Issues, challenges and problems with tax evasion

The institutional factors approach

Mohd Rizal Palil, Marlin Marissa Malek, Abdul Rahim Jaguli

Research output: Contribution to journalArticle

Abstract

Tax evasion, particularly in developing countries is a debatable issue. Evasion is a disease and needs to be minimized so that the black economy or hidden economy can be mitigated. This paper attempts to reveal the determinants of tax evasion from the institutional perspectives. The objective of this study is to identify the determinants of tax evasion a decade after the introduction of a Self-Assess-ment System (SAS). Three institutional perspectives of the determinants of tax evasion were examined, namely the probability of being detected, the role of the tax authority and the complexity of the tax system. The results suggested that the complexity of the system, and the probability of being detected had a significant impact on tax evasion. The results of this study could possibly contribute to the body of knowledge in lieu of combating tax evasion, as well as being an input to tax administrators and policymakers into which ways the determinants can affect compliance. The findings also provide an indicator for tax administrators of the relative importance of the tax system in assisting with the design of tax education programs, simplifying tax systems and developing a wider understanding of taxpayers’ behavior.

Original languageEnglish
Pages (from-to)187-206
Number of pages20
JournalGadjah Mada International Journal of Business
Volume18
Issue number2
Publication statusPublished - 1 May 2016

Fingerprint

Tax evasion
Institutional factors
Tax
Tax system
Institutional perspective
Authority
Hidden economy
Relative importance
Politicians
Education
Evasion
Developing countries
Body of knowledge

Keywords

  • Black economy
  • Hidden economy
  • Institutional factors
  • Self assessment system
  • Tax evasion

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics

Cite this

Issues, challenges and problems with tax evasion : The institutional factors approach. / Palil, Mohd Rizal; Malek, Marlin Marissa; Jaguli, Abdul Rahim.

In: Gadjah Mada International Journal of Business, Vol. 18, No. 2, 01.05.2016, p. 187-206.

Research output: Contribution to journalArticle

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