Digitalization And Tax Law 2023

S. 4221. Opportunities of a changing tax compliance environment

“If you think compliance is expensive, try non-compliance.” This often-cited statement of the former U.S. Deputy Attorney General Paul McNulty puts the costs of compliance and the costs of non-compliance in relation and is intended to show that the costs of non-compliance outweigh the costs of compliance. However, it can also be interpreted to show another important fact – that non-compliance is a possible option.

When putting this statement in the context of tax compliance, it is first important to understand what tax compliance is. The term tax compliance does not have a universally accepted definition. One possible definition for tax compliance is provided by the OECD, which defines tax compliance in their glossary as the “Degree to which a taxpayer complies (or fails to comply) with the tax rules of his country, for example by declaring income, filing a return, and paying the tax due in a timely manner”. Another definition refers to tax compliance as “the taxpayers’ decision to comply with tax laws and regulations by paying tax timely and accurately”.

These definitions show that a decision from the taxpayer is required rega...