Impact of reviving Article 169 of the Iranian Direct Tax Code on Tax Difference and Tax Avoidance

Document Type : Research Paper

Authors

1 Ph.D. Candidate of Accounting, University of Isfahan, Isfahan, Iran.

2 Associate Professor of Accounting, University of Isfahan, Isfahan, Iran.

10.22103/jak.2020.15705.3238

Abstract

Object: The revival of Article 169 of the Direct Taxes Code is an important tax development in recent years in Iran. According to this article, taxpayers are required to upload their sale and purchase information in the form of quarterly reports on the website of the Tax Administration. The implementation of this article as a tax program aims to improve the quality of the tax system. If successful, the tax difference and tax avoidance of Iranian companies are expected to decrease. Meanwhile, some companies are not covered by this legal article. But Article 169 may have had an indirect effect on them. This study aims to investigate the effect of reviving the Article 169 of the Direct Taxes Code on tax difference and tax avoidance of companies subjected and non-subjected by this legal article.
 Method: Data was collected using the document extraction method and reference to the database and then analyzed by Minitab and Stata software. To test the research hypotheses, paired t-statistics, and differences in differences approach were used. Changes in tax codes in an economic society directly affect the companies that are subject to those codes. At the same time, the non-subjected part of the community may be indirectly affected by the program because of its interactions with the subjected part. In this study, to differentiate the effects of the program in the subjected section in comparison with the non-subjected section of the society, the difference in difference estimator has been used. A sample of 135 companies was studied in the two groups of subjected and non- subjected in 2011 and 2012.
Results: The findings showed that the revival of Article 169 of the direct tax code has significant effects on reducing tax differences and significant effects on reducing corporate tax avoidance. Also, the impacts on the subjected companies were significantly different from non- subjected companies.
 Conclusion: The results show that the tax gap between the subjected and non-subjected groups has decreased since the implementation of Article 169 of the Direct Taxes Code. In other words, the financial relationships and interactions between subjected and non-subjected companies have been such that the reduction of the tax differences has expanded from subjected to non-subjected. But this decrease is significantly different between the two groups. In other words, the implementation of the program has not created the same differences between the subjected and non-subjected groups. The findings indicate that the intensity of the impact of the revival of Article 169 of the Direct Taxes Code was greater in the subjected group than in the non-subjected group. The results also show that tax avoidances have decreased in both groups of subjected and non-subject companies. Research results show that the reduction of tax avoidance has not been similar for the two groups. In other words, both groups are affected by the implementation of the program, but there is a significant difference between the results of differences between the two groups.

Keywords

References

بیگ‌پور، محمدعلی. (1394). حسابرسی مالیاتی. چاپ ششم، تهران، ا نتشارات دانشکده علوم اقتصادی.
پژویان، جمشید؛ ورشوساز بهناز. (1392). اثر استقرار مالیات بر ارزش افزوده در کشورهای منتخب منطقه خاورمیانه و شمال آفریقا منا. پژوهشنامه مالیات.۲۱(18)، ۳۰-۷.
جوکار، محمدرضا؛ مسلمی، آذر. (1395). بررسی تأثیر صورت معاملات فصلی مودیان مالیاتی بر تشخیص مالیات و درآمدهای مالیاتی در شهرستان ازنا، چهارمین کنفرانس بین المللی اقتصاد، مدیریت،حسابداری با رویکرد ارزش آفرینی، شیراز، 10-1.
رحمانی، علی؛ اربابی، زهرا. (1392). رابطه تفاوت مالیات تشخیصی و ابرازی با مدیریت سود. پژوهش‌های تجربی حسابداری، 10(3)، 83-61.
صفری گرایلی، مهدی؛ پودینه، شیوا. (1396). اجتناب مالیاتی و به موقع بودن اعلان سود: آزمون تجربی از بورس اوراق بهادار تهران. پژوهشنامه مالیات، ۲۴(۳۱)، 118-102.
عسکری، علی. (1389). تحول همه‌جانبه نظام مالیاتی درسال90. نشریه سامان سازمان امورمالیاتی ایران، 1(88)، 4-2.
کشاورزحداد، غلامرضا. (1396).  اقتصاد سنجی داده‌های خرد وارزیابی سیاست. تهران، نشر نی.
اسماعیلی، اسماعیل؛ آخوندی، احمد (1399). مجموعه کامل قوانین مالیاتی. تهران، سخنوران.
مهندس، ابوطالب؛ تقوی، مهدی.(1396). مالیه عمومی. چاپ بیست و نهم، تهران، نشر دوران.
نمازی، محمد؛ اسماعیلی پور، حسن. (1399). تأثیر استانداردهای بین‌المللی گزارشگری مالی (IFRS) بر فرار مالیاتی و اجتناب مالیاتی. دانش حسابداری، 11(1)، 33-1.
نوفرستی، محمد.(1398). آمار در اقتصاد وبازرگانی. چاپ نوزدهم، تهران، نشر رسا.
 
