The determinants of Tax Administration audit adjustments on Enterprise Income Tax

• Main Authors: Yu-Hsien Wang, 王玉嫻
• Other Authors: Wei-heng Lin
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/77643405683026431892

碩士 === 中原大學 === 會計研究所 === 91 === Enterprise income tax has been a major source of national revenue for Taiwan government. Along with economy development, the number of tax return filings to be assessed has been increased rapidly. In light of the prohibitive costs to review each filing, the tax administrations can only audit enterprise filings on a test basis accordingly. The determinants of the amount of audit adjustments, which can guide tax auditors in analysis of filings and direct their attention to problematic areas of filings selected for examination, are important to parties related to tax filings. To explore the determinants of tax adjustment made by tax auditors, this study uses confidential data from tax returns and tax audit results from 1998 through 2000. We employ the Heckman (1979) two-stage estimation procedure to alleviate self-selection bias in the relation between audit adjustments, amount of assessed income tax and explanatory variables. Explanatory variables are status of listing in Stock Exchange or Over-the-Counter, contributed capital, audited net sales, number of branches, net depreciable property, investment tax credit, the differences of profit between audit results and returns, three consecutive losses and the dishonest probability estimated by Ministry of Finance. The results show that smaller contributed capital and larger investment tax credit and the differences between profit standard and reported profit are accompanied by larger tax adjustments. The status of three consecutive losses is associated with smaller tax adjustments. On the other hand, the status of being listing and larger audited net sales and net depreciable property are associated with larger tax adjustments. And higher dishonest probability is associated with smaller audit adjustments.