulated companies.

Effect of COVID-19 Pandemic on Tax Perception: An Empirical Study

Tax is a financial burden that individuals have to bear as a result of an administrative act carried out by the tax administration. Although 24.1% of taxpayers consider tax as a sacred duty Çoban et al. (Sezgin Vergi Mükelleflerinin Davranışları Üzerine Ampirik Bir Ínceleme: Denizli Örneği 777–792, 2004), the European Human Rights Committee (ECHR) states that “…Any law involving some form of tax liability involves deprivation from the relevant assets…”. The European Court of Human Rights (ECHR) declared that it accepts the case law of the ECHR by saying “taxation as an intervention to the guaranteed rights” in Article 1 of Protocol 1 Yaltı (Vergi Yükümlüsünün Hakları, 2006). Regardless of how we define the tax, for an ideal tax system, tax compliance of the taxpayer should be ensured at the highest possible level. One of the most important factors affecting tax compliance is tax perception. In this study, we will try to answer these questions and analyse how various demographic differences affect tax perception during the COVID-19 pandemic. In the study, the data of the online survey prepared just for this study will be used and the differences will be determined by this way. It will be important to reveal the changes made by various demographic variables in the perception of tax during the COVID-19 process, in order to shed light on the future steps that the tax administration and the legislator can take regarding taxes. © 2022, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

Tax compliance, public spending and happiness in Europe

Purpose This study aims to analyze whether tax compliance is the basis for the short-run dynamics of the development of welfare and happiness. The strengthening of tax compliance of corporates and citizens is not only important to achieve the goals assumed by fiscal policy but also is part of the values that can generate a higher level of welfare and happiness in Europe. Design/methodology/approach This study uses a dynamic factor model to offer new indexes that allow to monitor tax compliance, public spending and happiness trajectories and to evaluate their short-run relationships. Next, an analysis of the cyclical characteristics in terms of duration, amplitude and intensity is provided using the Harding and Pagan method (2002). Findings The empirical findings show that the European countries were able to reinforce tax compliance during the expansionary periods of the economy, and this has made it possible to increase public spending, and indirectly, happiness. Otherwise, this paper shows that the contractions of public resources during the global crisis, such as the case in the COVID-19, reduced the possibilities of well-being in Europe and made it more difficult to increase public spending and happiness. Research limitations/implications This study tries to analyze the transmission channels and relationships of three very complex variables: tax compliance, public spending and happiness. Incorporating these three variables into this research, with a short-run perspective, the authors have opened a new line of research that enriched the previous analysis. Therefore, the authors' results should be considered the first step, that this study is going to continue to unravel the complexity of these relationships. Practical implications The design of policies aimed at improving individual, corporate and the well-being of nations needs them to incorporate elements of tax compliance as an objective that has economic and social implications. Individuals and corporates contribute to a fairer and more equitable society through compliance with tax obligations. Originality/value To the best of the authors' knowledge, this is the first paper that offers evidence on the short-run dynamics of tax revenue, public spending and happiness for a better understanding of their relationships and behavior during the different periods of the economy.

Tax compliance option during the pandemic: Moral, sanction, and tax relaxation (case study of indonesian msmes taxpayers)

This study aims at empirically analyzing the effect of tax moral, sanction, and tax relaxation o n taxpayer compliance. This study result is expected to provide an option to increase tax compl ia nce d u ri ng the Covid-19 pandemic. The type of this study is a quantitative study. It collects the data using a questionnaire in the form of Google form. The sampling technique of this study uses purposive sampling. The number of samples is 95 MSMEs members registered at the Department of Coopera tive and Micro Enterprise, Magetan Regency, Indonesia. The data were analyzed by the multiple linear regression analysis techniques. The analysis result shows that during the Covid-19 pandemic, tax moral function was neglected in increasing tax compliance. The focus of MSMEs owners is trying to maintain thei r b usi ness t o su rvive while their tax obligations are the next priority. The considerations as thei r b asi s t o carry o ut t h ei r t ax obligation are sanction and tax relaxation. The sanction plays a strong role in increasin g t a x co mpl ia nce which means the tax compliance of MSMEs owners is in compliance due t o co erci on. Ta x rel axat ion i s another option as a solution to increase the taxpayer's compliance with MSMEs owners during the pandemic. It gives ease and relief for MSMEs owners to fulfill their tax obligations. © 2021, Pro Global Science Association. All rights reserved.