Implication and Role of Culture Variables in Decision Making on International Tax
Asian Tax Journal Vol. 1 No. 2 (2000), pp. 243-276
Abstract
Culture which is reflected on societal norms and value system operates as significant variable in the process of personal decision making. This paper attempts to make a deductive inference on how culture variable may affect tax decision maker's cognition, judgment and behavior in international tax situations. The result shows the possibility that Hofstede's five dimensions of national culture, that is, individualism/collectivism, power distance, uncertainty avoidance, masculinity/femininity, long-term/short-term orientation, which are used widely by academic researcher, also use as the framework of cross-cultural study in international tax area. A summary of conclusion is as follows. First, the dimension of individualism/collectivism may affect the degree that a society protects whistle-blower of tax evasion and that tax official are generous to tax fraud of in-group. Second, the dimension of power distance may differ the degree that subordinates resist to superiors' pressure to conceal the unethical tax behavior and that taxpayers accept the authority of tax officials. Third, the dimension of uncertainty avoidance may affect the taxpayer's decision to tax avoidance in a loophole in tax law. Fourth, the dimension of masculinity/femininity may affect the extent of aggressiveness of taxpayer, ratio of female employment and promotion in Internal Revenue Service and taxpayers' acceptance to redistribution through heavy tax of high income person. Fifth, the dimension of long-term/short-term orientation may differ time required to tax audit and basic purpose of tax administration.
Keywords
- Culture
- International Tax
- Tax Decision
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