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Asian Journal of
Tax avoidance and tax evasion: Accounting
Research
current insights and future
research directions from an
emerging economy 275
Md Shamim Hossain Received 1 October 2023
Revised 24 December 2023
School of Business, Law and Entrepreneurship, Swinburne University of Technology, 28 March 2024
Hawthorn, Australia and 10 May 2024
Accepted 10 June 2024
CBA, International University of Business Agriculture and Technology,
Dhaka, Bangladesh
Md. Sobhan Ali
Department of Accounting, Government Khondokar Mosharraf Hossain College,
Kotchandpur, Bangladesh, and
Chui Ching Ling and Chorng Yuan Fung
Faculty of Business, Design and Arts,
Swinburne University of Technology Sarawak Campus, Kuching, Malaysia

Abstract
Purpose – This study aims to identify factors affecting tax avoidance and tax evasion in Bangladesh and
propose a future research agenda.
Design/methodology/approach – This paper reviewed 423 articles published between 2010 and 2023 using
a systematic literature review (SLR) approach.
Findings – The review classified the factors into three categories, namely individual taxpayers, corporate
taxpayers and tax administration. Income level, tax penalty, tax morale, inefficient tax return system and tax
assessment process are associated with the individual’s tax avoidance and tax evasion activities. Profitability,
corporate governance and financial restrictions are key factors influencing corporate taxpayers’ involvement
in tax avoidance and tax evasion. Factors related to tax administration include lack of social interaction,
distrust of national officials, complexities of policies, politicisation of tax authority, lack of political stability,
incompetent auditing, insufficient recording, lack of administrative cooperation, lack of accountability,
insufficient counselling and compromising in tax prosecution cases.
Practical implications – This paper provides tax regulators with insights to improve regulations and lessen
tax avoidance and tax evasion activities.
Originality/value – This paper is the first attempt to provide guidance for academics when examining tax
avoidance and tax evasion in Bangladesh.
Keywords Tax avoidance, Tax evasion, Bangladesh
Paper type Literature review

1. Introduction
Research on corporate tax avoidance and evasion has rapidly increased recently and received
soaring public attention (Islam and Hashim, 2020; Kovermann and Velte, 2019). Researchers

© Md Shamim Hossain, Md. Sobhan Ali, Chui Ching Ling and Chorng Yuan Fung. Published in Asian
Asian Journal of Accounting
Journal of Accounting Research. Published by Emerald Publishing Limited. This article is published Research
under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, Vol. 9 No. 3, 2024
pp. 275-292
translate and create derivative works of this article (for both commercial and non-commercial purposes), Emerald Publishing Limited
subject to full attribution to the original publication and authors. The full terms of this licence may be e-ISSN: 2443-4175
p-ISSN: 2459-9700
seen at http://creativecommons.org/licences/by/4.0/legalcode DOI 10.1108/AJAR-09-2023-0305

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 AJAR have debated about the definition of tax avoidance (Wang et al., 2020). Whilst some claim it is
9,3 a way to reduce tax liability within the legal framework, others think it is illegal to evade tax
burdens (Lee et al., 2015). Hasseldine and Morris (2013) suggest determining the legality of tax
avoidance activities is crucial. In this study, tax avoidance is defined as the legal utilisation of
the tax regime to reduce one’s tax payable, by means that are within the law or at least within
the letter of the law (Knuutinen, 2014). In contrast, tax evasion is any effort by taxpayers to
evade taxes by illegal means.
276 Tax revenue is one primary source of financial support for economic and social
development (Islam and Hashim, 2020; Jenkins and Newell, 2013). Despite the significant
role of tax revenue and the diffusion of tax avoidance and evasion to developing countries
(Mannan et al., 2021; Dang and Nguyen, 2022), few studies have been done on this area in
developing countries, including Bangladesh (Nurunnabi, 2019). Bangladesh has the lowest
tax-to-gross gross domestic product (GDP) ratio of 10.3% (OECD, 2018) amongst the South
Asian countries (Alam et al., 2022; Razzaque et al., 2023). In the financial year 2020–2021,
Bangladesh’s overall budget deficit is 6% of GDP (GOB, 2020, p. 13). According to Moazzem
et al. (2023), the International Monetary Fund (IMF) states that nations should strive for a
tax-to-GDP ratio of at least 12% to spur economic growth. Besides, the World Bank
contends that growth and poverty eradication depend on tax receipts surpassing 15%
of GDP.
Despite having the highest average tax rate amongst the South Asian countries,
Bangladesh’s tax loss is 30.2% of GDP (BDT 842 billion) (Moazzem et al., 2023). Compared to
neighbouring countries like India, Sri Lanka and Vietnam, Bangladesh is notably lacking in
its ability to collect taxes. In the 2021–2022 fiscal year, 68% of Bangladeshis do not pay
income tax (Moazzem et al., 2023). According to the State of Tax Justice 2020 report,
Bangladesh loses more than $703m a year due to individual taxpayers and multinational
firms evading taxes (Rashid et al., 2023). Earlier studies claim that Bangladesh is facing the
problem of losing tax revenue, mainly due to tax avoidance by firms, including multinational
corporations (Ahmed, 2019; Islam and Hashim, 2020; Shakila, 2019). Bangladesh must collect
tax revenue exceeding BDT 2,000bn to harmonise with the regional standard of around 14%
(Moazzem et al., 2023). Therefore, identifying factors affecting tax avoidance and evasion is
crucial for Bangladesh to achieve sustainable growth.
Studies in Bangladesh were mostly carried out from the country’s or individual taxpayers’
perspective, whilst very few were done on the firms. The overarching problem is the lack of
coherent findings on factors related to tax avoidance and evasion in Bangladesh. Using a
systematic literature review (SLR), this study aims to explore the current state of tax
avoidance and evasion in Bangladesh. The research questions of this study are:
RQ1. What are the findings on factors influencing tax avoidance and evasion in
Bangladesh?
RQ2. What potential research topics might be studied in future in Bangladesh?

