Study on The Effectiveness of The Tax Investigation Exemption Program
Asian Tax Journal Vol. 10 No. 1 (2009), pp. 9-33
Abstract
The National Tax Service initiated a program, as one of the policies to promote a better taxation environment in which honest and exemplary tax payers are respected (and given higher preferences) in the society, in which certain tax payers classified as being honest and exemplary are exempted from tax investigations. The National Tax Service has kept selecting exemplary businesses for this purpose since 2003. It is natural then to pose a question, namely, "Have the businesses selected as such been paying their taxes as honestly as before?" If such businesses have been reporting revenues which are lowered arbitrarily so as to pay less tax than due, the outcome of the afore－mentioned program could be considered rather dubious. This study set up three hypotheses for the purpose of evaluating the afore－mentioned program by the National Tax Service, that is, to study whether businesses selected for the program have actually reported arbitrarily reduced revenues after they were selected, contrary to the intended purpose of encouraging and rewarding honest tax reports. The outcome of the study revealed that the seemingly exemplary businesses have become less than honest. It could be postulated that the seemingly exemplary businesses betrayed the belief that those selected would maintain their honest tax reporting practices. Accordingly, it seems necessary for the National Tax Service to keep evaluating the sincerity of the businesses after they are selected for the program so that they maintain their exemplary practices.
Keywords
- Tax Investigation Exemption
- honest and exemplary tax payers
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