Journal of Tax Research

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This research seeks to review systematically the role of electronic invoices in the effective management of the Iranian tax system and its functions, as well as to identify the best possible solutions to deal with possible implementation challenges in this field. The research method in this study is “systematic review” which has been used as “a tool to analyze and understand research and reports related to electronic invoicing in an effective way and with considering of the dispersion of resources”. The searching process in this research has covered the most reliable sources of the last decade in the area of electronic invoices and related systems, and in applying this research method, the researchers have committed to the main objectives of the PRISMA guidelines for developing a systematic review protocol. In this framework, after preparing the resource database, data coding and analysis has been done using the Nvivo 12 program. By using the electronic invoicing system, Iranian National Tax Administration (INTA) can attain significant advantages, especially in the fields of provision of better services to taxpayers and promoting a culture of voluntary compliance, tackling tax evasion, creating economic transparency, facilitating the process of tax reporting and efficient and fair collection of value added tax revenues. In return for the mentioned advantages, the executive solutions in confronting the challenges in this field, such as the possibility of violations in B2C transactions and the non-realization of perfect removal of tax evasion in this sector, the cost and implementation burden for taxpayers, as well as specific transaction processes and businesses including uncertain and changeable transactions, should be taken into consideration.The most important achievements of establishing the electronic invoicing system may be defined in the form of (1) risk management and prevention of tax evasion, (2) reduction of tax compliance costs and burden and (3) developing sustainable resources, economic transparency and access to reliable information needed for economic forecasts in support of comprehensive and macro programs of the Government. Also, the regulatory frameworks, the level of maturity and characteristics of businesses, and the capacity and level of aptness of the Iranian tax system are the most important considerations and key points in the effective implementation of the electronic invoicing system and achieving the aforementioned goals, which should be considered by policymakers and executives in this field.
 

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This paper aims at presenting a theoretical explanation of economic factors involved in the emergence and development of tax evasion in the VAT system. According to the model proposed here, it is inferred that an increase in the cost payments subject to VAT will result in an increase of tax evasion or a decrease of tax compliance. Moreover, an increase in the probability of being caught or an increase in the sanction rate (as for cases where the tax files are not investigated) will result in an increase of tax compliance level and a result, in a decrease of tax evasion. The findings obtained, having supported theoretically, can help the Iranian VAT authorities in adopting a variety of appropriate policies to prevent tax evasion.

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In recent two decades, tax simplification has turned to be one essential component of tax reform plans in different countries. This is not only due to negative impacts complexity has on voluntary compliance costs resulting in tax evasion, but also due to the fact that it is a big barrier to tax fairness and efficiency (in case of income taxes) and as such, it is a factor far beyond administrative and compliance costs. Although a deeper understanding of various aspects of tax simplification requires more comprehensive investigations, this paper, which seems to be just a point of departure for putting such issues under discussion in Iran, aims at exploring different dimensions of tax simplification, reviewing different countries’ experience, and, in the end, offering some recommendations for reforming the Iranian tax system. Investigations show that a low compliance rate, a high volume of administrative circular directives, and an inappropriate combination of tax revenues do obviously indicate that the existing taxation system in Iran is quite complicated. Therefore, one of the essential challenges ahead of the Iranian taxation system can be tax simplification, in general, and tax laws simplification, in particular, which demands for a serious interaction between tax authority and legislating institutions.

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Tax compliance means accepting tax assessment and preparing to pay tax in a tax system. As voluntary compliance rate increases, tax indicators improve. Higher compliance rate is accompanied with the increased ratio of real tax revenue to the forcasted budget revenue. Effectiveness of tax system could be estimated based on non- compliance level or tax gap which is an important criteria in effectiveness of tax system. Deepening tax gap results in fundamental reforms. In this paper different aspects of tax compliance, present situation of Iranian system, different countries' experiences in tax compliance and its impacts in different dimensions were reviewed and finally policy recommendations for reforming state tax reforms directed at increasing tax compliance have been provided.

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The most important goal of a tax system is to increase tax compliance level. There is a clear and exact definition of tax compliance in the developed tax systems, while this concept is an unknown area in Iranian tax system. In Iranian tax texts, compliance is doing one's tax obligations according to the law. This definition is vague .The current paper has three main goals: a) studying different meanings of tax compliance in Iranian tax law, b) selection of a clear and precise definition of tax compliance and c) estimation of tax compliance rate and its obstacles in Iranian tax system. Our research method is based on library research method. The results indicate that tax compliance rate in Iran has increased from 18.8 percent to 49 percent between 2002 and 2009.

