The Effect of Changes in the Value-added Tax Rate on Tax Compliance Behaviour of Small Businesses in South Africa: A Field Experiment

2021 ◽  
pp. 65-88
Author(s):  
Anculien Schoeman ◽  
Chris Evans ◽  
Hanneke du Preez
Keyword(s):  
South Africa ◽  
Field Experiment ◽  
Small Businesses ◽  
Tax Compliance ◽  
Value Added ◽  
Value Added Tax ◽  
Tax Rate ◽  
Compliance Behaviour

scholarly journals Do South African Small Businesses Prefer Conservative Tax Advice To Aggressive Tax Advice?

2012 ◽  
Vol 11 (6) ◽  
pp. 697
Author(s):  
Melissa Lubbe ◽  
Gerhard Nienaber
Keyword(s):  
South Africa ◽  
Small Business ◽  
South African ◽  
Tax Evasion ◽  
Small Businesses ◽  
Tax Compliance ◽  
Rural South ◽  
Tax Practitioners ◽  
Tax Relief ◽  
Compliance Behaviour

Taxpayers relationship with tax practitioners may influence tax compliance behaviour. International research has been inconclusive on whether taxpayers prefer conservative tax approaches or more aggressive approaches. There has been only limited research on taxpayers preferences in South Africa. Several tax relief measures are available to South African small businesses as growing enterprises, but such entities may lack skilled tax staff and they therefore rely on tax practitioners. The first objective of this study is to determine whether such taxpayers prefer conservative or aggressive tax advice from practitioners. The second objective is to determine whether small business taxpayers would continue to use their tax practitioners services if they disagree with a suggested tax approach. Questionnaires were sent to 50 small businesses in a rural South African town. The data showed that most participating small business taxpayers prefer conservative advice but will agree with the tax practitioner, irrespective of the type of tax advice offered. As long as the advice does not involve tax evasion, they prefer to retain a tax practitioners services irrespective of the type of advice and their (dis)agreeing with it.

scholarly journals Annual tax compliance costs for small businesses: a survey of tax practitioners in South Africa

2012 ◽  
Vol 11 (3) ◽  
pp. 354-371 ◽  
Author(s):  
Sharon Smulders ◽  
Madeleine Stiglingh
Keyword(s):  
South Africa ◽  
Empirical Study ◽  
Small Businesses ◽  
Income Tax ◽  
Tax Compliance ◽  
Value Added ◽  
Baseline Measurement ◽  
Compliance Costs ◽  
Tax Practitioners ◽  
Tax Returns

This study provides a baseline measurement for annual tax compliance costs for small businesses. An empirical study performed amongst tax practitioners to identify and measure the annual tax compliance costs for small businesses throughout South Africa revealed that R7 030 per annum is the average fee that tax practitioners charge their small business clients to ensure that their tax returns (for four key taxes – income tax, provisional tax, value added tax and employees’ tax) are prepared, completed and submitted as SARS requires. From the perspective of time and cost, preparing, completing and submitting VAT returns takes the longest and costs the most. It is evident that, overall, the compliance costs are regressive: the smaller the business, the heavier the burden.

scholarly journals The Elements of Conceptual Model Goods and Services Tax Registered Persons in Malaysia

2018 ◽  
Vol 2 (2) ◽  
pp. 65-69
Author(s):  
Lee Heng Liang ◽  
Mohd Norfian Alifiah ◽  
Loo Ern Chen
Keyword(s):  
Conceptual Framework ◽  
Conceptual Model ◽  
Tax Compliance ◽  
Economic Factors ◽  
Tax Structure ◽  
Tax Rate ◽  
Structure System ◽  
Sociological Factors ◽  
Goods And Services ◽  
Compliance Behaviour

Goods and Services Tax (GST) system was implemented on the 1st April 2015 in Malaysia.  Like many others tax administration, tax compliance has been a major concern to the Royal Malaysia Customs Department (RMCD) (Zainol et al., 2015).  The issue of tax non- compliance such as over claiming of input tax, not issuing tax invoices, and under declaring output tax by the registered persons induced this study.  Thus, this study seeks to establish the determinant factors that may influence the tax compliance behaviour of GST registered person in Malaysia.  This study also attempts to propose a conceptual framework GST tax compliance behaviour by integrating economic factors such as tax structure system of GST tax rate, audit, penalty/fine, and psychological and sociological factors like attitude towards GST and GST tax knowledge.

The Impact of the Value-Added Tax Rate on the Entrepreneurial Behavior Model (On the Example of Palm Oil Importers)

2020 ◽  
pp. 181-197
Author(s):  
Anna V. Lozhnikova ◽  
◽  
Aleksandr L. Bogdanov ◽  
Tatiana G. Vayderova ◽  
Larisa N. Spivakova ◽  
...  
Keyword(s):  
Palm Oil ◽  
Chemical Industry ◽  
Food Production ◽  
Food Industry ◽  
Value Added ◽  
Entrepreneurial Behavior ◽  
Value Added Tax ◽  
Dairy Food ◽  
Tax Rate ◽  
The Impact

