The Influence of Financial Secrecy and National Culture toward Tax Compliance
DOI:
https://doi.org/10.32486/aksi.v7i1.193Keywords:
tax compliance, financial secrecy, transparency, restraint culture, taxAbstract
Tax compliance is essential to pursue the fulfillment of countries’ tax revenue. This research aims to prove the effect of country level of financial secrecy and the resraint culture toward the tax compliance behavior. We expect that the financial secrecy would reduce the tax compliance. Furthermore, we also hypothesize that the restraint culture in a society influences tax compliance negatively. This research uses control variables i.e: democracy, tax rate, and law enforcement. By using cross-countries data of 62 countries processed by multiple regression analysis, it is concluded that financial secrecy has a negative influence toward tax compliance. Moreover, the restraint culture does not implied to have any effect on tax compliance. The findings of this research provide additional contribution as an empirical study in a global scale about the influence of financial secrecy and restraint culture on tax compliance. Based on the result, it can be recommended the government that should promote transparency in the financial sector to minimize non-compliant behavior.
References
Adekoya, A., Adewale, O. T., & Akeem., L. B. (2019). Rule of Law, Moderated By Trust in Government and Voluntary Tax Compliance Behavior in Nigeria. International Journal of Economics, Commerce and Management, VII(8), 624–644.
Bakar, M. A. A. A., Palil, M. R., & Maelah, R. (2021). Governance Quality and Tax Compliance Behavior in East Malaysia. Asian Journal of Accounting and Governance, 15, 1–14. https://doi.org/10.17576/ajag-2021-15-07
Borrego, A. C. (2013). Tax Noncompliance in an International Perspective : a Literature Review Cidália Maria da Mota Lopes. November.
Clausing, K. A. (2016). The Effect of Profit Shifting on The Corporate Tax Base in The United States and Beyond. National Tax Journal, 69(4), 905–934. https://doi.org/10.17310/ntj.2016.4.09
Cobham, A., Janský, P., & Meinzer, M. (2015). The financial secrecy index: Shedding new light on the geography of secrecy. Economic Geography, 91(3), 281–303. https://doi.org/10.1111/ecge.12094
Eka, I. W. A. (2019). Does Financial Secrecy Affect Profit Shifting ? Jurnal Kajian Ilmiah Perpajakan Indonesia, 1(1), 27–40.
Elbahnasawy, N. G. (2020). Democracy, political instability, and government tax effort in hydrocarbon-dependent countries. Resources Policy, 65(November 2019), 101530. https://doi.org/10.1016/j.resourpol.2019.101530
Emmenegger, P. (2014). The politics of financial intransparency: The case of swiss banking secrecy. Swiss Political Science Review, 20(1), 146–164. https://doi.org/10.1111/spsr.12092
Ermasova, N., Haumann, C., & Burke, L. (2021). The Relationship between Culture and Tax Evasion across Countries: Cases of the USA and Germany. International Journal of Public Administration, 44(2), 115–131. https://doi.org/10.1080/01900692.2019.1672181
Garcia, M. M., & Haldenwang, C. von. (2016). Do Democracies Tax More? Political Regime Type and Taxation. Journal of International Development, 28(4), 485–506. https://doi.org/10.1002/jid.3078
Genschel, P., & Schwarz, P. (2012). Tax Competition and Fiscal Democracy. In TranState working papers (Vol. 161, Issue January 2012).
Guttorm Schjelderup. (2015). Secrecy Jurisdictions. Norwegian School of Economics, March.
Hai, O. T., & See, L. M. (2011). Intention Of Tax Non-Compliance-Examine The Gaps. International Journal of Business and Social Science, 2(7), 79. http://qut.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwTV09CwIxDC3i4OIiaFf_QI_e9XsWD0FwOlHHtmndDtTz_5urim55UzI8XkLII4SsNUTArqBzyAakCyiUJjfYi6zn1hVH2m_Z9qfm7YJMUr8kXbvtNjv2eQbArlLVTOWkG5mk1-AhCG9jFmmMVcwqOZuBCwPce49FGcchiia4hPM3sq5OsV6RuR9vxvuheMuAkul
Herlina, S., & Ma’ruf, U. (2020). Law Enforcement Against Elections Crime During Electoral Campaign 2019 ( Case Study In Bawaslu of Banjarmasin City ). Jurnal Daulat Hukum.
Hofstede, G., Hofstede, G. J., & Minkov, M. (2010). Culture and Organizations. In The McGraw-Hill Companies (Issue 3). https://doi.org/10.1080/00208825.1980.11656300
Hofstede Insight. (2021). National Culture. https://hi.hofstede-insights.com/national-culture
Iriqat, R. A. M., & Anabtawi, A. N. H. (2016). GDP and Tax Revenues-Causality Relationship in Developing Countries: Evidence from Palestine. International Journal of Economics and Finance, 8(4), 54. https://doi.org/10.5539/ijef.v8n4p54
Jansky, P., Knobel, A., Meinzer, M., & Palanský, M. (2018). Financial Secrecy Affecting the European Union: Patterns Across Member States, and What to Do About It. SSRN Electronic Journal, July 2019. https://doi.org/10.2139/ssrn.3267398
Janský, P., & Prats, A. (2015). International profit-shifting out of developing countries and the role of tax havens. Development Policy Review, 33(3), 271–292. https://doi.org/10.1111/dpr.12113
Jie, C., & Jing, L. (2015). An Empirical Study on Different Tendencies toward Indulgence-Restraint Dimension from the Intercultural Perspective —In the Case of Guangdong Province. Chinese Studies, 04(04), 116–126. https://doi.org/10.4236/chnstd.2015.44017
Langford, B. (2016). Tax revenue potential and effort investigation. International Growth Centre Working Paper, January.
