Tax literacy in the digital economy

Abstract: Due to the digital economy the average taxpayer now has access to other income streams where the majority of transactions can be virtual transactions. Even though these transactions are virtual or takes place in the shared economy, it might still have a taxation effect for the taxpayer and they need the necessary taxation knowledge to be able to account for these transactions on their tax returns. Likewise, tax administrations are increasingly making use of advanced technologies to prevent and detect non-compliance. For some taxpayers this brings new challenges and knowledge requirements in respect of their interaction with revenue authorities. Empirical findings has shown that taxpayer knowledge is a factor influencing tax compliance and accordingly, taxpayer education is generally one of the key approaches adopted by tax authorities to improve taxpayer compliance. The concept of ‘tax literacy’ is however proposed to be a wider concept than tax knowledge alone and needs further investigation in the context of its role in taxpayer compliance. The aim of this paper is to illustrate the usefulness of a conceptual framework of tax literacy as a tool in identifying tax compliance risks for individuals in the digital economy. The risks addressed in this paper are limited to those which could result from deficits in taxpayers’ knowledge and skills, as well as a lack of information resources. Using fundamental concepts from the literature on ‘literacy’ and drawing on established theories in especially the ‘financial literacy’ domain, the concept of ‘tax literacy’ is explained in this paper and presented as a three-dimensional framework. Understanding that tax literacy is a process of ‘making meaning’ from the interaction between tax awareness and contextual knowledge. The framework illustrates three elements of tax literacy, namely 1) tax awareness, 2) contextual knowledge and skills, and 3) meaning making or informed decision making. The first element, tax awareness, refers to individuals’ understanding of their role in the fiscal exchange or social contract with government. This awareness forms the basis of the framework, as it is a necessary condition for being tax literate. The second element proposes procedural as well as a legal component of contextual knowledge and skills. The procedural context allows for a consideration of the knowledge and skills required to interact with tax authorities and having your records for tax purposes in order. The legal context refers to an understanding of how you are taxed. The third element propose that taxpayers’ engagement in fulfilling their tax obligations is the result of a social construction of their awareness and knowledge, based on own perceptions. In other words, a combination of awareness, knowledge, skills and attitude are necessary to make decisions on acting in a tax compliant manner or not. The usefulness of the proposed framework as a tool in identifying tax compliance risks for individuals in the digital economy was illustrated with highlighting examples of specialised knowledge requirements on a procedural and legal level as it pertains to individuals as taxpayers in the digital age

Tax knowledge for the digital economy

Abstract:Orientation: Because of the digital economy, taxpayers have access to new income streams. These virtual transactions have taxation consequences, and therefore taxpayers need specialised taxation knowledge to understand their tax obligations and act in a tax compliant manner. Research purpose: The aim of this article was to identify the unique tax knowledge requirements for individuals functioning in the digital economy by systematically reviewing literature on the tax challenges arising from this new economy. Applying a conceptual framework of tax knowledge, these knowledge requirements were categorised as either general, procedural or legal. By identifying these requirements, it was possible to point out the risks within these categories that may cause obstacles to individuals to act fully tax compliant. Motivation for the study: Understanding the different knowledge requirements of taxpayers may assist tax authorities to identify the tax compliance risks of these taxpayers in their capacity as individuals functioning in the digital economy. Research approach/design and method: A qualitative approach was used in the study through a thematic search of appropriate literature such as articles, reports, blogs and media releases. These documents were systematically reviewed to identify the knowledge requirements for individual taxpayers functioning in the digital economy. Main findings: The findings suggest that there are specific tax knowledge requirements in different areas that must be in place to ensure tax compliance in the digital economy. Any shortcomings in these areas of knowledge create the risk of non-compliance for individuals functioning in the digital economy. Practical/managerial implications: Taxpayers and tax authorities alike should take note of the risk areas identified in each area of knowledge (general, procedural and legal) and devise strategies to deal with taxation issues arising from transactions in the digital economy. Contribution/value-add: This study applied a tax knowledge framework and identified the general, procedural and legal tax knowledge requirements of individuals functioning in the digital economy. The study also pointed out associated compliance risks, which may assist tax authorities to target strategies for improving taxpayer knowledge in these three areas

Correction to: A nonsynonymous mutation in PLCG2 reduces the risk of Alzheimer’s disease, dementia with Lewy bodies and frontotemporal dementia, and increases the likelihood of longevity

The IPDGC (The International Parkinson Disease Genomics Consortium) and EADB (Alzheimer Disease European DNA biobank) are listed correctly as an author to the article, however, they were incorrectly listed more than once

Correction to: A nonsynonymous mutation in PLCG2 reduces the risk of Alzheimer’s disease, dementia with Lewy bodies and frontotemporal dementia, and increases the likelihood of longevity

The IPDGC (The International Parkinson Disease Genomics Consortium) and EADB (Alzheimer Disease European DNA biobank) are listed correctly as an author to the article, however, they were incorrectly listed more than once