Explaining Customs Tax Evasion in Ethiopia: The Effect of Trade Tax, Law Enforcement, and Product Characteristics

Tadesse, Tasew

doi:10.1177/09749101221100637

Cited by 6 publications

(4 citation statements)

References 25 publications

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“…Moreover, the role of tax treaties in spurring cross-border investment in securities has been highlighted as a factor in global governance and credible commitments (Johnson, 2018). Case studies of successful international tax cooperation initiatives can be observed in the context of reducing evasion by judiciously lowering tariffs and enforcing the law at the border (Tadesse, 2022). Furthermore, the impact of tax amnesty programs on reducing cross-border tax evasion, as evidenced in Indonesia, provides insights into the relationship between tax amnesty and cross-border tax evasion (Purba et al, 2022).…”

Section: International Cooperation and Coordinationmentioning

confidence: 99%

Legal Frameworks and Tax Compliance in the Digital Economy: A Finance Perspective

Beatrice Oyinkansola Adelakun,

Joseph Kuba Nembe,

Bisola Beatrice Oguejiofor

et al. 2024

Eng. sci. technol. j.

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In the wake of rapid digitalization, the landscape of commerce has undergone a profound transformation, presenting unprecedented challenges to traditional tax systems and legal frameworks. This abstract examines the evolving dynamics of tax compliance within the digital economy through the lens of finance. The digital economy encompasses a broad spectrum of economic activities facilitated by digital technologies, including e-commerce, digital platforms, and virtual currencies. These innovations have blurred the boundaries of traditional tax jurisdictions, leading to complexities in determining tax liabilities and enforcement mechanisms. As such, the adequacy of existing legal frameworks in addressing tax challenges posed by the digital economy has come under scrutiny. From a finance perspective, ensuring tax compliance in the digital economy involves understanding the intricate interplay between technology, business models, and regulatory frameworks. Digital businesses often operate across multiple jurisdictions, exploiting loopholes and jurisdictional discrepancies to minimize tax obligations. Such practices have raised concerns regarding tax fairness and the erosion of tax bases, prompting policymakers to explore new regulatory approaches. One key aspect of addressing tax compliance in the digital economy is the development of international cooperation and coordination mechanisms. Given the transnational nature of digital transactions, effective tax enforcement requires collaboration among countries to combat tax evasion and profit shifting. Initiatives such as the Base Erosion and Profit Shifting (BEPS) project by the OECD seek to establish common standards and guidelines for taxing digital businesses. Moreover, the emergence of innovative technologies, such as blockchain and artificial intelligence, presents both opportunities and challenges for tax authorities. While these technologies offer potential solutions for enhancing tax administration and enforcement, they also introduce new complexities, such as the anonymity of transactions and the difficulty of tracking digital assets. Navigating the complexities of tax compliance in the digital economy requires a multifaceted approach that integrates legal, technological, and financial perspectives. By fostering international cooperation, leveraging technological innovations, and adapting regulatory frameworks, policymakers can mitigate tax challenges and promote a fair and sustainable tax system in the digital age. Keywords: Tax, Digital Economy, Finance, Legal, Review.

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Section: International Cooperation and Coordinationmentioning

confidence: 99%

Legal Frameworks and Tax Compliance in the Digital Economy: A Finance Perspective

Beatrice Oyinkansola Adelakun,

Joseph Kuba Nembe,

Bisola Beatrice Oguejiofor

et al. 2024

Eng. sci. technol. j.

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“…For instance, Kenya faces significant challenges in differentiating legal tax avoidance from illegal tax evasion, with a substantial proportion of registered companies not fulfilling their tax obligations, pointing to potential tax evasion practices [ 6 ]. Similarly, in Ethiopia, tax evasion manifests through underreporting income, inflating business expenses, and smuggling, necessitating the adoption of more sophisticated tax administration systems and rigorous enforcement strategies [ 44 ]. In Rwanda, tax evasion not only impacts revenue collection but also undermines public infrastructure and widens income inequality, necessitating reforms in tax policy and administration [ 45 ].…”

