To summarise the existing literature on tax compliance and ethnicity points to

To summarise the existing literature on tax

This preview shows page 40 - 42 out of 241 pages.

their views in terms of tax perceptions and practices. To summarise, the existing literature on tax compliance and ethnicity points to the potential effects of culture on SMEs’ tax compliance behaviours and perceptions. As a result of the sparse research conducted on SME operators’ ethnicity and tax compliance, this thesis aims to study the four largest ethnic SME groups in New Zealand and to identify their similarities and differences in their tax compliance decisions, practices and perceptions in relation to filing timely tax returns and paying their taxes on time. Empirical evidence is sought from ethnic SME operators, along with accounts given by “outsiders” to give an “etic” perspective of their tax decisions and the possible underlying cultural underpinnings of their behaviours. As tax compliance is a socio-technical activity, taxpayers’ compliance may be shaped by more than cultural values; also significant are institutional and economic factors relating to record keeping, cash management, tax knowledge, and assistance from tax practitioners. The remaining few sections discuss prior literature on the tax knowledge of SMEs, their perceptions of the tax authorities and the use of tax practitioners.
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27 2.6 Tax knowledge and record keeping systems of SMEs Research shows that SME operators strongly dislike tax payments (Ahmed & Braithwaite, 2005; Noble, 2000) as they restrict their economic freedom (Kirchler, 1999, 2007), and also because tax compliance requires some accounting and financial management knowledge (Australian Taxation Office, 1996; McKerchar, 1995). In order to file their tax returns on time, SME operators need appropriate record keeping systems to process accounting and tax information (Evans et al., 2005; Glover & Tran-Nam, 2005). Accounting systems can also provide “managerial benefits” (Lignier, 2009b) to SME operators by providing information on business stock, debtors, creditors, sales and cash (Hasseldine, 1995; Tran-Nam et al., 2000). The accounting information enables SME operators to make informed decisions based on objective information instead of relying on their “intuition” (Lignier, 2009a; Yong, 2005). Though accounting information and record keeping are important and useful to the business, SME operators do not give priority or attention to it. For some, record keeping is viewed as a time waster and therefore not considered an integral part of their business (Ashby & Webley, 2008; Prescott & Hooper, 2009). For others, they are not interested in record keeping due to poor accounting and tax knowledge (McKerchar, 1995; Wallschutzky & Gibson, 1993, 1994). For some, accounting and record keeping is perceived as challenging, a business barrier and a possible cause for business failures (Collins & Jarvis, 2002; Evans et al., 2005; Firebrace, 1999; Lignier, 2009b). In New Zealand, the record keeping function is usually done by spouses on a part time basis to save on compliance cost (Firkin, 2001).
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  • Fall '16
  • tax compliance, SME Operators

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