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Tax Morale

What Drives People and Businesses to Pay Tax?

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Unlocking what drives tax morale – the intrinsic willingness to pay tax – can greatly assist governments in the design of tax policies and their administration, particularly in developing countries where compliance rates are low. This report builds on previous OECD research to identify some of the key socio-economic and institutional drivers of tax morale across developing countries, and seeks to test for evidence of the social contract by examining the impact of public services on tax morale. It also uses new data on tax certainty as an entry point to explore tax morale in businesses, where existing research is very limited. Finally, the report identifies a range of factors related to the tax system that may affect business decision making, how they vary across regions, and suggests some areas for future research. Overall, the report provides a range of suggestions for further work, and how tax morale considerations can be integrated into holistic tax compliance strategies.

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Methodology – Business

In October 2016, the OECD launched a business survey on taxation to gather the views of businesses regarding the sources of tax uncertainty and on the possible solutions to foster greater certainty in the tax system. The survey was open between October and December 2016, targeted senior tax professionals and received 724 responses from firms headquartered in 62 different countries and with regional headquarters in 107 different jurisdictions. In the case of Africa, Asia and Latin America, more than 91% of firms were MNE’s with a global and regional headquarter. Among the respondents, the top five countries of global headquarters were Bulgaria, the United States, Italy, Japan and Germany (in order of number of respondents). The top five countries for regional headquarters are slightly different from those by global headquarters. Most respondents have regional headquarters in the United States, United Kingdom, Singapore, Germany, the People’s Republic of China and Mexico (in order of number of respondents). Additionally, although some jurisdictions are not represented as the base for global headquarters, they are well represented as a base for regional headquarters. For example, this is the case for the People’s Republic of China and Singapore. For a more developed description of the methodology please see the IMF/OECD Report for the G20 Finance Ministers on “Tax certainty” (IMF/OECD, 2017[1]).

English

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