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 Income Tax Compliance Cost of Corporations in India, 2000–01

2006 ◽  
Vol 31 (4) ◽  
pp. 9-30
Author(s):  
Arindam Das-Gupta
Keyword(s):  
Cash Flow ◽  
Tax Evasion ◽  
Income Tax ◽  
Tax Compliance ◽  
Postal Survey ◽  
Legal Compliance ◽  
Compliance Cost ◽  
Convenience Sample ◽  
Compliance Costs ◽  
Corporation Tax

This is the first study of compliance costs of income taxation of corporations in India. Compliance costs are the costs of meeting obligations under the income tax law and in planning to save taxes. Opportunity costs such as when tax refunds are delayed are also included. Social compliance costs, gross versus net private costs, and mandatory versus voluntary cost can be distinguished. Gross private compliance costs include both legal and illegal expenses (such as bribes paid), employee costs, the cost of tax advice, and also other non-labour expenses. Estimates in this paper are for the year 2000-01 based on a postal survey of 45 companies throughout India in August-September 2001. Estimated gross compliance costs, excluding bribe costs, are between 5.6 and 14.5 per cent of corporation tax revenues. These are similar to estimates for other countries near the lower limit but are a cause for concern near the upper limit. Tax deductibility of legal expenses and cash flow benefits from the timing difference between taxable income and payment of tax result in net compliance costs between minus 0.7 and plus 0.6 per cent of corporation tax revenue. Both gross and net compliance costs are regressive. Among other findings, five are noteworthy: First, around 25 per cent of sampled companies knowingly paid excess tax (median value: 46%) since tax evasion penalty cannot be levied under Indian law if assessed taxes have already been paid. Second, 70 per cent of companies, especially small companies, used external assistance to prepare tax returns accounting for 39 per cent of the legal compliance costs. Third, voluntary costs associated with tax planning contribute 19 to 43 per cent of total compliance costs. Fourth, the average sample company had 10 to 11 assessment years locked in disputes for tax or penalty in addition to around two years for which assessments were incomplete. Statistical analysis suggested that one extra disputed assessment year raises legal compliance costs by 5.7 per cent. Fifth, it was found to be fairly common for incorrect application of tax laws by tax officials in areas where they have high discretion to cause tax assessments to be revisited. Among reform suggestions is streamlining of 22 legal and procedural �hot spots� which add to compliance costs. Since the response rate was a disappointing 1.15 per cent, the stratified random sample design degenerated into a convenience sample with over-representation of large firms and under-representation of loss-making and zero-profit companies. Therefore, results should be viewed as preliminary and tentative. Other problems are that there were only qualitative questions about in-house cost components; assumed opportunity cost of funds to value cash flow benefits were used; and, as in earlier studies, there can possibly be a bias due to incorrect apportionment of fixed costs and the value of time of company management

scholarly journals Does E-Government Improve Government Capacity? Evidence from Tax Compliance Costs, Tax Revenue, and Public Procurement Competitiveness

2018 ◽  
Vol 34 (1) ◽  
pp. 101-120
Author(s):  
Anna Kochanova ◽  
Zahid Hasnain ◽  
Bradley Larson
Keyword(s):  
Income Tax ◽  
Public Procurement ◽  
Tax Compliance ◽  
Strong Relationship ◽  
Tax Revenue ◽  
Moderate Increase ◽  
Compliance Costs ◽  
Government Capacity ◽  
Cross Country ◽  
Number Of Firms

Abstract Using cross-country data on e-government systems, this paper analyzes whether e-filing of taxes and e-procurement implementation improves the capacity of governments to raise and spend fiscal resources through lowering tax compliance costs, improving tax collection and public procurement competitiveness, and reducing corruption. Adopting e-filing systems reduces tax compliance costs as measured by the time to prepare and pay taxes, the likelihood and frequency of firms being visited by a tax official, and the perception of tax administration as an obstacle to firms’ operation and growth. E-filing is also associated with a moderate increase in the income tax revenue to GDP ratio. The results for e-procurement are weaker, with the number of firms securing or attempting to secure a government contract increasing only in countries with higher levels of development and better institutions. There is no strong relationship between e-government and corruption.

