Effect of Tax Rates, Penalty Rate, Detection Probability, Cost of Compliance, Royalty Rates, Environmental Regulations, and Petroleum Profit Tax Compliance the Moderating Role of Trust in Government: A Conceptual Framework

  • Abba Ya’u Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia
  • Natrah Saad Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia
  • Abdulsalam Mas’ud Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia

Abstract

The paper presents a theoretical framework on the moderating effect of trust in
authority on the relationship between tax rates, penalty, detection probability, cost
of compliance, royalty rates, environmental regulations, and petroleum profit tax
compliance. The objective of the proposed framework is to expand the Allingham
and Sandmo (1972) model of tax compliance by adding two more predictor variables
relevant to the oil and gas industry (royalty rates and environmental regulations), and
moderating variable (trust) to better explain the relationship. Allingham and Sandmo
(1972) model received a lot of criticisms for not considering other non-human factors
that can help in determining taxpayers’ compliance behavior, hence the expansion of
the model to include new variables, purely non-human factors which are relevant to the
industry in question. A thorough search of the following databases: Scopus database,
Web of Science, Emerald, Google Scholar, among others was conducted to come up
with the relevant and related literature on the subject matter. Providing empirical
evidence through validation of this framework would have important implications
for policymakers in host oil and gas producing countries, oil and gas operators, the
deterrence theory as well as future research.

References

Abdul-Jabbar, H. (2009). Income tax non-compliance of small and medium enterprises
in Malaysia: Determinants and tax compliance costs (Doctoral dissertation,
Curtin University).
Published
2020-02-12
How to Cite
YA’U, Abba; SAAD, Natrah; MAS’UD, Abdulsalam. Effect of Tax Rates, Penalty Rate, Detection Probability, Cost of Compliance, Royalty Rates, Environmental Regulations, and Petroleum Profit Tax Compliance the Moderating Role of Trust in Government: A Conceptual Framework. Journal of Business Management and Accounting, [S.l.], v. 9, n. 2, p. 71-92, feb. 2020. ISSN 2231-9298. Available at: <http://e-journal.uum.edu.my/index.php/jbma/article/view/8720>. Date accessed: 17 feb. 2020. doi: https://doi.org/10.32890/jbma2019.9.2.8720.
Section
Articles