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All tax systems seek to collect the payable taxes, based on the related tax laws, and also use their resources effectively. So, determining the areas in which the tax compliance is low or there is no compliance, and also ranking those areas are regarded as a part of allocation process of scarce resources in achieving the maximum efficiency and effectiveness. Since the main goal of compliance is to assess the efficiency and effectiveness of the strategies used in fields in which the non-compliance dilemma is noticed, then doing research in respect of the quantitative tax compliance measurement models and its related methods and indexes is necessary. The main purpose of this research is to present a summary of attempts done in measuring the tax compliance using library study. The results show that there is no special model or theory to measure the tax compliance while regarding all effective factors but the Fisher Model can present a good one to do research about tax compliance, although some variables should be added to that model.

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This paper is to survey risk-based tax audit and it’s determinants by emphasizing on taxpayers size and experience of other countries which is conducted through audit plan based on risk and tax compliance management, calculation and assessment methods of risk with proper services and education to taxpayers. According to this research model, tax administration can use risk-based audit plus external and internal data such as custom, bank, insurance and previous tax return data to confirm taxpayers’ information by means of risk- based analysis and Information Technology (IT), statistical methods and current software like data mining in order to risk Scoring of each taxpayer. High and low risk taxpayers can be detected by risk- based scoring system and providing profile for each taxpayer which lead to maximum tax income with Tax equity and improvement satisfaction level of taxpayers by focusing on high risk taxpayer regard to resource limitation

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Abstract The current research is intended to study the relationship between organizational citizenship behavior of the taxation staff and tax compliance behavior of the taxpayers. To do it, 255 personnel of the taxation office and 275 taxpayers of Mazandaran tax affairs general directorate were randomly selected and answered to Organ’s questionnaire of organizational citizenship behavior (1991) and another researcher-made questionnaire for taxpayers’ compliance. Finally, the results from those questionnaires were analyzed by Spearman’s correlation coefficient and the findings indicated that morality, fairness, civility, altruism, fantasy and respect among the staff of taxation affairs and taxpayers’ compliance are significantly related (p< 0/01) and the results from Friedman test indicated that politeness together with prestige is considered as the first priority among the dimensions of citizenship organizational behaviors for personnel at tax general directorate (mean rank= 3/32).

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  In many countries the main part of government revenue resources is raised by tax. Among countries tax share of total public revenues is different and it depends on development level and economic structure. So, governments have focused on practical solutions such as increasing tax collection and decreasing costs of tax collections as the most important issues. During previous years a series of media advertising activities have been done to develop and create desirable tax culture. This paper has attempted to review advertising activities’ impact as an index of improving tax related activities. This research is applied and descriptive and it uses questionnaire as an instrument for collecting data, so it is a kind of survey and field study. The statistical population includes all businesses subject to paragraph (c) of Direct Tax Act in Shahrekord in 1390 which is estimated 6300 and the random sample has been selected as 362 by Cochran formula. The reliability of questionnaire is 0.95 and data was analysed by SPSS19. The results have indicated that advertisement has average impact on tax payment and on fields like public awareness of tax laws, sanctions and the way to spend it, tax culture expansion and tax justice promotion, the impact is less than average level.

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  Voluntary tax compliance is one of the important approaches to promote tax organization’s efficiency. The aims of this approach will be successfully realized when tax authorities properly identify and control the related affecting factors. Generally in tax compliance related studies, economic factors are more emphasized. While, according to the international researches, internal and psychological factors are as important as economic ones. Tax system’s fairness perception is one of the important internal factors which have been focused in recent decades by researches. Perceived fairness is the base to mutual confidence and it is emphasized in tax compliance. This descriptive and survey study has been sought to assess the effects of perceived tax fairness on taxpayers compliance behavior. At the same time the effects of tax knowledge and tax system complexity on tax fairness perception has been reviewed. The Structural Equations Modeling Method has been used to test researches hypotheses. The results of research have indicated that perceived tax fairness significantly influence tax compliance behaviors tax knowledge positively influences fairness perceptions tax complexity has an inverse relationship with fairness perceptions.