scholarly journals Determinants of internal ta compliance costs: Evidence from South Africa

2016 ◽  
Vol 9 (3) ◽  
pp. 714-729 ◽  
Author(s):  
Sharon Smulders ◽  
Madeleine Stiglingh ◽  
Riel Franzsen ◽  
Lizelle Fletcher
Keyword(s):  
South Africa ◽  
Significant Influence ◽  
Income Tax ◽  
Tax Compliance ◽  
Regression Analyses ◽  
Compliance Costs ◽  
Internal Time ◽  
Key Drivers ◽  
Business Tax ◽  
Compliance Behaviour

Being tax compliant generates costs and these costs affect small business tax compliance behaviour and contribution. This study uses multiple regression analyses to investigate the key drivers of small business’s internal tax compliance costs (hours spent internally on tax compliance activities). This will assist Revenue Services in understanding what factors (determinants) could increase a small business’s internal tax compliance costs and might assist in managing tax compliance behaviour and contribution. The results expose the significant determinants per tax type, enabling a comparison to be made across the different tax types. Overall, turnover is the variable that had the most significant influence on internal tax compliance costs (time) (as opposed to the number of employees, which had a significant effect only on the internal time spent on employees’ tax). The analysis confirmed that there is a higher proportional burden for smaller businesses in respect of internal income tax and employees’ compliance activities.

scholarly journals The distribution of UK personal income tax compliance costs

2010 ◽  
Vol 42 (3) ◽  
pp. 351-368 ◽  
Author(s):  
Laurence Mathieu ◽  
Catherine Waddams Price ◽  
Francis Antwi
Keyword(s):  
Income Tax ◽  
Tax Compliance ◽  
Personal Income ◽  
Personal Income Tax ◽  
Compliance Costs

scholarly journals The Hidden Burden of the Income Tax: Compliance Costs of German Individuals

2011 ◽  
Author(s):  
Jochen Hundsdoerfer ◽  
Sebastian Eichfelder ◽  
Kay Blaufus
Keyword(s):  
Income Tax ◽  
Tax Compliance ◽  
Compliance Costs

scholarly journals Corporate income tax burden for SMEs: The case of Bosnia and Herzegovina

2021 ◽  
Vol 13 (2) ◽  
pp. 151-165
Author(s):  
Vernesa Lavić ◽  
Azra Hadžiahmetović
Keyword(s):  
Bosnia And Herzegovina ◽  
Income Tax ◽  
Public Discourse ◽  
Small And Medium Enterprises ◽  
Tax Compliance ◽  
System Structure ◽  
Corporate Income Tax ◽  
Tax Burden ◽  
Compliance Costs ◽  
Post Conflict

Small and medium enterprises (SMEs) play a significant role in the economic development of both advanced and developing countries. Some earlier research showed that taxation and compliance costs have a significant effect on economic growth, development and performance of the business sector. For this reason, our research focuses on tax compliance costs imposed on the SMEs in Bosnia and Herzegovina (B&H), which is a transition and post-conflict country with a complex tax system structure. This complexity is particularly highlighted in the direct taxation system, hence the focus of this research is on corporate income tax (CIT) compliance costs. Our methodology is based on simulation of tax compliance costs between different entities in B&H - Federation of B&H (FB&H) and the Republika Srpska (RS), as well as measuring the effective tax burden for SMEs in B&H and the region. Our simulation of the CIT return of a company "X "in line with the entity law suggests that the effective tax burden is higher in RS than in FB&H entity. This is further confirmed with the effective tax rate formula applied in the second part of the research using data from the AMADEUS database. This result has an important policy implication for the fiscal authorities in B&H, as very often public discourse goes in the opposite direction to our finding.

