Sustainable Tax and Accounting Reporting in Building a New Tax Culture

Achieving the Sustainable Development Goals (SDGs) depends significantly on enhancing tax revenue mobilization and transforming tax culture among both institutional and individual taxpayers. Taxpayers today face growing regulatory complexity, evolving technologies, and increasing reporting obligations imposed by international organizations. The OECD encourages governments to improve tax systems by reducing tax non-compliance and analyzing taxpayers’ behavior (Hauptman et al., 2024a, 2024b). These pressures demand greater transparency and directly influence tax compliance strategies and practices. The push for a more transparent and equitable global tax system (OECD, 2021a, 2021b, 2022a, 2022b), aligned with principles of sustainability, is supported by adopted tax and accounting reporting standards issued by international professional bodies. Companies are not only required to comply with tax laws but also have a broader responsibility to stakeholders and society to uphold effective tax governance. At the same time, new mechanisms are being introduced to encourage tax-sustainable behavior and foster the development of a new tax culture. The latter should be based on a ‘culture of tax compliance’, meaning educating taxpayers to perceive tax payments as an integral part of their relationship with the government, built upon rights and responsibilities (OECD, 2021b). Countries possess distinctive cultural, social, economic, and legal characteristics (Singh et al., 2023). A positive perception of taxes in society must take these multifaceted influences into account (Mohammed & Tangl, 2024).

The development of a new tax culture can be viewed from various perspectives, as it is shaped by numerous factors ranging from individual perceptions to systemic approaches. This Special Issue, “Sustainable Tax and Accounting Reporting in Building a New Tax Culture”, explores these aspects through nine key areas that offer a diverse yet interconnected picture of contemporary challenges and opportunities in the study of tax culture and reporting. Topics range from the perspective of tax auditors, highlighting the influence of income and sales taxes on tax decision-making (Al-Khleifat et al., 2024), to the use of predictive methods, such as the gray forecasting model, to improve the understanding and forecasting of tax collection (Kaushik et al., 2024). An important element in shaping tax culture is also tax compliance within the framework of environmental tax policy (Hakam et al., 2024). For a more inclusive tax culture and reporting in the context of micro, small, and medium-sized enterprises, the role of innovation, creative tax reporting, and tax incentives is discussed (Saptono et al., 2024). Progress is further examined through the role of artificial intelligence in enhancing the quality of value-added tax reporting (Al Najjar et al., 2024). Special attention is given to tax evasion related to transactions involving stablecoins (Moura de Carvalho et al., 2024). Tax culture is also strongly influenced by quality control mechanisms, demonstrated by analyses of the quality of audit oversight impacting the financial performance of companies (Abraham et al., 2024). Tax compliance is assessed empirically through the evaluation of taxpayers’ knowledge and perceptions of fairness, which directly influence tax behavior and willingness to cooperate with tax authorities (Hauptman et al., 2024c). Individuals may perceive taxation as a form of punishment, depending on whether they view it as a service or a strain; therefore, understanding the underlying factors is crucial (Mohammed & Tangl, 2024). All of the mentioned aspects are essential for understanding the various factors that shape public perceptions of taxation, thereby contributing to the development of a new, more inclusive, and sustainability-oriented tax culture and reporting.

Al-Khleifat et al. (2024) investigate the determinants influencing tax decision-making in Jordan from the perspectives of income and sales tax auditors, highlighting the impact of both internal and external factors on auditing practices and taxpayer compliance. Auditor independence, professional experience, and taxpayer awareness are significant determinants in tax-related decisions. Authors recommend strengthening auditor training, promoting greater independence, and enhancing taxpayer education to support transparency and fairness within the tax system (Al-Khleifat et al., 2024).

A sustainable economic framework must be maintained by ensuring the efficiency and effectiveness of the tax collection process, argue Kaushik et al. (2024). Using a novel gray forecasting model, the authors analyze trends and patterns in direct tax collection, the cost of tax collection, the share of direct taxes in total tax revenue, and the tax-to-GDP ratio in India to predict the future outlook of tax revenues. The results revealed that direct tax collection has consistently increased over the past two decades, with the proportion of direct taxes in total tax revenue also showing significant improvement. Conversely, the cost of tax collection has steadily decreased, indicating enhanced efficiency in the tax collection process (Kaushik et al., 2024).

