Tax compliance conjures up certain meanings to ethnic SME operators This

Tax compliance conjures up certain meanings to ethnic

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Tax compliance conjures up certain meanings to ethnic SME operators. This chapter details the interview accounts of the 36 ethnic SME operators, which are then corroborated by the tax practitioners and business experts to give a robust understanding of the findings. Hofstede’s (2001) cultural framework is used to frame the discussion and to highlight the contribution this research makes toward the tax literature. The chapter begins by examining the tax compliance perceptions of ethnic operators in section 6.2 and a discussion on the accounting systems adopted by them in section 6.3. Section 6.4 identifies the record keeping functions of ethnic businesses, and section 6.5 summarises the findings. For reasons of confidentiality, ethnic SME operators have been coded as Asian (A), European (E), Maori (M), and Pacific (P) with suffixes 1 to 9. Therefore Asian operator one is labelled A1 and European operator two is labelled E2. Similarly, a tax practitioner is coded as TP with suffixes 1 to 8 and a business expert is labelled as BE with suffixes 1 to 15. Appendices 9 to 12 set out selected demographics of the various ethnic operators to provide the contextual background for the discussions.
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90 6.2 Tax compliance perceptions Tax compliance conjures up different meanings to the different ethnic SME groups. For some it was a normal part of their business routine, whereas for others it was stressful, and involved considerable paperwork and cash payments. As seen in the interview in Appendix 6 (question 2(a)), ethnic operators were asked an open-ended question of what words or images they had of tax compliance. As tax compliance may conjure up more than one image or word, Table 6.1 summarises the ethnic SME operators’ perceptions of tax compliance. Words and concepts associated with tax compliance European Asian Maori Pacific Total Paperwork 5 9 6 4 24 Payment: cash outflows 3 4 1 4 12 No choice and having to meet an obligation 3 2 2 4 11 Headaches/Stress/Worry/Fear 2 0 4 4 10 Do everything right and have accurate tax returns 4 0 3 2 9 Penalties 2 2 3 1 8 Dealing with government department, IRD or a bureaucracy 1 1 3 1 6 Time involved 3 2 0 0 5 Unpaid tax collectors 0 2 0 0 2 Table 6.1: Words and concepts associated with tax compliance by ethnic SME operators
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91 The two most common word associations with tax compliance were “paperwork” and “tax payments”. All the Asian operators and two thirds of the Maori operators in this sample viewed paperwork as their number one tax compliance issue. Much effort is required in gathering tax information such as recording, verifying and documenting business transactions as experienced by participants A1 and M6: “I suppose it means that we have to comply with what they (IRD) want and we don’t have much of a choice. There is a lot of paperwork involved, and I have limited understanding of some of the paperwork.
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  • Fall '16
  • tax compliance, SME Operators

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