Inside the Velvet Glove: Sustaining Private Regulatory Institutions Through Hollowing and Fortifying

The forces that threaten to break apart private regulatory institutions are well known, but the forces that sustain them are not. Through a longitudinal inductive study of the Toward Sustainable Mining (TSM) program in the Canadian mining industry, we demonstrate how private regulatory institutions are sustained by strategically manipulating different aspects of an institution’s stringency. Our findings show how shifts in external conditions decreased benefits of participation for firms, triggering institutional destabilization. We demonstrate how the interdependent mechanisms of hollowing—actions that ratchet down aspects of stringency associated with high compliance costs—and fortifying—actions that ratchet up aspects of stringency associated with low compliance costs—worked together to stabilize the institution by rebalancing the competing pressures that underpin it. However, these same mechanisms can hinder the ability of these institutions to substantively address the targeted issues, even as they become more stringent in some areas. Our study advances research on private regulation by showing how different aspects of stringency can be simultaneously ratcheted up and ratcheted down to sustain private regulatory institutions. Further, in positioning institutional stability as an ongoing negotiation, we elucidate the key custodial role of governing organizations like trade associations in institutional maintenance.

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

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.

Tax Administration Issues on Revenue Recognition after IFRS 15 Adoption in Indonesia

This study aims to provide a brief and analytical reporting on IFRS 15 adoption in Indonesia into PSAK 72 related to Income Tax and Value Added Tax issues that may arise. We use literature studies to collect data and strengthen it with in-depth interviews of taxpayers, PSAK standard setter, tax consulting practicioner, and Directorate General of Taxes official. Our findings demonstrate the need for entities to consider taxation issues that may arise due to revenue recognition developments. Unconformity that may arise between accounting and tax requires the entity to explain these differences by documenting them early. Taxpayers need to underline the burden of compliance arising from the IFRS 15 adoption, which is the compliance costs in the form of mark-to-market and realization taxation. In implementing PSAK 72 to align with the realization principle in the Income Tax Law, the taxpayer compliance cost will increase by making detailed fiscal reconciliations. From the VAT perspective, the Tax Paying Entrepreneurs need to make contract adjustments with the counterparty to ensure that the time of supply is the basis for determining the VAT payable. This research presents the gap between accounting and taxation so that it can be a lesson for application in other countries.

EU court ruling raises compliance costs for tech firms

Headline EUROPE: Court ruling ups compliance costs for tech

Pengaruh Penerapan Sistem E-Filling, Sanksi Perpajakan, Biaya Kepatuhan dan Pengetahuan Perpajakan Terhadap Kepatuhan WPOP pada KPP Pratama Badung Utara

This study aims to empirically test the effect of the application of e-filling system, tax sanctions, compliance costs and tax knowledge on the compliance of private taxpayers. The method of analysis used in this study is multiple linear regression analysis. The method of sampling taxpayers using the slovin formula, with the taxpayer sample used is as many as 100 respoden. The sample determination method uses a simple random sampling method. The results of this study showed that variable application of e-filling (X1) positively and significantly affects the compliance of private taxpayers. This is evidenced by the significance result of 0.000<0.05. Tax sanctions (X2) have a positive and significant effect on the compliance of private taxpayers. This is evidenced by the significance result of 0.001<0.05. Compliance costs (X3) have a positive and significant impact on the compliance of private persons taxpayers. This is evidenced by the significance result of 0.000<0.05. Tax knowledge (X3) has a positive and significant effect on the compliance of private taxpayers. This is evidenced by the significance of 0.000<0.05.

Determinan Kepatuhan Wajib Pajak UMKM Di Kabupaten Kudus

The purpose of this study was to determine the effect of tax officer service quality, tax sanctions, tax compliance costs, tax socialization, and financial conditions on taxpayer compliance at MSMEs in Kudus Regency. The population used in this study were the owners of MSME in Kudus Regency, amounting to 14,941 MSMEs. The sampling method used purposive sampling to obtain 185 respondents. The statistical method used is the Structural Equation Model with processing assistance using Amos 24. The result of the study show that tax officer service quality, tax sanctions, and tax sosialization have a positive effect on taxpayer compliance, while tax compliance costs and financial conditions does not affect on taxpayer compliance. Keywords: Tax officer service quality, tax sanctions, tax compliance costs, tax sosialization, financial conditions, and taxpayer compliance

A MODEL-THEORETICAL ANALYSIS FOR DIGITAL TAX ADMINISTRATIONS

Fairness in the sense of tax equality is a fundamental principle in modern tax systems. In recent years tax administrations have been making tremendous advances in moving from paper tax returns to a far-reaching digitalisation of the taxation procedure. This paper represents the first attempt to examine the impact of digitalisation of the tax administration on fair taxation through model theory. The model suggested in this paper is based on Allingham and Sandmo’s tax evasion model (Allingham & Sandmo, 1972, 323–338) supplemented by psychological costs of tax evasion and compliance costs and then transferred to the context of digitalisation and fair taxation. The model is intended to mathematically derive the influence of various digitalisation measures on the taxpayer's decision to behave fairly. It implies that the objective of fair taxation should be promoted with a mix of deterrent and encouraging measures.

Foreign cyberattacks will make US policy more coercive

Significance These sprints are part of a wider overhaul of national cybersecurity necessitated by the recently uncovered Russia-linked SolarWinds hack and the China-linked Microsoft Exchange hack. These are the two largest known attacks against the country. Impacts Federal rules on government procurement of IT hardware and software will tighten, increasing compliance costs for private vendors. Several new ransomware and other cyberattacks linked to Microsoft Exchange servers are likely to surface in coming months and years. The SolarWinds and Microsoft Exchange hacks will cost billions of dollars in insurance costs and additional cybersecurity investments.

The Disproportionate Sales Tax Compliance Burden on Small- and Medium-Sized Online Businesses After Wayfair

Many states’ sales and use tax provisions, updated in response to the Supreme Court’s decision in South Dakota v. Wayfair, Inc., will likely impose a disproportionate tax compliance burden on small- and medium-sized businesses (SMBs) that engage in e-commerce. Relative to large companies like Amazon and eBay, SMBs cannot absorb the high compliance costs associated with tracking, collecting, and remitting taxes. Wayfair expanded states’ authority to collect sales taxes on companies without a physical presence in the state. But states should wield this power judiciously. While mimicking South Dakota’s statute (upheld as constitutional in Wayfair) may help states avoid litigation, they would better promote the goals of fairness and efficiency by exempting a larger category of small vendors from sales tax obligations. In light of the COVID‑19 pandemic, which has acutely hurt SMBs, reducing sales tax-related compliance burden would also help states provide relief to struggling SMBs. States should (1) clarify which entities are subject to the remote seller and marketplace facilitator statutes and (2) raise the de minimis safe harbor thresholds that shield smaller businesses from having to remit taxes.