Section: Literature Reviewmentioning

confidence: 99%

Investigating the dynamics of tax evasion and revenue leakage in somali customs

Nor,

Mohamed

2024

PLoS ONE

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This study aims to investigate the dynamics of tax evasion and revenue leakage in the Somali customs framework, providing insights into the systemic opportunity structures, tax governance deficiencies, and personal incentive structures that facilitate these practices. By applying agency theory and rent-seeking theory, this research seeks to deepen the understanding of the complex relationship between individual motivations and systemic vulnerabilities in exacerbating corruption and tax evasion in a post-conflict governance context. By employing structural equation modeling (SEM) within the ADANCO-SEM analysis framework, this study analyzes primary survey data. This approach allows for a comprehensive examination of the relationships between systemic, governance, and personal factors contributing to corruption and tax evasion. The findings reveal a significant positive relationship between systemic opportunity structures, tax governance deficiencies, and personal incentive structures and the prevalence of tax evasion and corruption. Specifically, systemic opportunity structures were found to significantly influence both tax governance deficiencies and personal incentive structures, highlighting the intertwined nature of these factors in facilitating corrupt practices and tax evasion in Somali customs. This study underscores the urgent need for comprehensive reforms targeting systemic vulnerabilities, enhancing tax governance frameworks, and aligning personal incentives with the public interest. Practical applications include the adoption of advanced technological solutions for improved monitoring and transparency, as well as the development of targeted training programs for customs officials to foster ethical standards and compliance. This research contributes to the existing body of knowledge by providing a unique empirical examination of corruption and tax evasion in the context of Somali customs, a largely underexplored area in the literature. By integrating agency theory and rent-seeking theory, this study offers novel insights into the mechanisms of corruption and tax evasion, highlighting the importance of addressing both systemic and individual factors in combating these issues.

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“…Taxpayers develop egoist behavior by evading taxes and preparing falsified documents based on the direction of some corrupted tax experts. In that instance, tax evaders engaged in malpractices; the poor moral (selfish) person has a chance to take advantage of the egoists purposefully ( Frecknall-Hughes et al, 2017 ; Tadesse, 2022 ). Taxpayers’ psychological egoism always stands for the benefit of self-interest.…”

Section: Literature Reviewmentioning

confidence: 99%

Tax evasion, psychological egoism, and revenue collection performance: Evidence from Amhara region, Ethiopia

Rongping

Fentaw²,

Zhang³

2023

Front. Psychol.

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Tax evasion is the illegal withholding or underpayment of taxes, typically accomplished by intentionally providing false or no evidence to tax authorities. Tax evasion has had a severe detrimental influence on the economy of the Amhara National Regional State, Ethiopia. The Amhara Regional State lost tax revenue in recent years due to tax evasion. The objective of this study was to see how tax evasion, taxpayers’ psychological egoism, and other relevant factors affect tax revenue collection performance in the Amhara Region, Ethiopia. Data were collected from 395 VAT-registered taxpayers through a structured questionnaire. The structural equation model and multiple regression analysis method were utilized for empirical test based on the softwares of SPSS and AMOS. This research revealed that tax evasion and psychological egoism negatively affect tax revenue collection performance. Tax education and technology significantly and positively affected tax revenue collection performance. Meanwhile, the relationships between the above factors (tax evasion, tax education, and technology) and the tax revenue collection performance are reliably mediated by taxpayers’ psychological egoism. Those findings can give clues to researchers, tax experts, and policymakers for improving the tax revenue collection performance in Amhara Region. The government can enhance public education to reduce tax evasion and such misbehavior caused by taxpayers’ psychological egoism. Meanwhile, the most up-to-date tax invoicing technologies, like artificial intelligence and machine learning technology should be adopted.

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Explaining Customs Tax Evasion in Ethiopia: The Effect of Trade Tax, Law Enforcement, and Product Characteristics

Cited by 6 publications

References 25 publications

Legal Frameworks and Tax Compliance in the Digital Economy: A Finance Perspective

Legal Frameworks and Tax Compliance in the Digital Economy: A Finance Perspective

Investigating the dynamics of tax evasion and revenue leakage in somali customs

Tax evasion, psychological egoism, and revenue collection performance: Evidence from Amhara region, Ethiopia

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