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This study investigates tax cultural factors’ effects on tax compliance among taxpayers of 11 provinces of Iran. Tax compliance and tax culture improvement is the focus of the general public finance experts and tax authorities to create new tax bases or extension of the old ones. The richer the community’s tax culture is, the more successful and easier would be tax collection by tax administrations, and as a result taxpayers are willing to do their legal obligations. The data of the research has been collected by questionnaire. The statistical population includes 11 provinces which have compliance indices of 93% and more. In general 324 taxpayers were selected as a statistical sample. The data was analyzed with SPSS software using T-test and one-factor analysis, exploratory factor analysis. The reliability which was calculated with Cronbach alpha coefficient is 92%. All assumptions which were tested are 95% significant. Among the features of tax culture, Justice and function, with an average of 3/59, have the greatest influence on tax compliance. Taxpayers’ honesty and sense of responsibility with an average of 3/17 is in the second level and willingness to pay taxes by the average of 3/14 is in third level and has the lowest level of effect on tax compliance vis-à-vis two other variables

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  Abstract

  Taxpayers risk-based audit selection and audit planning requires identification of each taxpayer’s risk which in turn requires identification of factors affecting risks. There is no complete and comprehensive model for the selection of taxpayer based on the assessment of the risk level and selection of the taxpayer for audit in Iranian National Tax Administration (INTA). In this study, 15 independent variables as the influencing factors on corporate compliance risk have been identified and tested in the form of three main hypotheses and 14 sub-hypotheses. These independent variables have significant relationships with the taxpayers’ compliance risk independent variable among 228 corporates of the Tax Affairs General Directorate of West of Tehran. The different tests appropriate to the type of independent variables were used to test the hypotheses.

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Abstract

The aim of the present research is to identify and study effective factors on tax compliance advertisement for legal taxpayers of Mashhad with AHP approach. The research method is descriptive-survey and this research is of applied one. The statistic society includes middle managers, senior managers, legal taxpayers and State Tax Administration’s content of the advertisement in 1392-1393. In this research, we can conclude that the most effective criteria can be summarized in the form of criteria for taxpayers’ attitudes in their behaviors, advertisement performance, mentally receiving advertisement, way of message transfer, tendency steps, and finally literary structure of advertisement. Also the study of legal taxpayers indicates that each of these identified criteria is important on improving the effectiveness of advertisement on tax compliance.

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Risk management is one of the tax compliance instruments which are aimed to improve taxpayers’ compliance. In this view, effective factors of taxpayers risk are identified, meanwhile taxpayers are classified in different levels and effective tax strategies which are coordinated with each level of risks are chosen and utilized in order to institutionalize rendering services and suitable education, self-assessment and voluntary compliance. The size of taxpayers considered to be one of the main factors affecting their risks. Indeed, developing and implementing effective and targeted strategies for tax compliance regardless of size taxpayers will not be possible. In this research, the independent variable, the taxpayer size, and its significance relationship to the dependent variable, the risk of taxpayer compliance, were tested in two forms which were distributed among 210 legal taxpayers of Western Tehran Tax organization. In order to test the significance relationship of the taxpayer size variable, the Kruskal-Wallas non-parametric one-way variance was used. At the end, the test showed that the taxpayer size variable bore an inverse significant relationship to the dependent variable, the risk running by taxpayer. Furthermore the inverse relationship between taxpayer size and the risk running by corporate operating in different manufacturing, service, trading, and contracting sectors have also been examined. In this regard, we witnessed an inverse significant relationship between taxpayer size and the risk of compliance simply for the taxpayers operating in trading sector. In other words, the risk of their compliance would diminish as the size of the taxpayers operating in the trading sector grows.

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Abstract

 In this study, a framework for tax compliance is presented in which both the power of tax authorities and trust in them are related dimensions for understanding enforced and voluntary compliance. The dynamic interactions between power and trust are considered. The framework known as slippery slope framework assumes that tax compliance is depended on authorities’ power and Trust in them and voluntary cooperation. The Structural Equation Modeling is used to test slippery slope framework and 362 business owners will be examined. The results show that trust is positively related to voluntary compliance. The trust on authorities also is positively related to legitimate power and negatively correlated with coercive power. The Legitimate power and coercive power are related to forced compliance. Overall, the results are showing the multidimensional nature of power and trust and their relationship with tax compliance. The results also illustrate the importance of power and trust in tax policy.

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One of the outstanding aspects in Islamic taxes such as Khums and Zakat is the use of a voluntary system for motivation, calculation and payment. In contrast, conventional taxes mainly use a control-incentive framework for tax compliance. Using an analytical approach, the current paper evaluates the plausibility of the two tax systems by asking whether we could use control and incentive polices in the Islamic tax system, as it is used in the conventional tax system. I hypothesize that morality plays an important role in the Islamic tax system and use of control and incentives might produce problems such as intrinsic motivation crowding out effect and weakening the moral training capacity of Islamic taxes. According to the findings of the paper, the use of sever control policies and conventional incentive polices affect moral incentives for tax payments in two ways. The control policies erode self-esteem and incentive polices change the mentality of agents about exchange market for tax payment. It seems that the efforts of Islam to expand the system of self declaration, the consumption of taxes in place in which they have been collected, flexible tax rates, the necessity of good intention during paying taxes and emphasis on training aspects of the tax, shows that Islam has been aware of the negative effects of control and incentive polices on tax morale.

