Quotation Eberhartinger, Eva, Zieser, Maximilian. 2021. The Effects of Cooperative Compliance on Firms’ Tax Risk, Tax Risk Management and Compliance Costs. SBUR - Schmalenbach Journal of Business Research. 73 (1), 125-178.


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Abstract

In cooperative compliance programs, firms and tax administrations agree on cooperation instead of confrontation. Firms provide full transparency and advanced tax control frameworks. Tax administrations, in turn, offer certainty as to the tax treatment of complex transactions. In this study, we test how firms’ perceptions of tax risk, the quality of tax risk management, and compliance costs are related to cooperative compliance. To our knowledge, this is the first study that attempts to analyze both reasons for and consequences of participation in cooperative compliance programs. We examine the Austrian cooperative compliance pilot project known as horizontal monitoring that was aimed at large businesses and launched in 2011. We use survey data from representatives of firms participating in the pilot project and a sample of comparable firms under a traditional ex-post audit regime. We conduct group comparisons to test differences between these groups, as well as mediation analyses to shed light on more complex relationships between variables. Results show that horizontal monitoring firms perceive a significantly higher increase in tax certainty, which is associated with significant relative decreases in tax risk and compliance costs. Furthermore, while the quality of tax risk management upon entering the pilot project appears significantly higher for horizontal monitoring firms, they do not report greater improvement in tax risk management compared to the control group. These results are relevant for the development of cooperative compliance programs and the decision to participate in them.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal SBUR - Schmalenbach Journal of Business Research
Citation Index SSCI
WU-Journal-Rating new WH-B
Language English
Title The Effects of Cooperative Compliance on Firms’ Tax Risk, Tax Risk Management and Compliance Costs
Volume 73
Number 1
Year 2021
Page from 125
Page to 178
Reviewed? Y
URL https://link.springer.com/article/10.1007%2Fs41471-021-00108-6
DOI https://doi.org/10.1007/s41471-021-00108-6
Open Access Y
Open Access Link https://link.springer.com/article/10.1007/s41471-021-00108-6

Associations

People
Eberhartinger, Eva (Details)
Zieser, Maximilian (Former researcher)
Organization
Business Taxation Group AB (Details)
Research Institute for International Taxation FI (Details)
Research Institute for Cryptoeconomics FI (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5307 Business and management economics (Details)
5327 Accounting (Details)
5328 Auditing and trusts (Details)
5349 Business taxation (Details)
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