Do Perceptions of Corruption Influence Personal Income Taxpayer Reporting Behaviour?: Evidence From Indonesia

eJournal of Tax Research (2016) vol 14, no. 2

36 Pages Posted: 28 Feb 2019

See all articles by Arifin Rosid

Arifin Rosid

Directorate General of Taxation

Chris Evans

University of New South Wales

Binh Tran-Nam

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

Date Written: September 16, 2016

Abstract

This paper addresses an identified gap in knowledge about whether, and how, perceptions of corruption may influence personal income taxpayer compliance behaviour. It examines how perceptions of five forms of corruption may impact upon intentional tax underreporting behaviour by adopting a sequential mixed-methods approach. Initially, a qualitative phase was carried out by conducting semi-structured in-depth interviews with nine participants (three taxpayers, three tax agents and three tax officers). The second — and core — phase of the research involved extensive data collection using a mixed-modes field survey conducted through 12 tax offices across four Indonesian regions. A total of 397 respondents were surveyed, comprising 196 self-employed and 201 employed taxpayers. Three principal findings have emerged from the data. First, as expected, the data from both the qualitative and quantitative phases suggest that high levels of perceived corruption were evident in Indonesia. Second, the quantitative findings clearly demonstrate that perceptions of corruption undermine taxpayers’ intention to report actual income. Third, the findings ultimately suggest that high levels of perceived general corruption (i.e. abuse of entrusted power by public officials for private gain), grand corruption (i.e. corruption involving high-level public officials) and grand tax-corruption (i.e. corruption involving high-level tax officials) were influential on intentional tax underreporting behaviour. The present empirical results support the notions that perceptions of corruption are important determinants and have negative impact upon tax compliance behaviour. The results also imply that combating corruption, especially grand corruption, would have a beneficial effect on voluntary tax compliance in Indonesia.

Keywords: Perceptions of Corruption, Tax Non-Compliance, Underreporting Behaviour, Personal Income Taxpayers

JEL Classification: D03, H24, H25, H26

Suggested Citation

Rosid, Arifin and Evans, Christopher Charles and Tran-Nam, Binh, Do Perceptions of Corruption Influence Personal Income Taxpayer Reporting Behaviour?: Evidence From Indonesia (September 16, 2016). eJournal of Tax Research (2016) vol 14, no. 2, Available at SSRN: https://ssrn.com/abstract=3329060

Arifin Rosid (Contact Author)

Directorate General of Taxation ( email )

Mar'ie Muhammad Building 8th floor
Jl. Gatot Subroto Kav 40-42
Jakarta, South Jakarta 12190
Indonesia

HOME PAGE: http://arifinrosid.com

Christopher Charles Evans

University of New South Wales ( email )

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

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