Research Article Published 19 December 2019

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

How to Cite

How to Cite

Ya'u, A., Saad, N., & Mas'ud, A. (2019). 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, 9(2), 71-92. https://doi.org/10.32890/jbma2019.9.2.8720
Abba Ya'u
Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Malaysia
Natrah Saad
Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Malaysia
Abdulsalam Mas'ud
Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Malaysia
Full text
PDF View full text 993 KB · 22 pages XML JATS full text 107 KB · machine readable HTML Read online 69 KB
DOI 10.32890/jbma2019.9.2.8720 Cite this article
Share this article
Citations
1
OpenAlex, highest of the sources checked
Reads
699 +5
Abstract + full text
Downloads
636 +3
PDF and XML
Percentile
91th
By citations, works of the same year

Article

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.

Keywords
Trust in government petroleum profit tax environmental regulation royalty rates compliance

Metrics & impact

Citations by source

Harvested 08-09-2026

Counts differ by index because each source crawls a different corpus. Crossref counts only registered reference lists; Google Scholar includes theses, preprints and grey literature.

OpenAlex
1
Open corpus, updated daily View →
OpenCitations
1
Open references only View →
Crossref
1
Deposited reference lists only View →
Scopus
0 Not indexed
Indexed titles only View →
Google Scholar
Publishes no citation count that can be read automatically.
Includes theses and preprints Search →
Dimensions
Publishes no citation count that can be read automatically.
Includes policy documents Search →

Citations over time

New citations recorded in each year, as reported by OpenAlex.

1
0
2025 2026

Reads & downloads

Abstract views 699
PDF downloads 636
XML downloads 0
Full-text HTML 0
Counted under COUNTER Release 5 rules; known robots excluded.

Attention beyond citation

Citation percentile 91th
Field-weighted citation impact 0.00
Works this article cites 90

From OpenAlex. A field-weighted impact of 1.00 is the world average for work of the same field, type and year. No Altmetric key is configured, so news, policy and social attention are not shown.

