Investigating the Relationship between Mental Accounting of Income Tax and VAT with Tax Compliance

Document Type : Research Paper

Authors

1 Ph.D. Student of Accounting, Departement of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran

2 Professor in Accounting, Department of Accounting, Faculty of Manegment and Economics, Shahid Bahonar University of Kerman, Kerman, Iran

Abstract

Abstract

With the emergence of taxes, the phenomenon of tax evasion and tax non-compliance has always existed. A set of economic, social, cultural and psychological factors are effective on the decisions of non-compliance and tax evasion. If the factors affecting tax compliance or non-compliance are identified, changes in tax laws, structures or processes can help increase compliance and prevent tax evasion. In this research, it is investigated whether financial managers, accountants, and taxpayers consider income tax and value added tax separately from other financial events based on the theory of mental accounting. And do people who have high scores in mental accounting do more tax compliance? This research is of applied and descriptive-survey type and from the point of view of the time dimension, it is part of the cross-sectional research that was conducted in the solar year 1401 (tax year 1400). The statistical population of this research consists of financial managers, accountants, and tax payers of businesses and companies that are required to submit tax returns in Kerman province. Since the statistical population of this research is assumed to be unlimited, in order to determine the sample size, Cochran's formula was used for the unlimited population and the sample size was estimated to be 384 people, and a questionnaire consisting of two questions was used to collect data. The results of the research show that taxpayers mentally separate taxes from other incomes and distinguish between gross and net income and do not enter all financial activities in a single mental account. Also, the results showed that mental accounting has a positive and significant effect on tax compliance, and taxpayers who have higher mental accounting scores do more tax compliance.

Keywords

References

 
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History

  • Receive Date: 21 December 2022
  • Revise Date: 18 April 2023
  • Accept Date: 29 April 2023

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