Social Network and Tax Evasion: Theoretical Model and Empirical Evidence in Bangladesh

This paper examines ethical and behavioral aspects of taxpayers, the financial condition of citizens, tax fairness, taxpayer services, complexities in the tax regime, tax rates, penalties and enforcement, and tax amnesties and the black economy. Primary data were collected by conducting a survey utilizing structured printed questionnaires. Secondary data were collected from project reports, government publications and documents, books, journals, reports, newspapers and electronic media. Empirical findings suggest that all these issues are associated with tax evasion in Bangladesh. We also find that eligibility in a social network increases the likelihood that others will take-up. This suggests that taxpayers affect each other’s decisions about tax avoidance, highlighting the importance of accounting for social interactions in understanding enforcement and tax avoidance behavior, and providing a concrete example of optimization frictions in the context of behavioral responses to taxation. The involvement and nexus of the three actors in tax policy formulation, implementation and compliance processes were examined. The empirical findings indicate the presence of this nexus which facilitates tax evasion. The high magnitude of tax evasion in Bangladesh is significantly acknowledged by respondents in the study. The empirical findings suggest that the absence of a participatory policy making process, lack of research into, and reform of, the tax system, short-term oriented and politically motivated tax policies, loopholes, anomalies and complexities of tax laws and policies are responsible for creating scope for tax evasion

Socio-economic Factors of Tax Compliance: An Empirical Study of Individual Taxpayers in the Dhaka Zones, Bangladesh

Tax compliance can be affected by many factors such as magnitude of compliance cost, the extent of penalty, perceived fairness of the tax system, awareness level of taxpayers and perceptions of government spending. The purpose of the study is identifying factors that affect compliance of individual income taxpayers in Bangladesh. The target population of the study is individual income taxpayers of the fifteen zones of Dhaka. The sample size is determined to 385 self-assessment assesse and 376 general procedure return submitted income taxpayers to which the questionnaire was distributed during the period of 1st December 2019 to 15th February, 2020. The results of the ordered logistic regression model reveal that the fairness, tax penalty and relationship with regard to taxpayer’s perception of government spending have positive and significant relationships with compliance. It also examines the effects of compliance decisions of referrals on others compliance decisions. The findings show a negative but insignificant relationship between them which implies that individual income taxpayer’s make their compliance decisions independent of others' decisions. Finally, the study having evaluated the effect of cost of complying with the tax law on tax compliance and concluded that there is a negative relationship between them implying that higher cost of compliance will lead to lower levels of compliance. Therefore, this paper suggests that maintaining tax fairness, optimum levels of penalty, spending the tax revenue on public development projects, keeping tax rates to the minimum as much as possible and keeping compliance costs to the minimum can enhance the compliance of taxpayers

The COVID-19 Pandemic Impacts on Manpower Export: An Econometric Analysis of Survival Strategies of Recruiting Agencies in Bangladesh

The COVID-19 outbreak led the governments of many countries to impose restrictions on non-essential travel to countries affected by coronavirus, indefinitely suspending tourism travel, work visas and immigrant visas. Some countries placed a complete travel ban on all forms of inward or outward travel, shutting down all airports in the country. In this context, the main purpose of this study is to review the survival strategies by the international recruiting agencies in the country both triggered and prolonged the recession while trying to save the lives of citizens. In this regards, in the random sample selection process 291 recruiting agents were selected out of total 1,189 active members of Bangladesh Association of International Recruiting Agencies (BAIRA). The econometric model developed is used to assess the relationships between COVID-19 sustainability and the exploratory determinant variables. The results delve out that the only five variables out of twenty-four to survive are owner (s) personal reserve fund, shark loan, sale of other assets and properties, probability of bankruptcy and probably closing business soon. This paper contributes to the literature by showing that financial factors and/or non-economic factors can trigger both a financial and economic meltdown in unprecedented ways. This study also propose a model for investigating sustainability of other business sectors in the same way. Finally, it suggest that in order to protect manpower export sector, the Government of Bangladesh needs to bring under a special program and provide financial and strategic assistance to recruiting agencies in overall market research, exploration and creation