Identifiers
DOI · 10.32890/jbma2019.9.2.8720
OpenAlex · W3008521447

References

References 87
Deposited to Crossref with the article DOI
  1. Abdul-Jabbar, H. (2009). Income tax non-compliance of small and medium enterprises in Malaysia: Determinants and tax compliance costs (Doctoral dissertation, Curtin University).
  2. Abdul-Jabbar, H., & Pope, J. (2008). Exploring the relationship between tax compliance costs and compliance issues in Malaysia. Journal of Applied Law and Policy, (2008).
  3. Adam, M. N. H., & Yusof, N. A. M. (2018). A comparative study on the burden of tax compliance costs amongst GST registered companies in Malaysia and abroad. Journal of Science, Technology and Innovation Policy, 3(2).
  4. Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1, 323-338.
  5. Alm, J. (1991). A perspective on the experimental analysis of taxpayer reporting. The Accounting Review, 66(3), 577-593.
  6. Alm, J., Jackson, B. R., & McKee, M. (1992). Estimating the determinants of taxpayer compliance with experimental data. National Tax Journal, 45(1), 107–114.
  7. Alm, J., Martinez-Vazquez, J., & Schneider, F. (2004). ‘Sizing’ the problem of the hard-to-tax. Paper presented at the Hard to Tax: An International Perspective, Andrew Young School of Policy Studies, Georgia State University, Stone Mountain, May 15-16, 2003.
  8. Alm, J., Sanchez, I., & De Juan, A. (1995). Economic and noneconomic factors in tax compliance. Kyklos, 48(1), 1-18.
  9. Alm, J., Kirchler, E., & Muehlbacher, S. (2012). Combining psychology and economics in the analysis of compliance: From enforcement to cooperation. Economic Analysis and Policy, 42(2), 133-151.
  10. Alm, J., & McClellan, C. (2012). Tax morale and tax compliance from the firm’s perspective. Kyklos, 65(1), 1-17. doi: 10.1111/j.1467-6435.2011.00524.x
  11. Amiesa, F. S., Omowunmi, I., & Joseph, A. A. (2018). Economic evaluation of the dual petroleum tax system proposed in the 2017 Nigeria Fiscal Reform Framework. In SPE Nigeria Annual International Conference and Exhibition. Society of Petroleum Engineers.
  12. Anyanwu, J.C. (1993). Monetary economics: Theory, policy and institutions, Onitsha: Hybrid Publishers.
  13. Balassone, F., & Jones, P. (1998). Tax evasion and tax rates: Properties of a penalty structure. Public Finance Review, 26(3), 270-285.
  14. Bayer, R. C. (2006). A contest with the taxman–the impact of tax rates on tax evasion and wastefully invested resources. European Economic Review, 50(5), 1071-1104.
  15. Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169-217.
  16. Bosetti, V., Messina, E. & Valente, P. (2002). Optimization technologies and environmental applications. IMAJ. Manag. Math., 13, 167–185.
  17. Boyd, R.G. and D. Khosrow, (1994). Tax reform and energy in the Philippines economy: A general equilibrium computation. Energy Journal, 15(2).
  18. Carr, W. F., & Owen, P. R. (1997). Clear as crude: Defending oil and gas royalty litigation. Natural Resources Journal, 37(3), 695-706.
  19. Cerqueti, R. (2014). Exhaustion of resources: a marked temporal process framework. Stochastic environmental research and risk assessment, 28(4), 1023-1033.
  20. Cerqueti, R. and Coppier, R. (2009), “Tax revenues, fiscal corruption and ‘shame’ costs”, Economic Modelling, 26(1/2), 1239-1244.
  21. Chorvat, E., & Chorvat, T. R. (2018). The dynamic stability of progressive taxation. National Tax Journal, 71(1).
  22. Clotfelter, C. (1983). “Tax evasion and tax rates: An analysis of individual returns.” Review of Economics and Statistics 65, 363-373.
  23. Collins, J. H., & Plumlee, R. D. (1991). The taxpayer’s labor and reporting decision – The effect of audit schemes. Accounting Review, 66(3), 559–576.
  24. Devos, K. (2013). Do penalties and enforcement measures make taxpayers more compliant? The view of Australian tax evaders. Far East Journal of Psychology and Business, 12(1), 1-9.
  25. Dismukes, D. E., Burke, J. M., & Mesyanzhinov, D. V. (2006). Estimating the impact of royalty relief on oil and gas production on marginal state leases in the US. Energy policy, 34(12), 1389-1398.
  26. Doran, M. (2009). Tax penalties and tax compliance. Harv. J. on Legis., 46, 111.
  27. Eichfelder, S., & Kegels, C. (2014). Compliance costs caused by agency action? Empirical evidence and implications for tax compliance. Journal of Economic Psychology, 40, 200-219.
  28. Evans, J. & Hunt L. (2011). International handbook on the economics of energy. Massachusetts, USA: Edward Elgar Publishing Inc. USA. ISBN 978 0 85793 8251 experimental approach. Journal of Business Ethics, 18(2), 173-184.
  29. Feichtinger, G., Hartl, R. F., Kort, P. M., & Veliov, V. M. (2005). Environmental policy, the Porter hypothesis and the composition of capital: Effects of learning and technological progress. Journal of Environmental Economics and Management, 50(2), 434-446.
  30. Fischer, C. M., Wartick, M., & Mark, M. M. (1992). Detection probability and taxpayer compliance: A review of the literature. Journal of Accounting Literature, 11(1), 1–46. Effect of Tax Rates, Penalty Rate, Detection Probability, Cost of Compliance, Royalty Rates, Environmental Regulations, 89 and Petroleum Profit Tax Compliance the Moderating Role of Trust in Government: A Conceptual Framework A Conceptual Model: 71-
