Tax Compliance Costs

2017 ◽  
Vol 46 (5) ◽  
pp. 764-792 ◽  
Author(s):  
Sebastian Eichfelder ◽  
Frank Hechtner
Keyword(s):  
Small Businesses ◽  
Tax Compliance ◽  
Framing Effects ◽  
Nonresponse Bias ◽  
Temporal Dimension ◽  
Cost Estimates ◽  
Survey Nonresponse ◽  
Compliance Costs ◽  
Temporal Framing ◽  
Cost Measurement

As documented by empirical research, tax compliance costs are a considerable burden for households and businesses. However, cost estimates may be biased due to survey nonresponse and questionnaire framing effects. Investigating both aspects, we do not find significant evidence for a nonresponse bias. By contrast, our results indicate that framing effects regarding the temporal dimension of cost measurement (temporal framing effects) might alter cost estimates by about 39 percent downward (65 percent upward) on average and by up to 53 percent downward (respectively, 112 percent upward) for small businesses. We also test a number of cost drivers with a focus on e-government features. We do not find any evidence that the use of Belgian e-government applications in 2002 and 2004 significantly reduced compliance costs.

scholarly journals Factors driving tax compliance costs of small businesses in the South African construction industry

2019 ◽  
Vol 19 (1) ◽  
Author(s):  
Obert Matarirano ◽  
Germinah E. Chiloane-Tsoka ◽  
Daniel Makina
Keyword(s):  
Construction Industry ◽  
South African ◽  
Small Businesses ◽  
Tax Compliance ◽  
The South ◽  
Compliance Costs

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 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 Do regulators overestimate the costs of regulation?

2014 ◽  
Vol 5 (2) ◽  
pp. 315-332 ◽  
Author(s):  
R. David Simpson
Keyword(s):  
Regulatory Compliance ◽  
Summary Statistics ◽  
Compliance Cost ◽  
Strong Argument ◽  
Cost Estimates ◽  
Compliance Costs ◽  
Average Ratio ◽  
Ex Post ◽  
Ex Ante ◽  
The Mean

Abstract:It has occasionally been asserted that regulators typically overestimate the costs of the regulations they impose. A number of arguments have been proposed for why this might be the case. The most widely credited is that regulators fail sufficiently to appreciate the effects of innovation in reducing regulatory compliance costs. Most existing studies have found that regulators are more likely to over- than to underestimate costs. While it is difficult to develop summary statistics to aggregate the results of different studies of disparate industries, one such measure is the average of the ratio of ex ante estimates of compliance costs to ex post estimates of the same costs. This ratio is generally greater than one. In this paper I argue that neither the greater frequency of overestimates nor the fact that the average ratio of ex ante to ex post cost estimates is greater than one necessarily demonstrates that ex ante estimates are biased. There are several reasons to suppose that the distribution of compliance costs could be skewed, so that the median of the distribution would lie below the mean. It is not surprising, then, that most estimates would prove to be too high. Moreover, Jensen’s inequality implies that the expected ratio of ex ante to ex post compliance costs would be greater than one. I propose a regression-based test of the bias of ex ante compliance cost estimates, and cannot reject the hypothesis that estimates are unbiased. Failure to reject a hypothesis with limited and noisy data should not, of course, be interpreted as a strong argument to accept the hypothesis. Rather, this paper argues for the generation of more and better information. Despite the existence of a number of papers reporting ex ante and ex post compliance cost estimates, it is surprisingly difficult to get a large sample with which to make such comparisons.

scholarly journals The Study on the Reduction of Tax Compliance Costs in Korea

2015 ◽  
Vol null (44) ◽  
pp. 1-21
Author(s):  
이진수 ◽  
김정호
Keyword(s):  
Tax Compliance ◽  
Compliance Costs

The Income Tax Compliance Costs of Private Households: Empirical Evidence from Germany

2019 ◽  
Vol 47 (5) ◽  
pp. 925-966 ◽  
Author(s):  
Kay Blaufus ◽  
Frank Hechtner ◽  
Janine K. Jarzembski
Keyword(s):  
Income Tax ◽  
International Comparisons ◽  
Tax Compliance ◽  
Cost Burden ◽  
Compliance Costs ◽  
Private Households ◽  
Self Employment ◽  
Upper Bound Estimate ◽  
Total Burden ◽  
Appeal Procedure

Using a survey of more than 18,000 taxpayers in North Rhine-Westphalia (Germany), we estimate the income tax compliance costs of German households and study the determinants of these costs. We find that taxpayers need between 9.13 and 10.23 hours and spend €106 to meet their income tax obligations. The average total burden is between €228 (lower bound estimate) and €321 (upper bound estimate). The aggregate cost burden ranges between 2.03 percent and 2.92 percent of the German income tax revenues of tax year 2015. Although these costs have decreased significantly over recent years (mainly for self-preparers without self-employment income), international comparisons illustrate that the German burden is still located in the upper middle. The five most important cost drivers that increase individual costs are the use of tax advice, the appeal procedure, income, return complexity, and education. We cannot confirm that e-filing reduces taxpayers’ compliance costs.

scholarly journals A Survey of Tax Compliance Costs of Flemish SMEs: Magnitude and Determinants

2011 ◽  
Vol 29 (4) ◽  
pp. 605-621 ◽  
Author(s):  
Bilitis Schoonjans ◽  
Philippe Van Cauwenberge ◽  
Catherine Reekmans ◽  
Gudrun Simoens
Keyword(s):  
Tax Compliance ◽  
Compliance Costs
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