ANALISIS SKEMA PRESUMPTIVE UNTUK PENGHITUNGAN PAJAK PENGHASILAN WAJIB PAJAK UMKM DI INDONESIA

INFO ARTHA ◽  
2017 ◽  
Vol 1 (2) ◽  
pp. 139-148
Author(s):  
Emik - Suyani
Keyword(s):  
Income Tax ◽  
Significant Contribution ◽  
Tax Compliance ◽  
Tax Revenue ◽  
Compliance Costs ◽  
Tax Revenues ◽  
Tax Amnesty ◽  
Reasonable Approach ◽  
National Tax ◽  
Tax Fairness

The SMEs have an important role in the development of Indonesia’s economy, representing 99.99% of the total enterprises in 2013 and had a significant contribution to GDP amounted to 60.34 % of the total GDP. However, this was not in line with the amount of national tax revenue, only under 0.5% of total tax revenues in 2014 and 2015. Along these years, Income tax for SMEs is calculated by utilizing the presumptive scheme with gross turnover as a proxy for income base.This study will analyze the current-implemented presumptive scheme and introduce other presumptive schemes. This study shows that current presumptive scheme has some the advantages, among others, having simplicity, having reasonable approach for calculating income tax and minimizing economic distortion. However, this scheme lead to the issue of tax fairness,  the low of tax compliance and the difficulty of conducting supervision. Another scheme could be taken into consideration, utilizing assets as a proxy of income base. This scheme will provide some benefits. It may encourage of the low tax compliance costs that lead to the high of tax compliance, and may relieve of conducting tax supervision. Moreover, this scheme is being regarded successful for tax amnesty program in Indonesia.Usaha Mikro, Kecil, dan Menengah (UMKM) berperan penting dalam pembangunan ekonomi Indonesia. Pada tahun 2103, UMKM menunjukkan 99,99% dari total pengusaha dan mempunyai kontribusi 60,34% dari total Produk Domestik Bruto (PDB). Namun, kontribusi UMKM terhadap total penerimaan pajak belum sejalan dengan kontribusi UMKM terhadap PDB. Selama tahun 2014 s.d. 2016, UMKM hanya menyumbangkan pajak kurang dari 0,5% dari total penerimaan pajak. Pengenaan Pajak Penghasilan untuk Wajib Pajak UMKM menggunakan skema presumptive dengan omzet sebagai proxy penghasilan, yaitu 1% dari peredaran bruto.Penelitian ini akan menganalisis skema presumptive yang sekarang digunakan dan memperkenalkan perspektif skema presumptive yang lain untuk diterapkan di Indonesia. Hasil penelitian menunjukkan bahwa skema presumptive dengan peredaran bruto sebagai proxy penghasilan memiliki kelebihan berupa kesederhanaan, mengakomodasi variabel yang mendekati penghitungan pajak, dan meminimalkan distorsi ekonomi. Kelemahannya adalah menimbulkan ketidakadilan pajak secara vertikal dan horizontal, tingkat kepatuhan yang rendah, dan pengawasan yang sulit. Pemerintah perlu melakukan analisis biaya dan manfaat jika ingin melanjutkan skema ini. Skema lainnya perlu juga untuk dipertimbangkan, yaitu penggunaan aset sebagai proxy penghasilan. Skema ini memiliki kelebihan baik untuk pemerintah maupun Wajib Pajak, antara lain biaya kepatuhan yang rendah, kepatuhan yang tinggi, dan pengawasan yang relatif mudah. Pemerintah dapat mempertimbangkan untuk menggunakan skema ini bercermin dari keberhasilan program tax amnesty.

scholarly journals Corporate Income Tax Compliance Costs and their Determinants: Evidence from Greece

2017 ◽  
pp. 233-270 ◽  
Author(s):  
Ioannis Stamatopoulos ◽  
Stamatina Hadjidema ◽  
Konstantinos Eleftheriou
Keyword(s):  
Income Tax ◽  
Tax Compliance ◽  
Corporate Income Tax ◽  
Compliance Costs
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