  31. Friedland, N., Maital, S., & Rutenberg, A. (1978). A simulation study of income tax evasion. Journal of Public Economics, 10(1), 107–116.
  32. Faridy, N., Copp, R., Freudenberg, B., & Sarker, T. (2014). Complexity, compliance costs and non-compliance with VAT by small and medium enterprises (SMEs) in Bangladesh: Is there a relationship? Retrieved from http://hdl.handle. net/10072/63522
  33. Gangl, K., Hofmann, E. B., Pollai, M., & Kirchler, E. (2012). The dynamics of power and trust in the ‘slippery slope framework’ and its impact on the tax climate. Available at SSRN 2024946.
  34. Gangl, K., Hofmann, E., & Kirchler, E. (2015). Tax authorities’ interaction with taxpayers: A conception of compliance in social dilemmas by power and trust. New Ideas in Psychology, 37(0), 13-23. doi: http://dx.doi.org/10.1016/j. newideapsych.2014.12.001
  35. Gbegi, D., Adebisi, J., & Tosin, B. O. D. U. N. D. E (2017). The Effect of Petroleum Profit Tax on the Profitability of Listed Oil and Gas Companies in Nigeria
  36. Gius, M. (2018). The Relationship between Tax Rates and Tax Revenue. Atlantic Economic Journal, 46(1), 137-139.
  37. Gobena, L. B., & Van Dijke, M. (2016). Power, justice, and trust: A moderated mediation analysis of tax compliance among Ethiopian business owners. Journal of Economic Psychology, 52, 24-37.
  38. Godwin, M. (1978). Compliance costs—The cost of paying tax. Omega, 6(5), 389-398.
  39. Gordon, D. V., & Wen, J. F. (2018). Tax penalties on fluctuating incomes: Estimates from longitudinal data. International Tax and Public Finance, 25(2), 430-457.
  40. Gowharzad, H. T., & Al-Harthy, M. H. (2011). Production royalty sliding scales. Energy Sources, Part B: Economics, Planning, and Policy, 6(1), 53-62.
  41. Gravelle, J. G. (2011). Reducing depreciation allowances to finance a lower corporate tax rate. National Tax Journal, 64(4), 1039.
  42. Guo, Y., Xia, X., Zhang, S., & Zhang, D. (2018). Environmental regulation, government R&D funding and green technology innovation: Evidence from China provincial data. Sustainability, 10(4), 940.
  43. Haig Rw (1935). The cost to business concerns of compliance with tax laws. Mgnt Ree. 24, 323-333
  44. Hofmann, E., Gangl, K., Kirchler, E., & Stark, J. (2014). Enhancing tax compliance through coercive and legitimate power of tax authorities by concurrently diminishing or facilitating trust in tax authorities. Law and Policy, 36(3). doi: 10.1111/lapo.12021
  45. Isehunwa, S., & Uzoalor, E. I. (2011). Evaluation of true government take under fixed and sliding royalty scales in Nigerian oil industry. Australian Journal of Basic and Applied Sciences, 5(3), 735-741.
  46. Johnston KS (1961) Corporations federal income tax compliance costs. Ohio University Bureau of Business Research. Monography 10. Columbus.
  47. Johnson, D., & Grayson, K. (2005). Cognitive and affective trust in service relationships. Journal of Business Research, 58(4), 500-507. doi: 10.1016/ S0148-2963(03)00140-1
  48. Kemp, A.G., (1992). Development Risks and Petroleum Fiscal Systems: A Comparative Study of the UK, Norway, Denmark and the Netherlands. Energy Journal, 13(3): 1-8.
  49. Kirchler, E. (2007), The economic psychology of tax behaviour, Cambridge, Cambridge University Press.
  50. Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2), 210-225. doi: 10.1016/j.joep.2007.05.004
  51. Korpela, K. M., Pasanen, T. P., Repo, V., Hartig, T., Staats, H., Mason, M. & Scopelliti, M. (2018). Environmental strategies of affect regulation and their associations with subjective well-being. Frontiers in psychology, 9, 562.
  52. Kastlunger, B., Lozza, E., Kirchler, E., & Schabmann, A. (2013). Powerful authorities and trusting citizens: The slippery slope framework and tax compliance in Italy. Journal of Economic Psychology, 34(2013), 36–45. doi: 10.1016/j. joep.2012.11.007
  53. Kyari, A. K. (2013). A theoretical and empirical investigation into the design and implementation of an appropriate tax regime: an evaluation of Nigeria’s petroleum taxation arrangements. (Doctoral Deseertation.Openair.rgu.ac.uk)
  54. Lankoski, L. ( 2017). Linkages between environmental policy and competitiveness. Available online: http://www.olis.oecd.org/olis/2008doc.nsf/LinkTo/ NT0000B20E/$FILE/JT03268619.PDF
  55. Lee, K. (2015). Timing of penalties, tax rates, and tax evasion. FinanzArchiv: Public Finance Analysis, 71(1), 37-52.
  56. Leeuwen, G.V.; Mohnen, P. (2013). Revisiting the Porter hypothesis: An empirical analysis of Green innovation for the Netherlands. Econ. Innov. New Technol. 67, 295–319.
  57. Main, I. W. M. (2012). Effect of quality of service, tax sanction and costs compliance taxpayers compliance. Journal of Accounting. Udayana University. Bali.
  58. Mas’ud, A., Aliyu, A.A., & Gambo, E.J. (2014). Tax rate and tax compliance in Africa. European Journal of Accounting Auditing and Finance Research, 2(3), 22-30.
  59. Mason, R., & Calvin, L. D. (1978). A study of admitted income tax evasion. Law and Society Review, 13(Fall), 73-89.
  60. Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. The Academy of Management Review, 20(3), 709-734.
