The Hidden Compliance Cost of VAT: An Exploration of Psychological and Corruption Costs of VAT in a Developing Country

eJournal of Tax Research, Vol 14(1); 2016 166-205

Griffith University Law School Research Paper No. 16-16

41 Pages Posted: 18 Aug 2016

See all articles by Nahida Faridy

Nahida Faridy

Griffith University - Department of Accounting, Finance and Economics

Brett Freudenberg

Griffith University - Griffith Business School; Griffith University - Griffith Law School

Tapan Sarker

University of Southern Queensland; University of Southern Queensland

Richard Copp

Griffith University - Griffith Business School

Date Written: August 16, 2016

Abstract

A Value Added Tax (VAT) is seen as critical in providing the tax revenue base for governments, especially developing nations. However, prior research about VAT compliance costs has largely occurred in developed nations and has generally excluded psychological and corruption costs. This article reports a study which measures and reflects upon the psychological costs both in quantitative and qualitative terms for small and medium enterprises in a developing nation, Bangladesh. The cost of corruption is also considered. The findings of this study provide valuable insights as to what is the true compliance cost for VAT in a developing country.

Keywords: small business, private enterprise, VAT, compliance cost, Bangladesh

JEL Classification: K34, H25, H26, L20, L51

Suggested Citation

Faridy, Nahida and Freudenberg, Brett and Sarker, Tapan and Copp, Richard, The Hidden Compliance Cost of VAT: An Exploration of Psychological and Corruption Costs of VAT in a Developing Country (August 16, 2016). eJournal of Tax Research, Vol 14(1); 2016 166-205, Griffith University Law School Research Paper No. 16-16, Available at SSRN: https://ssrn.com/abstract=2824781

Nahida Faridy

Griffith University - Department of Accounting, Finance and Economics ( email )

PMB 50
Gold Coast Queensland 9726
Australia

Brett Freudenberg (Contact Author)

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Griffith University - Griffith Law School ( email )

Nathan Campus, GU
Nathan 4111
Australia

Tapan Sarker

University of Southern Queensland ( email )

Springfield Central
Springfield
Brisbane, Queensland 4111 4300
Australia

University of Southern Queensland ( email )

P.O.Box 238 Darling Heights
Toowoomba, Queensland 4350
Australia

HOME PAGE: http://https://staffprofile.usq.edu.au/Profile/Tapan-Sarker

Richard Copp

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

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