Businesses face a variety of externally imposed regulations, including taxation. Compliance with these regulations is the single biggest regulatory burden for companies.
Professor Binh Tran-Nam, who is based out of the RMIT Vietnam Asia Graduate Centre, examines tax compliance as a red tape to businesses.
“Almost all tax compliance models assume taxpayers can comply with tax regulation without incurring additional costs,” Professor Tran-Nam said.
“In reality, tax compliance typically requires taxpayers or third parties to incur recurrent or one-off costs, often not negligible, to fulfil their tax obligations.”
Speaking at the 6th International Conference on Business Management 2015, Professor Tran-Nam explained that not only is taxation compliance costly for businesses of all sizes, but there seems to be no sign of it letting up.
“Compliance costs at the taxpayer level are significant, and have increased substantially over 17 years,” he said.
He based his comments on a 2014 Australian Research Council-funded research by academics from RMIT Vietnam, UNSW, Monash and UTAS on the taxation compliance burden of taxpayers selected from the Australian Taxation Office’s national database.
“The substantial increase in the tax compliance costs incurred by small to medium sized enterprise taxpayers may reasonably be attributed to the introduction of the Goods and Services Tax (GST) in 2000,” he said.
“Tax calculations are becoming increasingly complex, and so many businesses must incur the costs of outsourcing those calculations.”
Both the size of the business and the number of tax laws impact its tax compliance costs.
“Larger businesses seem to hold more strongly negative views about the frequency of changes in tax laws and the uncertainty of tax administrative practices.”
“Tax compliance will likely continue to be red tape for Australian businesses for decades to come,” he concluded.
Professor Tran-Nam was one of two keynote speakers at the conference, which was attended by about 50 academics from the region. Thirty-four research papers were presented, with subjects ranging from environmental issues in Japan to developing sustainable education systems in Vietnam.
The conference was hosted by RMIT Vietnam Centre of Commerce and Management for the first time at Saigon South campus.