  61. Muehlbacher, S., Kirchler, E., & Schwarzenberger, H. (2011). Voluntary versus enforced tax compliance: Empirical evidence for the “slippery slope” framework. European Journal of Law and Economics, 32(1), 89-97. doi: 10.1007/s10657-011-9236-9 Effect of Tax Rates, Penalty Rate, Detection Probability, Cost of Compliance, Royalty Rates, Environmental Regulations, 91 and Petroleum Profit Tax Compliance the Moderating Role of Trust in Government: A Conceptual Framework A Conceptual Model: 71-
  62. Murphy, K. (2004). The role of trust in nurturing compliance: A study of accused tax avoiders. Law and Human Behavior, 28(2), 187-209. doi: 10.1023/B:LAHU.0000022322.94776.ca
  63. Nwezeaku, N.C. (2005). Taxation in Nigeria: Principles and Practice, Owerri: Springfield Publishers Limited.
  64. Nzioki, P. M., & Peter, O. R. (2014). Analysis of factors affecting tax compliance in real estate sector: A case of real estate owners in Nakuru town, Kenya. Research Journal of Finance and Accounting, 5(11). Retrieved from http://www.iiste.org/ Journals/index.php/RJFA/article/view/13523
  65. Odusola, A. (2006). “Tax policy reforms in Nigeria”, World Institute for Development Economics and Research, Research Paper No. 2006/03. http://www.wider,unu. edu
  66. Onifade, T. T. (2017). Alberta, Canada, royalty review and its lessons for resource economies. Journal of Energy & Natural Resources Law, 35(2), 171-196
  67. Oremade T. (2006), Petroleum Profit Tax in Nigeria. Ibadan: Evans Brothers Nigeria Publishers.
  68. Oremade, B. T. (2010). Perception of petroleum profits tax compliance in Nigeria (Doctoral dissertation, Bournemouth University).
  69. Osmundsen, P., (1998). Dynamic taxation of non-renewable natural resource under asymmetric information about reserves, Can. J. of Economics, 31, 933-951.
  70. Palil, M. R., & Mustapha, A. F. (2011). Factors affecting tax compliance behaviour in self assessment system. African Journal of Business Management, 5(33), 12864–12872.
  71. Park, C. G., & Hyun, J. K. (2003). Examining the determinants of tax compliance by experimental data: A case of Korea. Journal of Policy Modeling, 25(8), 673–684.
  72. Pommerehne, W., & Weck-Hannemann, H. (1996). Tax rates, tax administration and income tax evasion in Switzerland. Public Choice, 88(1-2), 161–170.
  73. Sapiei, N. S., Abdullah, M., Azmi, A. A. C., & Mustapha, M. Z. (2017). Compliance costs and the behavior of SMEs with the implementation of GST in Malaysia. International Journal of Economics and Management, 11(S2), 379-
  74. Savitri, E. (2016). The effect of taxpayer awareness, tax socialization, tax penalties, compliance cost at taxpayer compliance with service quality as mediating variable. Procedia-Social and Behavioral Sciences, 219, 682-687.
  75. Schaubroeck, J., Lam, S. S. K., & Peng, A. C. (2011). Cognition-based and affect-based trust as mediators of leader behavior influences on team performance. Journal of Applied Psychology, 96(4), 863-871. doi: 10.1037/a0022625
  76. Sinnasamy, P., & Bidin, Z. (2017). The relationship between tax rate, penalty rate, tax fairness and excise duty non-compliance. In SHS Web of Conferences, 34, 11001. EDP Sciences.
  77. Slemrod, J. (1985). An empirical test for tax evasion. Review of Economics and Statistics, 67(2), 232–238.
  78. Slemrod, J., Blumenthal, M., & Christian, C. (2001). Taxpayer response to an increased probability of audit: Evidence from a controlled experiment in Minnesota. Journal of Public Economics, 79(3), 455–483.
  79. Stamatopoulos, I., Hadjidema, S., & Eleftheriou, K. (2017). Corporate income tax compliance costs and their determinants: Evidence from Greece. In Advances in Taxation (233-270). Emerald Publishing Limited.
  80. Tapiero, C. S. (2009) Energy consumption and environmental pollution: a stochastic model. IMA J. Manage. Math., 20, 263–273.
  81. Torgler, B. (2011). Tax morale and compliance: Review of evidence and case studies for Europe. World Bank Policy Research Working Paper. SSRN eLibrary.
  82. Vintilă, G., Gherghina, Ş. C., & Păunescu, R. A. (2018). Study of effective corporate tax rate and its influential factors: Empirical evidence from emerging european markets. Emerging Markets Finance and Trade, 54(3), 571-590.
  83. Virmani, A. (1989). Indirect tax evasion and production efficiency. Journal of Public Economics, 39(2), 223-237.
  84. Weck-Hannemann, H., & Pommerehne, W. (1989). Einkommenssteuerhinterziehung in der Schweiz: Eineempirische Analyse. Schweizerische Zeitschrift fu ̈r Volkswirtschaft und Statistik, 125(4), 515–556.
  85. Xin, M. K. H., Khai, K. G., Fong, L. S., & Chen, N. H. (2015). Factors affecting individual taxpayers’ compliance in Malaysian tax filing system. The International Journal of Business & Management, 3(9), 339-347.
  86. Young, J.C. (1994). Factors associated with non-compliance: Evidence from the Michigan tax amnesty program. Journal of American Taxation Association, 16(2), 82-105.
  87. Zhao, X., & Sun, B. (2016). The influence of Chinese environmental regulation on corporation innovation and competitiveness. Journal of Cleaner Production, 112, 1528-1536.

Most read articles by the same author(s)