The impact of the dispute resolution processes on tax morale

Abstract

Background: An ideal world is for all citizens to be tax compliant. The decision of a taxpayer to comply with regulations governed by tax laws depend on the determinants of tax morale. Tax morale considers what motivates individuals to pay taxes and how keen they are to pay taxes on a timely basis. A major negative detriment to tax morale is financial dissatisfaction, especially when there are differences between the taxes to be paid by taxpayers and their tax obligation, this could be viewed as a dispute process. To ensure compliance of the procedures during a dispute, a dispute resolution process was created which is a mechanism that tax administrators put in place, in order to enhance fairness of taxpayer‟s tax affairs. Main purpose of study: This study provides a structured overview of peer reviewed articles published in highly rated academic journals on dispute resolutions processes and tax morale, which is the willingness of taxpayers to comply with their tax obligations, pending a resolution of their tax matters under dispute with revenue authorities. This study will aid revenue authorities in identifying ways to encourage taxpayers‟ amenability to adhere to the law and provide recommendations on combating the deficit from non-compliant taxpayers under tax disputes. Method: The study follows a systematic review whereby peer reviewed articles are collected using key words related to the research topic. The search was conducted on online databases found on the University of Pretoria‟s online library, namely Google Scholar, Scopus and Web of Science. Subsequently, the articles were selected based on an inclusion and exclusion criteria to ascertain the reliability and relevance of the information to ensure that only literature relevant to this current study was included. Results: In this study 38 articles were sourced on dispute resolution processes and tax morale. The findings in these articles indicate that dispute resolution processes have a negative impact on the tax morale of individuals. This results in a negative impact on collection of taxes by revenue authorities from taxpayers that have an on-going tax dispute. Conclusions: The issues of the impact of dispute resolution processes as a detriment of tax morale have been researched worldwide for the past few decades and are a matter of interest to both revenue authorities and individuals. This study can be used for future research as a guiding tool to assist revenue authorities with identifying ways to encourage taxpayers to be compliant if they have pending tax disputes.