The Influence of the Corporate Sector on the Effectiveness of Tax Compliance Instruments

Abstract

This chapter investigates the effects of the corporate sector on the effectiveness of selected tax compliance instruments in the context of large corporate taxpayers belonging to the finance, manufacturing, and service sectors. Applying multilevel logit models based on real tax office and survey data from Bangladesh, it is found that the filing compliance of large corporate taxpayers is influenced by penalty, tax audit, and taxpayer services, while reporting compliance is influenced by tax audit, criminal prosecution, and tax simplification. In the case of payment compliance, two coercive instruments – penalty and tax audit – have been found to be statistically significant. However, when sector characteristics are considered, the extent of the influence of these instruments, and, in some cases, their statistical significance changes. This suggests that the effectiveness of tax compliance instruments, among other things, largely depends on the sector affiliation of corporate taxpayers. Overall, this study establishes that corporate sector plays an important role in the effectiveness of tax compliance instruments, with the caveat that findings might be different if working definitions of the study variables were measured differently.

Citation

Akhand, Z. (2018), "The Influence of the Corporate Sector on the Effectiveness of Tax Compliance Instruments", Advances in Taxation (Advances in Taxation, Vol. 25), Emerald Publishing Limited, Leeds, pp. 119-146. https://doi.org/10.1108/S1058-749720180000025006