In achieving the Sustainable Development Goals, the study by Hakam et al. (2024) examines compliance behavior within the context of environmental tax policies. By analyzing a broad range of environmental taxation instruments, rather than focusing solely on specific taxes or isolated policy mechanisms, the study demonstrates that interdisciplinary approaches and international collaboration are essential. Taxpayer compliance is influenced by factors such as social acceptability, regulatory quality, and perceptions of fairness (Hakam et al., 2024). Developing fair and effective environmental tax policies is crucial, and a combination of incentives and enforcement mechanisms plays a vital role in promoting compliance (Hakam et al., 2024). Through bibliometric and scientometric analyses, Hakam et al. (2024) identify emerging trends and key factors influencing compliance behavior. Their findings show that citations and publications on environmental challenges are dominated by China and the USA, with high-quality research also emerging from Canada and Australia (Hakam et al., 2024). Authors believe that the study provides valuable guidance for businesses, helping them innovate for sustainability and adapt to evolving policy landscapes.

The role of innovation, creative compliance, and tax incentives in the case of micro, small, and medium enterprises (MSMEs) in Indonesia is examined in the study by Saptono et al. (2024). As these enterprises make up around 90% of businesses worldwide (Lutfi et al., 2022; Saptono et al., 2024), the study explores how government financial assistance, through tax incentives, tax planning, and tax avoidance strategies, can enhance their resilience and sustainability by fostering innovation (Saptono et al., 2024). Creative compliance, such as tax planning and tax avoidance, does not directly influence resilience or sustainability, but tax incentives had a limited impact on resilience during times of crisis, and they played a more significant role in supporting long-term sustainability (Saptono et al., 2024). Innovation emerged as a key factor, serving as the critical link between creative compliance and business success, and fully mediating the relationship between tax incentives and resilience (Saptono et al., 2024). The authors conclude that MSMEs should prioritize innovation within their strategic planning, especially when combined with effective tax practices. They also emphasize the importance of government support through simplified regulatory frameworks to promote a more innovative-friendly business environment (Saptono et al., 2024).

Ensuring high tax reporting quality from the perspective of AI’s role was explored by Al Najjar et al. (2024) through an experimental study focused on VAT in emerging markets (specifically in Lebanon). The authors tested reporting quality using both traditional methods and AI tools to determine whether low VAT reporting quality in emerging markets, often caused by accounting errors, can be improved using AI (Al Najjar et al., 2024). Based on experimental research involving AI intervention through ChatGPT-4, the authors found that AI-assisted reporting significantly enhances reporting quality (Al Najjar et al., 2024). The Al Najjar et al. (2024) study contributes by offering novel and practical insights into the role and potential of AI in enhancing tax reporting practices.

The study by Moura de Carvalho et al. (2024) investigates the tax evasion behavior of small and medium enterprises (SMEs) engaging in stablecoin transactions in Brazil. Specifically, whether factors such as a company’s size, age, sector, or the intensity, frequency, and context of its transactions are associated with tax evasion behavior. This study provides a deeper understanding by investigating whether the intensity of stablecoin use is associated with a higher propensity for tax evasion. Furthermore, it examines whether companies engaged in high-frequency stablecoin transactions are more likely to evade taxes than those involved in low-frequency transactions. The authors examine whether companies engaging in on-chain transactions are more prone to tax evasion than those involved only in off-chain transactions. Additionally, they assess the relationship between a company’s age and its propensity to engage in tax evasion. They also investigate whether companies in the service sector are more likely to evade taxes than those in the commercial sector. Finally, the study explores whether medium-sized companies have a higher probability of tax evasion than smaller ones (Moura de Carvalho et al., 2024). Moura de Carvalho et al.’s (2024) research shows that age, intensity, sector, size, and IntraVaspP2P (on-off chain) are significant predictors of tax evasion. The authors (Moura de Carvalho et al., 2024) were unable to confirm the hypothesis that firms engaging exclusively in P2P transactions have a higher propensity to evade taxes than those engaging solely in IntraVASP transactions. Younger and medium-sized companies, characterized by intensive stablecoin use, high transaction frequency, involvement in both IntraVASP and P2P transactions, and operating within the service sector, are more likely to engage in tax evasion (Moura de Carvalho et al., 2024).