2. Methodology
This research uses an SLR approach to analyse the Bangladeshi tax avoidance and evasion
literature. SLR has been described as impartial, thorough and allowing for replication
(Tranfield et al., 2003), encompassing a comprehensive search for significant contributions on
a specific subject evaluated and summarised using an established methodology. Four
primary steps were taken to accomplish this goal: (1) planning, (2) searching, (3) screening and
(4) extracting, synthesising and reporting (Tranfield et al., 2003). The following subsections
go into further depth about them (Figure 1).

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 Asian Journal of
Planning: Organizing the review and defining a
procedure to create a systematic and repeatable Accounting
approach Research

Searching: Articles identified through database

searching (n = 423) 277

Screening: Articles screened and included in the Articles excluded

analysis (n = 51) (n = 372)

Extracting, synthesising and reporting the findings Figure 1.

based on the selected articles (n = 51) Flow diagram of
the study
Source(s): Authors’ own creation

SLR was started by organising the review and defining a procedure to create a systematic
and repeatable approach. This initial phase determines the research area to focus on.
Established databases and publishers were chosen to search for papers on tax avoidance and
evasion (Ftouhi and Ghardallou, 2020; Whait et al., 2018). Search terms, with Boolean
function, “Tax avoidance” AND “Bangladesh,” “Tax evasion” AND “Bangladesh,” “Tax
aggressiveness” AND “Bangladesh” and “Tax planning” AND “Bangladesh” were used on
the article title, keywords and abstract from 2010 to 2023 (Table 1). A total of 423 papers on
tax avoidance and evasion were found meeting the inclusion criteria.
Inclusion criteria were adopted to screen the articles (Table 2) (Moher et al., 2010). This
study included 51 articles where the search terms appeared in both abstract and main body
for analysis and reporting. A two-stage writing approach was adopted for reporting
(Tranfield et al., 2003): descriptive and thematic analysis. Descriptive analysis provided
information like the body of research on tax avoidance and evasion in Bangladesh, type of
study, publications and citations. Thematic analysis emphasised theoretical and empirical
approaches to the study of tax avoidance and evasion in Bangladesh (Snyder, 2019).

No Publishers “Tax avoidance” AND “Bangladesh” “Tax evasion” AND “Bangladesh”

1 Emerald Publisher 77 86
2 Wiley Online Library 16 14
3 Springer Link 14 16
4 Taylor and Francis Online 10 18
5 Science Direct 37 59
6 Scopus 1 11
7 JSTOR 7 19
8 EBSCO 3 7 Table 1.
9 ProQuest 11 17 Lists of articles from all
Total 176 247 sources ranging from
Source(s): Authors’ own creation 2010 to 2023