Magiya, Y. (2020). Predatory Rulers, Credible Commitment and Tax Compliance: How War Does Not Make the State Under Weak Rule of Law. SSRN Electronic Journal, 1–45. https://doi.org/10.2139/ssrn.3684199
Mas’ud, A., Aliyu, A. A., & Gambo, E.-M. J. (2014). Tax Rate and Tax Compliance in Africa. European Journal of Accounting Auditing and Finance Research, 2(May), 22–30.
Mawejje, J., & Sebudde, R. K. (2019). Tax revenue potential and effort: Worldwide estimates using a new dataset. Economic Analysis and Policy, 63, 119–129. https://doi.org/10.1016/j.eap.2019.05.005
OECD. (2009). Countering Offshore Tax Evasion of the OECD Centre for Tax Policy and Administration Countering Offshore Tax Evasion: Some Questions and Answers. https://www.oecd.org/ctp/harmful/42469606.pdf
Oktaviani, R. M., Hardiningsih, P., & Srimindari, C. (2017). Kepatuhan Wajib Pajak Memediasi Determinan Penerimaan Pajak Penghasilan. Jurnal Akuntansi, 21(2), 318. https://doi.org/10.24912/ja.v21i2.201
Olaniyi, T., & Akinola, B. (2020). National culture and tax performance in Africa. Ekonomski Horizonti, 22(1), 3–15. https://doi.org/10.5937/ekonhor2001001o
Omar, N., & Zolkaflil, S. (2015). Profit Shifting and Earnings Management through Tax Haven Subsidiaries: An Exploratory Analysis of Multinational Companies. Procedia Economics and Finance, 28(April), 53–58. https://doi.org/10.1016/s2212-5671(15)01081-3
Ortas, E., & Gallego-Álvarez, I. (2020). Bridging the gap between corporate social responsibility performance and tax aggressiveness: The moderating role of national culture. Accounting, Auditing and Accountability Journal, 33(4), 825–855. https://doi.org/10.1108/AAAJ-03-2017-2896
Pratama, R. A. (2020). Anti-Avoidance and Profit Shifting in Asean Multinational Enterprises: Is It Effective? Info Artha, 4(1), 47–61. https://doi.org/10.31092/jia.v4i1.641
Pukeliene, V., & Kažemekaityte, A. (2016). Tax Behavior: Assessment of Tax Compliance in European Union Countries. Ekonomika, 95(2), 30–56. https://doi.org/10.15388/ekon.2016.2.10123
Puspitasari, E., Sukmadilaga, C., Suciati, H., Bahar, R. F., & Ghani, E. K. (2019). The effect of financial secrecy and IFRS adoption on earnings quality: A comparative study between Indonesia, Malaysia and Singapore. International Journal of Innovation, Creativity and Change, 5(2), 863–886.
Rakhmadhani, V. (2020). Pengaruh Tingkat Kepatuhan Wajib Pajak Terhadap Penerimaan Pajak. Ekonam: Jurnal Ekonomi, Akuntansi & Manajemen, 2(1), 12–18. https://doi.org/10.37577/ekonam.v2i1.202
Rashid, H., Warsame, H., & Khan, S. (2021). The Differential Impact of Democracy on Tax Revenues in Developing and Developed Countries. International Journal of Public Administration, 44(8), 623–635. https://doi.org/10.1080/01900692.2020.1741616
Réthi, G. (2012). Relation between tax evasion and Hofstede’s 4 + 2 model. European Journal of Management, 12(3), 61–72.
Steuerle, G. (2008). An Issue of Democracy. The Government We Deserve.
Tax Foundation. (2020). Corporate Tax Rates Around the World. Fiscal Fact, 735, 1–18. https://taxfoundation.org/publications/corporate-tax-rates-around-the-world/#Changes%0Ahttps://taxfoundation.org/publications/corporate-tax-rates-around-the-world/
Tax Justice. (2020). What is a secrecy jurisdiction? https://fsi.taxjustice.net/en/faq/what-is-a-secrecy-jurisdiction
Tax Justice Network. (2020). Financial Secrecy Index Report 2020.
Teymur, R., & Saman, F. (2012). Corruption, democracy and tax compliance: Cross-country evidence. The Business & Management Review, 2(2), 221–232. http://qut.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwY2BQME0C3VttmmpukZiYZm6YnGZsnJyWbJRqYpKaZJZolIgy2IZUmrsJMTCl5okyyLm5hjh76MKKxviUnJx4I0tgyxp0SYShoRgDC7BnnAoAE7QZPg
The Economist Intelligence Unit. (2021). Democracy Index 2020 In Sickness and in health? The Economist Intelligence Unit, 69.
The United Nation. (2021). Member States. https://www.un.org/en/about-us/member-states
Tobin, G., & Walsh, K. (2013). What makes a country a tax haven? an assessment of international standards shows why Ireland is not a tax haven. Economic and Social Review, 44(3), 401–424.
Tsakumis, G. T., Curatola, A. P., & Porcano, T. M. (2007). The relation between national cultural dimensions and tax evasion. Journal of International Accounting, Auditing and Taxation, 16(2), 131–147. https://doi.org/10.1016/j.intaccaudtax.2007.06.004
World Justice Project. (2020). Rule of Law Index Rule of Law Index. In The World Justice Project (Issue June). http://www.oecd.org/mena/governance/45447873.pdf
Youde, S., & Lim, S. (2019). Tax Compliance. Global Encyclopedia of Public Administration, Public Policy, and Governance, 1–5. https://doi.org/https://doi.org/10.1007/978-3-319-31816-5_3828-1
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Ari Budi Kristanto
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
