Tax fraud investigation : level of operations and policy measures / Arnel A. Bernardo. 6

Thesis (Ph.D.) -- Pamantasan ng Lungsod ng Maynila, 1998.;A dissertation presented to the faculty of the Graduate School of Management in partial fulfillment of the requirements for the degree Doctor of Business Administration. 56

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EXECUTIVE SUMMARY: One hundred fifty-one purposively chosen stakeholders from Valenzuela, Manila, Quezon City ad Makati participated in this study. With three researcher-made rating scales used as the instruments, the data were collected from September to November 1998. The survey data were submitted further to a review by seven experts on taxation in the process of triangulation or focus group discussion. Together, these data answered the following specific questions: 1. What was the level of operations of tax fraud investigation? 2. What were the problems and constraints that hamper tax fraud investigation? 3. What additional measures are needed to confront tax violations? 4. Do government and non-government stakeholders significantly differ in their assessment of tax fraud investigation practices? 5. What policy measures can be formulated to improve tax fraud investigation? Three rating scales were developed and validated for this dissertation, with each scale answering one specific objective of the study. One hundred fifty-one stakeholders (government and non-government) accomplished these scales. The quantitative data generated from these scales were further utilized as the discussion points of a group of 7 experts who participated in a triangulation process to review and validate these quantitative data. The quantitative survey data were statistically analyzed using means, standard deviation, ranking and t-test for independent samples. The findings of the study show that: 1. The level of operations of tax fraud investigation is believed to be marginal or in the borderline. 2. Government and non-government stakeholders differ significantly in many aspects of tax fraud investigation, while they also agree in some respect. 3. There are various problems and constraints which hamper tax fraud investigation. 4. Various measures are available to address identified problems. These measures are either administrative or legislative in nature. These measures are marginally implemented. 5. Many of the problems and constraints related to tax avoidance and evasion have persisted over the years in spite of the measures applied. 6. Policy measures are recommended either to be installed or to be strengthened. The study concludes that: 1. The level of operations of tax fraud investigation is weak. 2. People involved in the investigative practice tend to be defensive by trying to picture favorable trends about the issue on tax fraud investigation. 3. Tax fraud investigation problems and constraints have not been seriously addressed. Given these, many taxpayers continue to manage evading or avoiding taxes. 4. Policy measures, either administrative or legislative, are available but do not seem to be effective. The study recommends that existing measures to address tax avoidance and evasion be implemented with seriousness both on the part of those who are in the tax system and on the part of the taxpayers. Additional measures are necessary to strengthen the existing ones. A Congressional bill is drafted in this regard. Additional research on this subject will increase awareness about the issue and may lessen the problems.

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