Investigating tax compliance risks of large businesses in Indonesia

Pratomo, M 2018, Investigating tax compliance risks of large businesses in Indonesia, Doctor of Philosophy (PhD), Graduate School of Business and Law, RMIT University.

Document type: Thesis
Collection: Theses

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Title Investigating tax compliance risks of large businesses in Indonesia
Author(s) Pratomo, M
Year 2018
Abstract The tax compliance behaviour of large businesses is one of the crucial challenges to nation-building in a developing country. However, studies in this area and knowledge of how the respective tax authorities manage the issue are somewhat limited. Hence, this study addresses a gap identified in the body of knowledge and answers research questions pertaining to the factors that influence large business compliance, how they affect it, and how the relevant authority manages compliance risks.

Employing four fundamental research concepts to determine research design, this qualitative study used semi-structured, in-depth interviews to collect data. A total of 48 key informants participated in this study. They were grouped according to their specific tax functions: tax officials, tax managers and tax advisors. The collected interview data was encoded and analysed using thematic analysis. Subsequently, data triangulation, member checking, and disconfirming evidence techniques were used to check the validity and reliability.

Four main findings were derived from the study. First, it was found that four major factors simultaneously affect large business tax compliance in Indonesia. These are: (i) economic (cost-benefit driven decisions, compensation of manager, probability of detection and penalty, risk appetite and uncertainty), (ii) socio-psychological (personal and social norms, fairness and trust), (iii) corporate characteristics (tax risk management, ownership structure and business size, business profitability and the use of tax advisors) and (iv) regulation (complexity, ambiguity, unfairness and regulatory overlap). Secondly, in principle, the Indonesian tax authority (DGT) manages non-compliance by means of two sequential steps: persuasion and enforcement. Thirdly, it was found that the issues of inadequate human resources, poor data management and lack of coordination have impeded the DGT’s capacity to respond effectively to compliance risks. Finally, the introduction of the responsive regulatory approach might have benefits for both the tax authority and taxpayers.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Graduate School of Business and Law
Subjects Taxation Law
Taxation Accounting
Public Economics- Taxation and Revenue
Keyword(s) tax compliance behaviour
large businesses
influencing factors
managing tax risks
developing country
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Created: Fri, 22 Jun 2018, 14:48:47 EST by Denise Paciocco
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