Identifying the Effective Components in Validating the Declared Taxable Income of Companies Using the Structural Equation Model

Document Type : Original Article

Authors

• aliasghar mottaghi ¹
• Nabi Najafi ²
• احمد محمدی ³

¹ Azad Unversity Tabriz

² Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran

³ گروه حسابداری، واحد تبریز، دانشگاه آزاد اسلامی، تبریز، ایران

10.22067/ijaaf.2023.79633.1260

Abstract

Objective: In recent years, the country's tax affairs organization has followed the approach of trusting taxpayers and the principle of the correctness of information expressed by taxpayers and has reviewed and compiled its systems and directives in this regard. Thus This paper aims to provide a comprehensive model for validating the taxable income of companies in the light of trust theory, information validity theory, the law of truthfulness, and theories of truth (correspondence, coherence, and pragmatic).

Methodology: in this paper, by conducting semi-structured interviews with experts in 2021 and 2022, the components and indicators governing the declared taxable income of the companies were extracted, then the proposed research model was compiled using the structural equation method.

Results: The factors affecting the credibility of taxable income declared by companies, in order of importance, are auditing factors, technical and systemic factors, environmental factors, company-specific factors, and financial and accounting factors that the tax affairs organization should use to assess the credibility of income. Companies subject to tax should pay attention to these factors appropriately.

Innovation: The components identified in this research can help determine the validity of declared taxable income and the credit risk of companies. Before the tax audit process implementation, it provides a valid basis for selecting a taxpayer for audit. Also, the research findings lead to the development of theoretical support bases in accounting and tax research.

Keywords

• declared taxable income
• information credibility
• trust theory
• tax audit
• comprehensive tax plan

Main Subjects

• Accounting

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