Abraham et al. (2024) measured the effect of audit oversight quality on the financial performance of U.S. firms, with a special focus on firm profitability and its impact on firm value in the pharmaceutical and energy industries. According to the authors, audit oversight is provided by audit committees, which hire auditing firms to conduct audits of the firm in question (Abraham et al., 2024). Audit committees are additionally appointed to oversee the financial reporting process, monitor financial control systems, hire and evaluate independent auditors, and communicate their findings with management and auditors (Abraham et al., 2024). The added value of the study lies in proposing two new measures of audit oversight quality (the ability to fulfill one or more of their responsibilities, as mentioned in annual reports, and the number of times the term ‘audit committee’ is used). The main results of Abraham et al. (2024) show that the audit oversight quality measures were regressed against profitability, debt capacity, and firm value. The authors of the study concluded that audit oversight quality reduces return on equity and has a disciplining effect on borrowing, as increased oversight of debt growth lowers companies’ tendency to take on additional debt using collateral and reduces investor returns on debt-financed projects. An increase in firm size, when accompanied by high audit oversight quality, enhances the firm’s value, with the robustness of the first audit oversight quality measure needing to be considered (Abraham et al., 2024).

In the study by Hauptman et al. (2024c), the perceived levels of tax knowledge and tax fairness among taxpayers in Slovenia are assessed, with a focus on differences based on gender and settlement size. In their study, the correlations between tax knowledge and the dimensions of tax fairness are investigated. The results provide evidence that tax knowledge differs between male and female taxpayers; therefore, the authors conclude that developing appropriate educational programs in tax education is necessary to address this gap (Hauptman et al., 2024b). However, when examining tax fairness, the study’s results revealed no differences based on gender or settlement size (Hauptman et al., 2024b). The study shows weak but statistically significant correlations between tax knowledge and tax fairness perception, varying by fairness dimension. Authors suggest that policymakers should consider taxpayers’ perceptions of distributive fairness and tax knowledge when designing communication strategies and educational programs (Hauptman et al., 2024c).

Mohammed and Tangl (2024) analyzed individuals’ perceptions and the factors behind viewing taxes as punishment, and presented a comprehensive examination weighing taxes as a service or a strain. The perceptions of taxes are shaped by various economic and psychological factors (fairness views, societal standards, and cognitive biases), government communication, and societal norms), as demonstrated in their study. The relationship between economic development and tax perception is crucial and multidimensional (Mohammed & Tangl, 2024). They confirmed that tax perceptions tend to be more positive in economically developed countries than in less developed nations due to the visible benefits of tax contributions, while negative perceptions are mostly rooted in the lack of apparent returns on taxes paid. In these circumstances, regressive taxation worsens negative perceptions by placing a disproportionate burden on lower-income individuals (Mohammed & Tangl, 2024). A crucial role in shaping tax perceptions is played by the fairness of tax policies and effective government communication. Incorporating financial literacy and civic education into school curricula is a powerful tool for changing tax perceptions through education (Mohammed & Tangl, 2024). Individuals who vividly recall instances of government waste or inefficiency are more likely to hold negative attitudes toward taxation, and governments can influence cultural norms by running awareness campaigns and emphasizing the societal costs of tax avoidance (Mohammed & Tangl, 2024). Public acceptance of taxation can be increased through progressive tax policies and clear, consistent communication from the government (Mohammed & Tangl, 2024).

The papers included in this Special Issue offer an in-depth and insightful exploration of the emerging tax culture aimed at promoting tax-sustainable behavior, covering a wide range of topics. Each paper presents practical solutions that policymakers can use in shaping a new tax culture, both in terms of policy development and reporting. The authors also provide valuable recommendations for researchers, highlighting potential future research directions that can build on the studies presented and address the gaps identified. We invite researchers to engage in these in-depth studies of specific problems.