Title

Will a departure from tax-based accounting encourage tax noncompliance? Archival evidence from a transition economy

Document Type

Journal article

Source Publication

Journal of Accounting and Economics

Publication Date

5-1-2010

Volume

50

Issue

1

First Page

58

Last Page

73

Keywords

Book-tax differences, H26, IFRS, Informativeness of book-tax differences, Tax noncompliance, Tax-based accounting system

Abstract

We investigate whether a departure from a tax-based accounting system toward the adoption of International Financial Reporting Standards encourages tax noncompliance. We also examine whether such a departure, which weakens book-tax conformity, affects the informativeness of book-tax differences for tax noncompliance. Our evidence suggests that as book-tax conformity decreases, tax noncompliance increases. Although book-tax differences remain informative of tax noncompliance, the informativeness attenuates as book-tax conformity weakens. Additionally, firms with high incentives to inflate book income are more tax compliant than their counterparts after the departure from a tax-based accounting system.

DOI

10.1016/j.jacceco.2010.02.001

Print ISSN

01654101

Publisher Statement

Copyright © 2010 Elsevier B.V.

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Full-text Version

Publisher’s Version

Recommended Citation

Chan, K. H., Lin, K. Z., & Mo, P. L. L. (2010). Will a departure from tax-based accounting encourage tax noncompliance? Archival evidence from a transition economy. Journal of Accounting and Economics, 50(1), 58-73. doi: 10.1016/j.jacceco.2010.02.001