The Tax Compliance Costs of Large Corporations: An Empirical Inquiry and Comparative Analysis

45 Pages Posted: 2 Feb 2017 Last revised: 10 Sep 2018

See all articles by Chris Evans

Chris Evans

University of New South Wales

Philip Lignier

University of Tasmania

Binh Tran-Nam

University of New South Wales (UNSW) - School of Taxation and Business Law

Date Written: 2016

Abstract

This article considers the tax compliance costs incurred by the large corporate sector. Using a survey of large and very large businesses and international groups in Australia, and drawing on the findings of other studies, the authors compare and contrast the current burden with the burden encountered by such businesses in Australia and elsewhere in recent years. They identify key trends in the compliance cost profile of the large corporate sector and possible explanations for those trends. They also discuss the factors that are perceived by survey respondents to give rise to high compliance costs. Finally, they provide insights into the relationship between the tax-risk positions taken by Australian firms in the large corporate sector and the compliance cost profiles of those firms.

The research outcomes are both confirmatory and insightful. They confirm key findings from the literature that tax compliance costs are significant, regressive, and not reducing over time, but also provide new insights into the compliance cost profile of the large corporate sector -- an area of research that has previously been largely unexplored. The research suggests that, apart from business size, the number of taxes that the entity has to comply with is a significant predictor of the level of tax compliance costs. In addition, it suggests that, after controlling for size, entities that have been identified as a significant compliance risk by the tax authority have higher compliance costs than those with lower risk classifications. Besides these statistically measurable determinants, the study suggests that three broad drivers of tax compliance costs are perceived by taxpayers: the complexity and uncertainty of tax rules, the administrative compliance requirements imposed by tax authorities, and international exposure.

Keywords: Tax; Tax Administration; Operating Costs; Large Corporations Tax; Risk Management; Compliance

Suggested Citation

Evans, Christopher Charles and Lignier, Philip and Tran-Nam, Binh, The Tax Compliance Costs of Large Corporations: An Empirical Inquiry and Comparative Analysis (2016). Canadian Tax Journal/Revue Fiscale Canadienne, Vol. 64, No. 4, p. 751, 2016, Available at SSRN: https://ssrn.com/abstract=2909028

Christopher Charles Evans (Contact Author)

University of New South Wales ( email )

School of Taxation and Business Law
Australian School of Business, UNSW
Sydney, NSW 2052
Australia

Philip Lignier

University of Tasmania ( email )

French Street
Sandy Bay
Tasmania, 7250
Australia

Binh Tran-Nam

University of New South Wales (UNSW) - School of Taxation and Business Law ( email )

UNSW Sydney
Sydney, NSW 2052
Australia
61-2-9385-9561 (Phone)
61-2-9313-6658 (Fax)

HOME PAGE: http://www.asb.unsw.edu.au/schools/Pages/BinhTran-Nam.aspx

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
63
Abstract Views
621
rank
376,235
PlumX Metrics