Details
| Original language | English |
|---|---|
| Pages (from-to) | 173-205 |
| Number of pages | 33 |
| Journal | Journal of Business Economics |
| Volume | 90 |
| Issue number | 2 |
| Early online date | 3 Sept 2019 |
| Publication status | Published - Mar 2020 |
Abstract
In many countries simplified methods for tax accounting are considered as important step to reduce tax complexity and thereby the compliance cost burden of particularly small businesses. Using two surveys among (1) small businesses and (2) tax advisors, this study examines the effect of cash-based versus accrual accounting on tax and financial accounting compliance cost. While the results of the first study are ambiguous, the second study shows that cash-based accounting is associated with a decrease of external compliance costs of small firms by about 30%. This relative benefit decreases slightly with the size of the business. However, we do not find that the usage of cash-based accounting reduces the demand for professional tax advice.
Keywords
- Accrual accounting, Cash-based accounting, Tax complexity, Tax simplification
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Business and International Management
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
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In: Journal of Business Economics, Vol. 90, No. 2, 03.2020, p. 173-205.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - The effect of simplified cash accounting on tax and financial accounting compliance costs
AU - Blaufus, Kay
AU - Hoffmann, Franziska
PY - 2020/3
Y1 - 2020/3
N2 - In many countries simplified methods for tax accounting are considered as important step to reduce tax complexity and thereby the compliance cost burden of particularly small businesses. Using two surveys among (1) small businesses and (2) tax advisors, this study examines the effect of cash-based versus accrual accounting on tax and financial accounting compliance cost. While the results of the first study are ambiguous, the second study shows that cash-based accounting is associated with a decrease of external compliance costs of small firms by about 30%. This relative benefit decreases slightly with the size of the business. However, we do not find that the usage of cash-based accounting reduces the demand for professional tax advice.
AB - In many countries simplified methods for tax accounting are considered as important step to reduce tax complexity and thereby the compliance cost burden of particularly small businesses. Using two surveys among (1) small businesses and (2) tax advisors, this study examines the effect of cash-based versus accrual accounting on tax and financial accounting compliance cost. While the results of the first study are ambiguous, the second study shows that cash-based accounting is associated with a decrease of external compliance costs of small firms by about 30%. This relative benefit decreases slightly with the size of the business. However, we do not find that the usage of cash-based accounting reduces the demand for professional tax advice.
KW - Accrual accounting
KW - Cash-based accounting
KW - Tax complexity
KW - Tax simplification
UR - http://www.scopus.com/inward/record.url?scp=85072156229&partnerID=8YFLogxK
U2 - 10.1007/s11573-019-00943-4
DO - 10.1007/s11573-019-00943-4
M3 - Article
AN - SCOPUS:85072156229
VL - 90
SP - 173
EP - 205
JO - Journal of Business Economics
JF - Journal of Business Economics
SN - 0044-2372
IS - 2
ER -