 
References
Accounting Research Bulletin. (1953). ARB43: Restatement and Revision of Accounting Research Bulletins. Section 10: Real and Personal Property Taxes.
Agell, J., Persson, M., Sacklen, H. (2020). The effects of tax reform on labor supply, tax revenue and welfare when tax avoidance matters. European Journal of Political Economy, 20(4), 963-982.
Askari, A. (2010). The comprehensive evolution of the tax system in the 2010s. Iranian Tax Affairs Organization Journal, 1(88), 2-4 [In Persian].
Beygpour, M.A. (2010). Tax Audit. Faculty of Economics Publications, Tehran [In Persian].
Chen, Y., Huang, S., Pereira, R., Wang, J. (2011). Corporate tax avoidance and firm opacity, Working Paper, University of Missouri.
Desai, M.A., Dharmapala, D. (2009). Corporate tax avoidance and firm value. Review of Economics and Statistics, 91(3), 537–546.
Frank, M., Lynch, L., Rego, S. (2009). Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review, 84(2), 467-496.
Gordon, R.H., Nielsen, S.B. (1997).Tax evasion in an open economy: value-added vs. income taxation. Journal of Public Economics, 66(2), 173-197.
Graham, R.J., Raedy, S. J., Shackelford, D.A. (2012). Research in accounting for income taxes, Journal of Accounting and Economics, 53(12), 412-434.
Hanlon, M., Heitzman, S. (2009). A Review of Tax Research. Working Paper, Massachusetts Institute of Technology.
Healy, P. (1985). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 7(3), 85–107.
Hendriksen, E., Vanberda, M.f. (1992). Accounting Theory. Irwin, New York.
Ismaili, Ismail, Akhundi, Ahmad. (2013). Complete collection of tax laws. Sokhanvaran, Tehran [In Persian].
Jokar, Mohammad Reza, Moslemi, Azar. (2016). Investigation of the effect of quarterly transactions of taxpayers on tax assessment and tax revenues in Azna, Fourth Intenational Conference on Economics, Management, Accounting with a value creation approach, Shiraz, 1-10 [In Persian].
Kane, Edward, Valentini, John. (1975). Tax avoidance by savings-and-loan associations before and after the tax reform act of 1969. Journal of Monetary Economics, 1(8), 41-63.
Keshavarz Hadad, Gholamreza. (2015). Micro Data Econometrics and Policy evaluation. Ney Publishing, Tehran [In Persian].
Kim, J., Li, B.Y., Zhang, L. (2011). Corporate tax avoidance and stock price crash risk: Firm-level analysis. Journal of Financial Economics, 100(3), 639-662.
Lee, M. (2005). Micro-Economics for Policy Program and Treatments Effects. Oxford University Press Inc, New York.
Leung, S., Richardson, G., Taylor, G. (2019). The effect of the general anti-avoidance rule on corporate tax avoidance in China. Journal of Contemporary Accounting and Economics, 15(1), 105-117.
Mohandes, Abutaleb and Taghavi, Mehdi. (2017). Public Finance. Doran Publishing Tehran [In Persian].
Namazi, M., Ismailipour, H. (2020). The impact of international financial reporting standards (IFRS) on tax evasion and avoidance. Journal of Accounting Knowledge, 11(1), 1-33 [In Persian].
Nofaresti, M. (2019). Statistics in Economics and Business. Nineteenth Edition, Rasa Publishing, Tehran [In Persian].
Onji, K. (2014). The efficiency consequence of a political compromise in the Japanese tax reform of 1989. Japan and the World Economy, 31(1), 54-64.
Pajouyan J., Warshosaz, B. (2013). Effect of Value Added Tax Implementation in Selected MONA Countries. Taxation Research Journal, 21(18), 1-4 [In Persian].
Plesko, G.A. (2004). Corporate tax avoidance and the properties of corporate earnings. National Tax Journal, 57(3), 29-37.
Rahmani, Ali, Arbabi, Zahra. (2013). The relationship between book tax differences and earnings management. Empirical Accounting Research, 3(10), 61-83 [In Persian].
Richardson, G., Taylor, G., Roman, L. (2015). The impact of financial distress on corporate tax avoidance spanning the global financial crisis: Evidence from Australia. Economic Modelling, 1(44), 44–53.
Romer, C., Romer D.H. (2009). The macroeconomic effects of tax changes. estimates based on a new measure of fiscal shocks. American Economic Review, 100(3), 763–801.
Safari Graili, Mehdi; Pudineh Shiva (2017) Tax avoidance and timely announcement of profits: An empirical test of the Tehran Stock Exchange. Journal of Taxation, 24 (31), 102-118 [In Persian].
Stiglitz, Joseph E. (1985). The general theory of tax avoidance. National Tax Journal, 38(3), 325-338.
Sundvik, Dennis. (2017). Book-tax conformity and earnings management in response to tax rate cuts. Journal of International Accounting, Auditing and Taxation, 28(3), 31-42.
Watts, Ross. (2003). Conservatism in accounting Part I: Explanations and implications. Accounting Horizons, 17(3), 207-222.
Journal of Accounting Knowledge
Volume 11, Issue 4 - Serial Number 43
December 2020
Pages 129-147

Files

History

  • Receive Date: 11 April 2020
  • Revise Date: 02 September 2020
  • Accept Date: 02 August 2020

Share

How to cite

Statistics