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In order to deal with non-compliance behaviors, tax systems devise various strategies based on taxpayers’ incentives. Since taxpayers are not considered as homogeneous group, their tax compliance level can be different from each other and their conditions always change during different periods. According to the Tax Justice Principle, appropriate strategies are adopted to deal with taxpayers based on their tax compliance level to attract their trust to tax administration then tax compliance is measured in each taxpayer's level. As there is no tax compliance measurement model in Iranian tax system, this research is to present a model to measure tax compliance in each taxpayer' level. So ANP and DEMATEL questionnaires have been designed and sent to 30 tax experts. Finally, the indexes of tax compliance were identified by using the Exploration Study Method in case of legal entities - which are correlated with the taxpayer's duties in compliance with the obligations of Iranian Direct and Value Added Tax Acts- and then Mixed Fuzzy ANP and DEMATEL Method have been implemented by Superdecision software. The Standard Numeral Quantity of each tax compliance indexes was measured and hereby the tax compliance measurement model in each taxpayer's level was presented. According to the results, if the mentioned in this research and tax risk measurement model are used together, the Iranian Tax Administration  can play an important role in improvement of tax compliance level.

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Regarding the cultural factors affecting tax compliance, there is strong evidence that taxpayers are not just affected by binding legal mechanisms and instruments in various countries. This paper examines the promotion of tax culture and its impact on the expansion of tax umbrella and the identification of new taxpayers. In this research, the factors affecting tax culture have first been identified and ranked using Analytical Hierarchy Process (AHP) in the following nine groups: cultural and demographic norms, social values, financial and administrative corruption in the society, the rule of law, tax knowledge, enforcement guarantees, satisfaction of taxpayers and tax officials and the determination of government officials. Then, the impact of factors so identified on the expansion of tax umbrella has been studied. This research has been conducted at the level of experts consisting of university faculty members, tax auditors, and directors of departments at the Iranian National Tax Administration. According to the results obtained, enforcement guarantee, tax knowledge and cultural norms ranked first to third. Also, the sub- criteria of age difference of individuals, improvement of the ethics of employees in each profession, the existence of poverty in society and insufficient prosperity, observance of laws, observance of morality and values, familiarity of individuals with criminal acts, index of public supervision over the spending of tax revenues, taxpayer's perception of an equal application of law, reverence by tax officials, clarification of the law and its efficiency have been scored the highest in the sub-criteria prioritization. The results of the study in regard with the effect of the identified factors on the expansion of tax umbrella showed that cultural norms, social values and levels of financial and administrative corruption had the highest impacts.

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The country's tax system has always faced many challenges in the business sector, and various factors have caused lack of tax compliance in this sector. In this research, the identification and ranking of effective behavioural factors affecting non-compliance of business tax has been pursued with the aim[1] of answering the question that " what are the most important factors affecting the non-compliance of business tax from the point of view of experts?" has been followed. To this end, the components and indicators of non-compliance tax behaviour in the field of business were extracted based on the literature and theoretical foundations, then based on the theory of planned behaviour, behavioural modelling has been done. Then a matrix questionnaire was used for data collection based on the Saaty paired comparison technique. Finally, according to the experts' opinion in this area, using the Analytical Hierarchy Process (AHP) method and the Expert Choice software, factors from the previous stage have been ranked. The results indicate that among the main indices, norms (social and individual) are the most important ones. Among the sub-indicators of perception, norms and perceived behavioural control, information asymmetry, main referent behaviour and third-party reporting, have the highest importance in non-compliance respectively.

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The aim of this study is to design a system model of accountability in the tax system of the Islamic Republic of Iran. For this purpose, the mixed research method was used. First, the Delphi technique was used to identify the legitimate demands and expectations of taxpayers as inputs of the model. In the next step, 4 types of accountability mechanisms were identified as components of transformation process of the model. In the third step, through  partial least squares path modeling, using Smart PLS software, the impact of tax system's accountability on social-psychological variables of public trust, legitimacy and public satisfaction as outputs of the model, as well as the impact of public trust, legitimacy and public satisfaction on voluntary tax compliance, as outcome of the model, was tested. The findings indicated that, when the status of the political accountability is not at the optimal level, the optimal level of managerial and legal accountability does not have a significant impact on voluntary tax compliance.