"A Typology of Tax Compliance in Developing Economies: Empirical Evidence from China's Shoe Industry"
Xin He and Huina Xiao
Law & Policy
April 2019, Volume 41, Issue 2, pp 242-266
Abstract: Drawing on fieldwork investigations of shoe manufacturers in southeastern China, this article provides empirical evidence for understanding these businesses’ taxpaying practices. We find that since business taxpayers largely regard tax law as illegitimate, instrumental considerations dominate these taxpayers’ decisions to pay or not pay taxes. We then incorporate “structural opportunities for evasion” and “perceived costs of evasion” to develop a two‐by‐two matrix to understand the following types of behavior: aggressive evasion, obliged compliance, strategic compliance, and reciprocal compliance. We argue that this matrix explains why value added tax fraud is widespread in China while voluntary compliance is rare. It also helps to illuminate compliance more generally in developing economies.
Post a Comment