The impact of tax complexity and installment payments on tax noncompliance in Brazil: a study on federal taxation related to IRPJ, CSLL, PIS/Pasep, and Cofins
DOI:
https://doi.org/10.17524/repec.v18i3.3419Keywords:
Tax disobedience; Tax Planning; Tax aggressiveness; Tax Complexity; Tax AmnestyAbstract
Objective: To verify within the scope of federal taxation whether tax complexity and repetitive special installment payments are associated with an increased probability of tax noncompliance among companies listed on B3. Method: A panel logit model was developed to estimate the probability of a company being non-compliant based on the independent variables tax complexity, special installment payments, probability of inspection, inspection costs, Selic rate, and expected utility, which are controlled by current liquidity, EBITDA, and company size. Results: This study identified that tax complexity and repetitive special installment payments increase the probability of tax noncompliance among companies listed on B3. The results also showed that low inspection probability, the high costs of inspection, the need for cash, and expected utility positively affect the probability of tax noncompliance among the companies in the sample. These results indicate that Brazil should decrease its unnecessary tax complexity. Contributions: Understanding the determinants and consequences of tax noncompliance in Brazil is relevant to better manage scarce inspection resources, and guide efficient public policies to generate employment and income for the population. Thus, this study contributes to society as a whole by highlighting the need for a tax reform to reduce unnecessary tax complexity and facilitate the understanding of tax legislation.
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