Voluntary External Audit and Tax Compliance
Asian Tax Journal Vol. 25 No. 2 (2024), pp. 157-173
Abstract
In this study, we analyze how voluntary external audits of corporations that are not subject to statutory external audits affect tax compliance, and determine whether voluntary external audits are compensated and what kind of effects they have on tax compliance when benefits (tax deductions, tax audit exclusion, etc.) are given. I want to see if there is a difference. For analysis, data were collected through experimental methods, and in order to select subjects who could understand the tax reporting situation, experimental participants were students who had taken a tax accounting course among accounting majors at a four－year university. The dependent variable is the reported income rate, which measures taxpayers’ tax compliance (tax reporting decision－making), and the independent variables were whether voluntary external audit was conducted and the type of benefit (tax exemption from tax audit, tax credit). The experiment was conducted using a between－group design. The experiment involves conducting tax returns in two preliminary experiments and six actual experiments. Based on the data collected as a result of the experiment, the implementation of voluntary external audits and tax reporting behavior are analyzed to determine the policy effect on providing benefits from voluntary external audits. Tested. As a result of the analysis, the reported income rate was higher when voluntary external audit was conducted than when it was not conducted, confirming that voluntary external audit induces tax compliance. In addition, providing benefits for voluntary external audits has been shown to have a statistically significant impact, so if voluntary external audits are conducted, providing the benefits can contribute to inducing tax compliance. Among the types of benefits for voluntary external audit, tax credit benefits have a higher reported income rate than tax audit exemption, so providing tax credit benefits is expected to have a positive effect on inducing tax compliance. This study is significant in that it provides policy implications that providing benefits for voluntary external audit can be significant as a policy to encourage tax compliance.
Keywords
- Statutory audit
- tax compliance
- accounting
- taxation
- tax law
Related Articles
Key Audit Matters and Tax Avoidance ：The Informational Value of Tax Accounts and the Role of Auditors
26(2) 71-107
Tax Specialist Auditors and Tax Avoidance: Small and Medium－Sized Accounting Firms
26(1) 9-36
Tax Avoidance and the Characteristics of the Support Organization of the Audit Committee
24(1) 129-157
The Effect of Accounting Firm Mergers on Corporate Tax Avoidance of Auditees
21(6) 189-209
Mandatory Auditor Rotation Firm and Tax Avoidance in accordance with Auditor Provided Tax Services
20(1) 95-116