The article discusses the problem of the reducing life quality of Russians in the new conditions of the market economy. The Russian phenomenon of the use of “palm oil” as a priority raw material in food production is analyzed against the decrease in its use in the EU countriesand against the expansion of the daily diet of the Chinese due to increased dairy food consumption. Opposing points of view of key industry associations (the Dairy Union of Russia and the Fat and Oil Union of Russia) have been identified and are presented in the context of palm oil use in dairy food production. The results of a statistical study of the demand for palm oil from Russian importers against the background of an increase in the value-added tax rate from 10 to 20% in October 2019 are presented. The data of customs statistics on palm oil imports were analyzed in the context of countries of origin, nine codes of the commodity nomenclature of foreign economic activity, months and years within the five-year period of 2016–2020, as well as in the context of the importing regions of Russia. The results of statistical processing of data by the Federal Customs Service revealed no effect of the sharp increase in the VAT rate on the volume of palm oil imports. The analysis of foreign statistics revealed a significant presence of actors in the chemical industry among transnational companies that are the largest consumers of palm oil. The model of entrepreneurial behavior based on consumption in palm oil production, formed and widely spread in the Russian food industry market, is criticized. 98% of palm oil and its fractions imported into Russia goes to the needs of food industry enterprises, and the authors consider that the foreign ownership of these enterprises plays an important role. In the authors’ opinion, in many respects, the latter fact determined our country’s ranking first in the food chemistry sector in the distribution of published patent applications by technology field for the top 10 origins in 2014–2016. In this respect, Russia is far ahead of China, the USA, Japan, South Korea, Germany, the UK,France, and Switzerland. In China, systematic research is being carried out on the ratio of palm oil use in the food (primarily, instant noodles, other fast food) and non-food (chemical industry, including cosmetics production) sectors.

Governmentality of Value Added Tax compliance using Electronic Fiscal Devices in Malawi

2021 ◽  
Vol 12 (4) ◽  
pp. 0-0
Keyword(s):  
Developing Countries ◽  
Tax Compliance ◽  
Value Added ◽  
Government Agencies ◽  
Business Associations ◽  
Value Added Tax ◽  
National Budget ◽  
Ways Of Thinking ◽  
Complex Relationships ◽  
Power And Authority

This paper critically analysed the implementation of Electronic Fiscal Devices (EFD) in supporting value added tax (VAT) compliance. The study draws on the concept of governmentality to highlight ways of exercising power and authority among VAT stakeholders using the case of Malawi. The findings showed that tax regime discourse was important in shaping the ways of thinking and acting of stakeholders in the implementation of EFD. Complex relationships emerged as a result of implementing EFD between the revenue authority and VAT registered operators, foreign-owned businesses, business associations, government agencies and donors. While the revenue authority managed to achieve VAT compliance using EFD, there was resistance from VAT registered operators and business organisations which affected the growth of the tax regime and financing of the national budget. The study contributes to the understanding of EFD use and VAT compliance in the context of developing countries.

Administrative and Compliance Costs of Value Added Tax (VAT): A Review

2021 ◽  
pp. 097226612110588
Author(s):  
S. Vishnuhadevi
Keyword(s):  
Small Businesses ◽  
Tax Compliance ◽  
Value Added ◽  
Operating Costs ◽  
Tax Revenue ◽  
Compliance Cost ◽  
Compliance Costs ◽  
Factors Associated ◽  
Administrative Costs ◽  
Decision Factors

This article surveys the existing literature on the compliance and administrative costs of VAT incurred by the businesses and the governments respectively. The review focuses on the concepts and components of VAT operating costs, the link between the tax compliance costs and the tax compliance decision, factors associated with compliance costs and the steps taken by various countries to mitigate these costs. The major studies of VAT compliance cost since 1980 and the methodologies adopted are summarised. The review of the studies shows that the VAT compliance costs are higher and significant in both absolute money terms and relative to tax revenue in developed as well as developing countries than the administrative costs and the compliance costs are highly regressive in nature which disproportionately affects the small businesses. Further, the psychological costs are underexplored in the VAT compliance cost literature due to the difficulty in measuring them. This article also highlights the understudied area of VAT compliance costs in India and the importance of exploring the compliance burden in India.

scholarly journals A tax compliance risk profile of guesthouse owners in Soweto, South Africa

2019 ◽  
Vol 11 (1) ◽  
Author(s):  
Marina Bornman ◽  
Pusheletso Ramutumbu
Keyword(s):  
South Africa ◽  
High Risk ◽  
Small Business ◽  
Tax Compliance ◽  
Business Owners ◽  
Risk Profile ◽  
Research Approach ◽  
Small Business Owners ◽  
Guest House ◽  
Compliance Behaviour

Background: A conceptual framework to assess the particular tax situation of small business owners identifies three key aspects that distinguish small business owners’ perceptions of their tax obligation. These aspects are: they are likely to perceive more opportunities not to comply than employed taxpayers; they are likely to lack meaningful taxation knowledge and they are likely to frame the paying of taxes as a loss.Aim: The aim of this article was to sketch a tax compliance risk profile of guest house owners in Soweto to suggest strategies to negate those factors that may negatively influence their compliance behaviour.Setting: Tax compliance is a priority for tax administrations, especially in developing countries such as South Africa where small businesses are a high compliance risk group. Small guest houses’ income is usually variable and/or cash-based and not easily verifiable against third-party data, which creates a high risk of non-compliance.Methods: A mixed methods research approach was followed. Empirical evidence in the form of semi-structured questionnaires administered face-to-face with 23 guest house owners in Soweto was statistically and thematically analysed to compile a profile of the tax compliance risk according to the framework for tax compliance behaviour of small business owners.Results: Factors such as age, gender and tax morale show favourable results for tax compliant behaviour. However, perceptions of fairness, perceived opportunity for non-compliance, knowledge deficits, decision frames, industry, business size and social norms embrace a high risk of non-compliance for this population.Conclusion: Information pointing out the factors that could negatively influence tax compliance behaviour in this population was obtained. Strategies for empowering small business owners to comply voluntarily with their tax obligations are suggested and include, for example, taxpayer education and improved communication efforts from the revenue authority.

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