Managing compliance risks of large businesses: A review of the underlying assumptions of co-operative compliance strategies

Large businesses play a vital role in the economy e.g. as large employers and investors. They are also important for the development of countries and for economic growth due to their (tax) contributions to the state budget. With growing budget deficits, numerous accounting scandals and public outrage about aggressive tax planning, corporate tax non-compliance is more than ever a serious issue for countries worldwide. In the last decade many tax authorities have developed so-called cooperative compliance strategies as preventive instruments to influence corporate tax behaviour. We conclude that the most important assumptions underlying co-operative compliance strategies are the contributions to taxpayer compliance by improving perceived procedural justice, reducing taxpayer uncertainty and improving tax risk management by taxpayers. These assumptions can draw on some theoretical substantiation, but none of them can claim a solid grounding from empirical evidence. This article is part of a PhD research project in which corporate behaviour with regard to tax compliance is the subject of research.