Journal of Tax Reform
The Impact of the Size of Enterprises on Tax Evasion in the Forestry Industry of Russia
Iu.E. Labunets, I.A. Mayburov
Ural Federal University, Ekaterinburg, Russian Federation
Abstract
The problem of low tax revenues and a large shadow sector is relevant to many countries and industries, and the forestry industry in Russia is no exception. This study examines the forms of tax evasion in various segments of the forestry industry to evaluate the impact of the size of businesses and the level of tax audit risk on the frequency of same-type tax responses. The hypothesis is that same-type tax responses in the form of tax evasion are observed in businesses of all sizes of the forestry industry. The frequency of these tax responses correlates with the level of tax audit risk. The representative sample of micro-, small and mid-sized businesses comprises 7,910 enterprises. For each enterprise included in the sample we calculated the level of tax audit risk for the period of 2017-2020. Audit risk was calculated as a cumulative indicator of the incidence of non-compliance, which was detected by comparing the calculated and normative values of the criteria described in the Federal Tax Service’s Concept of the System of Planning of On-Site Tax Audits. The study found that the businesses of all sizes from all sectors of the forestry industry resorted to tax evasion. The specific forms and structural elements of their responses were described. The correlation and regression analysis has shown that there is a strong direct relationship between the level of tax audit risk and the frequency of same-type tax responses. The occurrence of same-type tax responses points to the weaker impact of economic factors within the traditional model of tax behaviour. These findings can be of interest to the tax authorities and policy-makers seeking to raise tax revenues collected from enterprises of the Russian forestry industry.
Keywords
tax response, tax behaviour, tax evasion, forestry industry, tax audit risk, business size
JEL classification
G40, L60References
1. Allingam M.G., Sandmo A. Income Tax Evasion: A Theoretical Analysis. Journal of Public Economics. 1972;1(3-4):323–338. https://doi.org/10.1016/0047-2727(72)90010-2
2. Alm J., McClelland G.H., Schulze W.D. Why do people pay taxes? Journal of Public Economics. 1992;48(1):21–38. https://doi.org/10.1016/0047-2727(92)90040-M
3. Slemrod J., Blumenthal M., Christian C. Taxpayer Response to an Increased Probability of Audit: Evidence from a Controlled Experiment in Minnesota. Journal of Public Economics. 2001;79(3):455–483. https://doi.org/10.1016/S0047-2727(99)00107-3
4. Alm J., Mckee M. Audit Certainty, Audit Productivity, and Taxpayer Compliance. National Tax Journal. 2006;59(4):801–816. https://doi.org/10.17310/ntj.2006.4.03
5. Alm J., Enami A., McKee M. Who Responds? Disentangling the Effects of Audits on Individual Tax Compliance Behavior. Atlantic Economic Journal. 2020;48(2):147–159. https://doi.org/10.1007/s11293-020-09672-4
6. Manhire J. Tax Compliance as a Wicked System. Florida Tax Review. 2016;18(6):235–274. https://doi.org/10.2139/ssrn.2586556
7. Kleven H.J., Knudsen M., Kreiner C.T., Pedersen S., Saez E. Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark. Econometrica. 2011;79(3):651–692. https://doi.org/10.3982/ECTA9113
8. Alm J., Malézieux A. 40 years of tax evasion games: A meta-analysis. Experimental Economics. 2021;24:699–750. https://doi.org/10.1007/s10683-020-09679-3
9. Kogler C., Olsen J., Müller M., Kirchler E. Information processing in tax decisions: a MouselabWEB study on the deterrence model of income tax evasion. Journal of Behavioral Decision Making. 2022;1:1–15. https://doi.org/10.1002/bdm.2272
10. Kahneman D., Tversky A. Prospect Theory: An Analysis of Decision under Risk. Econometrica. 1979;47(2):263–292. https://doi.org/10.1017/CBO9780511803475.003
11. James S. Combining the Contributions of Behavioral Economics and Other Social Sciences in Understanding Taxation and Tax Reform. Conference of the Society for the Advancement of Behavioral Economics, San Diego State University, August 2–5. 2010:1–19. https://doi.org/10.2139/ssrn.1705207
12. De Giovanni D., Lamantia F., Pezzino M. Evolutionary Tax Evasion, Prospect Theory and Heterogeneous Taxpayers. In: Szidarovszky F., Bischi G. (eds). Games and Dynamics in Economics. Springer, Singapore; 2020, pp. 89–102. https://doi.org/10.1007/978-981-15-3623-6_5
13. Weber T.O., Fooken J., Herrmann B. Behavioural Economics and Taxation. Taxation Papers. No. 41. 2014. 37 p. Available at: http://ec.europa.eu/taxation_customs/taxation/gen_info/ economic_analysis/ tax_papers/index_en.htm
14. Alm J. Expanding the theory of tax compliance from individual to group motivations. Turlane Economic Working Paper Series. Tulane University. 2014:260–277. https://doi.org/10.4337/9781781004715.00020
