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Cost accounting case study
Cost accounting a managerial chapter 3
Cost accounting case study
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Tax compliance cost has become an important aspect of tax policy. This is because of its connection with the tax compliance and the government revenue in turn. Unnecessary burden of compliance cost either on individual or business taxpayer may have negative effect on the tax compliance and eventually reduction in the tax revenue. Tax compliance cost is one of the determinants of tax compliance behavior. Unnecessary high tax compliance cost leads to either intentional or non-intentional non-compliance. In the case of business taxpayer, especially smaller ones, the burden may discourage their growth. Thus, less complex tax laws and simple tax administration is a pre-requisite to reducing their compliance cost and hence, to encourage entrepreneurship and SMEs development.
Empirical studies were conducted all over the world to estimate the compliance cost. Evans (2008) acknowledged that the number of the compliance and/or administrative cost studies conducted and published after the Haig’s (probably first organized compliance cost study) study in 1935 is more than 100. Despite the existence of the large body of literature, the concept of tax compliance cost remain ambiguous. Most of the research narrow the concept to the objective of their research. Therefore, this essay aims at bringing an overview of the concept in single essay. The next section of the essay discusses the definitions of compliance cost, the third section discusses aspects of compliance cost and finally, the last section gives a recap of the essay.
1.2 Definitions of Tax Compliance Cost
Sandford, Godwin and Hardwick (1989); Evans, Ritchie, Tran-Nam and Walpole (1996) acknowledge the difficulty in giving a precise definition of compliance cost. However, some...
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...nce Costs of Taxation, Fiscal Publications, Bath.
Ariff, M., & Pope, J. (2002). Taxation and compliance costs in Asia Pacific economies. Sintok: Universiti Utara Malaysia.
Tran-Nam, B., Evans, C., Walpole, M., & Ritchie, K. (2000). Tax compliance costs: Research methodology and empirical evidence from Australia. National Tax Journal, 53(2), 229-252.
Sanford, C. (1995). Tax compliance costs measurement and policy. Bath, England: Fiscal Publications.
Sandford, C. T., Godwin, M.R., Hardwick P.J.W. & Butterworth M.I. (1981). Costs and benefits of VAT. London, Heinemann Educational Books.
Evans (2008). “Taxation Compliance and Administrative Costs: An Overview.” In Tax Compliance Costs for Companies in an Enlarged European Community, edited by Michael Lang, Christine Obermair, Josef Schuch, Claus Staringer and Patrick Weninger. Kluwer Law International.
Blaise M. Sonnier, J.D., DBA. (2012). Circular 230: Its Day-to-Day Impact on Tax Practices. Retrieved October 12, 2016, from http://www.thetaxadviser.com/issues/2012/feb/tpr-feb12.html
Rifin, A. (2010). The Effect of Export Tax on Indonesia’s Crude Palm Oil (CPO) Export Competitiveness. ASEAN Economic Bulletin, 27(2), 173–84.
JACKSON, S. B., SHOEMAKER, P. A., BARRICK, J. A., & BURTON, F. (2005). Taxpayers' Prepayment Positions and Tax Return Preparation Fees. Contemporary Accounting Research, 22(2), 409-447.
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
Taxation has a huge impact on organisations, especially Tesco's, as some of their products have increased on tax. Some products have increased in tax because it is considerate for the government such as for the economy, healthy living and the environment. Due to an increase of tax on certain products not many people will agree with the price they are paying for these specific products and/or services. This is the reason why it has a huge impact on the companies because they aren't gaining much profit from them, they are losing profit from
Mooney, G Collard, K Taylor, T (2003a) Costing cultural security, SPHERe Discussion Paper, Perth, Western Australia: Curtin University, Division of Health Sciences, viewed online 10 September 2011. http://www.eniar.org/news/health7.html Mooney, G. (2003b). The 'Standard'. Inequity in Australian health care: how do we progress from here?
Tax season is upon us and many Americans are scrambling around trying to get theirs finished by the end of the dead line. This time of year is not a joyous occasion, everyone on edge most of them pondering how much they will have to pay. While others are wondering if they will get as much as they thought they will, or are they going to be one of the unlucky few to be audited? I am one of those people, anxious, and waiting at the edge of my seat for that hammer of reality to come crashing down over my head. With each new election year comes new arguments and battles fought within the halls of Capital Hill, but who is right and is there a middle ground? I will present you with the facts as I have found them; the choice is yours to determine what is right and what is wrong.
There are 3 types of corporate income taxes as follows: National 30% of taxable income, Local 20.7% of National Tax, and Enterprise 10.08% of taxable income. The calculated effective tax rate of 42.05% although they simply add up to 46.29% (30.0% + 30.0%X20.7% + 10.08%). It is because Enterprise tax is deductible for the other tax purposes only when it becomes due. Tax evasion involves fraudulent or criminal behavior, conduct involving deception, concealment, or destruction of records. Tax evasion occurs when the taxpayer fraudulently or criminally avoids the payment of taxes otherwise due and owing under the tax laws. There are many tax crimes under the Internal Revenue Code. The criminal violations cover the same territory as the civil fraud penalties, although the government has a higher burden of proof in the criminal cases. The criminal cases, however, reach a far greater spectrum of potential defendants. Unlike the civil penalties which target only the taxpayer, the criminal penalties reach anyone engaging in the defined offense, including employees, accountants, lawyers and tax preparers. Under IRC Sec. 7206(2), a person is guil...
While the tax rate and tax base of GST though are relatively low and narrow. “The current tax system is not going to keep up with the expenditure forecast. States haven’t got the fund to provide the services that community expects.” Mr. Tom Seymour (PwC tax managing partner). “Personal tax rates are already high in Australia and corporate tax is at the top of OECD corporate tax rates.” As a result of the limitation in reforming income tax and corporate tax, to provide more satisfactory public services, boarding the GST base and/or setting a higher GST rate is
According to Accounting Theory: Contemporary Accounting Issues by Evans, accountants have developed two alternative approaches to accounting for income taxes, which are the cash method and the allocation method. The cash method is described as a simple and direct approach. The amount of income taxes actually paid for the year is reported on the Income Statement. The amount comes from the firm's income tax return and fit is not adjusted in any way. Therefore, the firm's actual transaction to record its income tax liability is the basis for the amount of the income tax expense reported on the Income Statement. The allocation method is a bit different. The actual amount of tax that is paid in the year is ignored when it comes to reporting income tax expense on the Income Statement. The amount of income tax expense reported on the Income Statement is based on the on the income tax rate that the firm pays, which is applied to the amount of pretax income. This makes the Income Statement perfectly consistent with the before-tax income. Using the allocation method makes it look like all items on the Income Statement based on the same method.
The government use of taxes plays a crucial role in today’s economy as well as personal finances, it has and will continue to leave its mark on the world we live in.
The purpose of this paper is to illustrate the layout of taxation. I will differentiate the types of taxes and the roles that they serve currently. Subsequently, I will explain what equity, efficiency, effectiveness and transparency (EEET) are and show how they apply to taxation as a whole. Lastly, I will conclude how the EEET applies to the four tax types.
The famous literature on principles of taxation was embodied in Adams Smith “Canons of taxation”. Since then, economies have adopted (and adapted where necessary) these basic principles for what is regarded as the most important tool of fiscal policy.
Last accessed 9th Jan 2015. Sloman, J., Wride, A., & Garratt, D. (2012). Economics. 8th ed. Harlow: Pearson Education Limited.
Lin, K. Z., & Wong, P. Y. (2012). Recent Reform in Chinese VAT Policies. International Tax Journal, 38(4), 39-46.