The tax compliance costs of large corporations: an empirical inquiry and comparative analysis
Evans, C and Lignier, P and Tran-Nam, B, The tax compliance costs of large corporations: an empirical inquiry and comparative analysis, Canadian Tax Journal, 64, (4) pp. 751-793. ISSN 0008-5111 (2016) [Refereed Article]
This article considers the tax compliance costs incurred by the large corporate sector.
Using a survey of large and very large businesses and international groups in Australia, and
drawing on the findings of other studies, the authors compare and contrast the current
burden with the burden encountered by such businesses in Australia and elsewhere in
recent years. They identify key trends in the compliance cost profile of the large corporate
sector and possible explanations for those trends. They also discuss the factors that are
perceived by survey respondents to give rise to high compliance costs. Finally, they
provide insights into the relationship between the tax-risk positions taken by Australian
firms in the large corporate sector and the compliance cost profiles of those firms.
The research outcomes are both confirmatory and insightful. They confirm key
findings from the literature that tax compliance costs are significant, regressive, and not
reducing over time, but also provide new insights into the compliance cost profile of the
large corporate sector—an area of research that has previously been largely unexplored.
The research suggests that, apart from business size, the number of taxes that the entity
has to comply with is a significant predictor of the level of tax compliance costs. In addition,
it suggests that, after controlling for size, entities that have been identified as a significant
compliance risk by the tax authority have higher compliance costs than those with lower
risk classifications. Besides these statistically measurable determinants, the study
suggests that three broad drivers of tax compliance costs are perceived by taxpayers: the
complexity and uncertainty of tax rules, the administrative compliance requirements
imposed by tax authorities, and international exposure.
tax, tax administration, large corporations, compliance