15. Shakkour A., Almohtaseb A., Matahen R.K., Shakkour N. Factors influencing the value added tax compliance in small and medium enterprises in Jordan. Management Science Letters. 2021;11:1317–1330. https://doi.org/10.5267/j.msl.2020.11.007
16. Alshira A.F., Abdul-Jabbar H., Samsudin R.S. Sales Tax Compliance Model for the Jordanian Small and Medium Enterprises. International Journal of Economics and Finance. 2019;11(5):114–127. https://doi.org/10.5539/ijef.v11n5p114
17. Irawan B., Khoirunurrofik. Understanding Tax Morale of Micro, Small, and Medium Enterprises in Jabodetabek. Proceedings of the Asia-Pacific Research in Social Sciences and Humanities Universitas Indonesia Conference (APRISH 2019). Advances in Social Science, Education and Humanities Research. 2021;58:449–457. https://doi.org/10.2991/assehr.k.210531.058
18. Rashid Md. H. Firms’ Characteristics and Tax Evasion. In: Handbook of Research on Theory and Practice of Financial Crimes. Edition: First Chapter: 22 Publisher: IGI Global, USA; 2021, pp. 428–451. https://doi.org/10.4018/978-1-7998-5567-5.ch022
19. Payne J.E. Saunoris J.W. Corruption and Firm Tax Evasion in Transition Economies: Results from Censored Quantile Instrumental Variables Estimation. Atlantic Economic Journal. 2020;48:195–206. https://doi.org/10.1007/s11293-020-09666-2
20. Alshira’h A., Abdul-Jabbar H., Samsudin R., Intan T. The Effect of Tax Moral on Sales Tax Compliance among Jordanian SMEs. International Journal of Academic Research in Accounting, Finance and Management Sciences. 2019;9(1):30–41. https://doi.org/10.6007/IJARAFMS/v9-i1/5722
21. Vincent O. The development of a scale to measure SMEs tax compliance in Nigeria: An adaptation of Fischer’s model. Journal of Accounting and Taxation. 2021;13(3):132–143. https://doi.org/10.5897/JAT2021.0479
22. Amponsah S., Isshaq Z., Agyapong D. Determinants of tax stamp evasion in rural districts in Ghana. International Journal of Law and Management. 2019;61(1):73–90. doi.org10.1108/IJLMA-08-2017-0190
23. Werekoh E.A.The Effects of Taxation on Economic Development: the Moderating Role of Tax Compliance Among SMEs. Research Square. 2020. https://doi.org/10.21203/rs.3.rs-1238141/v1
24. Kireenko A.P., Nevzorova E.N., Fedotov D.Yu. Sector-Specific Characteristics of TaxCrime in Russia. Journal of Tax Reform. 2019;5(3):249–264. https://doi.org/10.15826/jtr.2019.5.3.071
25. Dabla-Norris E., Gradstein M., Miryugin F., Misch F. Productivity and Tax Evasion. IMF Working Papers. 2019;260:1–33. https://doi.org/10.5089/9781513518619.001
26. Kelmanson B., Kirabaeva K., Medina L., Mircheva B. Explaining the Shadow Economy in Europe: Size, Causes and Policy Options. International Monetary Fund (IMF) Research Paper Series. 2019;278:1–22. https://doi.org/10.5089/9781513520698.001
27. Lopez J.J. A quantitative theory of tax evasion. Journal of Macroeconomics. 2017;53:107–126. https://doi.org/10.1016/J.JMACRO.2017.06.005
28. Alm J., Liu Y., Zhang K. Financial constraints and firm tax evasion. International Tax and Public Finance. 2019;26:71–102. https://doi.org/10.1007/S10797-018-9502-7
29. Barth E., Ognedal T. Tax Evasion in Firms. Labour.2018;32(1):23–44. https://doi.org/10.1111/labr.12111
30. Mayburov I.A., Labunets Iu. E. Taxpayer behavior patterns of firms and their classification. In: Conference: 37th IBIMA Conference on 30–31 May 2021 Cordoba, Spain. Conference proceedings, pp. 4193–4197. Available at: https://ibima.org/accepted-paper/taxpayer-behavior-patterns-of-firms-and-their-classification/
About Authors
Iulia E. Labunets – Post-Graduate Student, Department of Financial and Tax Management, Ural Federal University named after the first President of Russia B.N. Yeltsin (19 Mira St., 620002, Yekaterinburg, Russian Federation); ORCID: https://orcid.org/0000-0001-8522-4115; e-mail: ulya.ev_84@mail.ru
Igor A. Mayburov – Doctor of Economics, Professor, Head of the Department of Financial and Tax Management, Ural Federal University named the first President of Russia B.N. Yeltsin (19 Mira St., 620002, Yekaterinburg, Russian Federation); ORCID: https://orcid.org/0000-0001-8791-665X; e-mail: mayburov.home@gmail.com
For citation
Labunets Iu.E., Mayburov I.A. The Impact of the Size of Enterprises on Tax Evasion in the Forestry Industry of Russia. Journal of Tax Reform. 2022;8(1):88–101. doi.org/10.15826/jtr.2022.8.1.110
Article info
Received January 16, 2022; Revised February 28, 2022; Accepted April 3, 2022
DOI: https://doi.org/10.15826/jtr.2022.8.1.110
Download full text article:
~437 KB, *.pdf
(Uploaded
22.04.2022)
Created / Updated: 31 August 2015 / 3 July 2017
© Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B.N.Yeltsin»
Remarks?
select the text and press:
Ctrl + Enter
Portal design: Artsofte
ISSN 2414-9497 (online)