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 AJAR 3. Descriptive analysis of selected papers
9,3 A summary of the works published in journals is shown in Table 3. The table displays the
percentage of studies on the subjects that appear in prestigious publications in Bangladesh,
such as the Journal of Cost and Management, followed by one or two publications in other
journals. Scholarly interest in tax avoidance and evasion has grown significantly in recent
years. In addition, Table 4 shows the list of articles published from 2010 to 2023 with more
than 50% published in the last five years.
278
4. Underpinning theories
This study used agency theory to analyse tax avoidance and evasion practice by corporate
firms (Desai et al., 2007; Desai and Dharmapala, 2006). Desai et al. (2007) and Desai and
Dharmapala (2006), using the agency theory, observe that businesses frequently design
intricate transactions to evade being discovered by tax authorities. These complex
transactions conceal assets from tax authorities and shareholders, which may enable
managers to obtain personal gain (such as collecting economic rents from business).
However, there could be a conflict between tax avoidance and evasion with an organisation’s
social responsibility (Wang et al., 2020). Therefore, corporate tax avoidance and evasion may
be influenced by monetary and social responsibility incentives.
Economic models (Becker, 1968) suggest that tax system incentives influence individuals’
tax reporting behaviour. Taxpayers make decisions based on expected utility maximisation.
They face a trade-off between tax savings from underreporting real income and the risk of
audit and penalties for non-compliance. This theory, originating from Becker’s (1968) work on
crime, was first used by Allingham and Sandmo (1972) to address the issue of tax compliance.
Public finance scholars have subsequently examined tax compliance using their model. The
current study adopted two concepts of Allighman-Sandmo’s (1972) model, i.e. the degree of
evasion rising with the tax rate and people are more likely to evade when they become aware
of the large number of evaders in society.

5. Literature review on the current state of the field

5.1 Conceptual framework on tax avoidance and tax evasion in Bangladesh
Past studies on tax avoidance and evasion were predominantly based on developed
economies. This study expanded the literature by considering emerging economies, such as
Bangladesh. This paper categorises taxpayers in Bangladesh into two groups: individual
taxpayers and corporate taxpayers. The individual taxpayers refer to any individual
taxpayers other than firms. Individual taxpayers can be an employee, partner or sole
proprietor. Any business other than sole proprietorship and partnership is considered as the
corporate taxpayers. Factors that can impact tax evasion and avoidance are summarised in
the conceptual framework as shown in Figure 2.

Description Inclusion criteria

Subject area Taxation, business firm, administration, individual taxpayers, tax evasion and avoidance
Document type Article and review
Source type Journals
Search area Business, management and accounting
Language English
Table 2. Publication stage Final and article in press
Inclusion criteria for Country Bangladesh
article selection Source(s): Authors’ own creation

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 Asian Journal of
Number of Percentage Accounting
No Journal articles (%)
Research
1 The Cost and Management 4 7.84
2 Munich Personal RePEc Archive (MPRA) 2 3.92
3 Global Disclosure of Economics and Business 2 3.92
4 Centre for Policy Dialogue (CPD) 2 3.92
5 European Journal of Business and Management 2 3.92 279
6 World Journal of Social Sciences 2 3.92
7 Journal of Economic Behavior and Organization 1 1.96
8 The Comilla University Journal of Business Studies 1 1.96
9 Environmental Science and Pollution Research 1 1.96
10 Economics and Business 1 1.96
11 Journal of Accounting, Finance and Economics 1 1.96
12 Research Journal of Finance and Accounting 1 1.96
13 American Journal of Trade and Policy 1 1.96
14 Advances in Public Interest Accounting 1 1.96
15 Journal of Financial Crime 1 1.96
16 Journal of International Accounting, Auditing and Taxation 1 1.96
17 Asian Journal of Accounting and Finance 1 1.96
18 International Journal of Public Administration 1 1.96
19 Polish Journal of Management Studies 1 1.96
20 Emperor International Journal of Finance and Management Research 1 1.96
21 International Journal of Advanced Research in Economics and Finance 1 1.96
22 Bulletin of the WHO 97: 221–229 1 1.96
23 Preventive Medicine 1 1.96
24 Social Responsibility Journal 1 1.96
25 Implementing Organisation: Research and Policy Integration for 1 1.96
Development (RAPID), Working paper BGD-21181
26 Journal of Applied Business and Economics 1 1.96
27 Brac Institute of Governance and Development 1 1.96
28 Accounting and Finance Review 1 1.96
29 Pacific Economic Review 1 1.96
30 Journal of World Business 1 1.96
31 International Journal of Accounting, Finance and Business 1 1.96
32 Australian Journal of Accounting, Economics and Finance (AJAEF) 1 1.96
33 Economies 1 1.96
34 International Journal of Accounting, Finance and Business (IJAFB) 1 1.96
35 Handbook of Research on theory and practice of Financial Crimes 1 1.96
36 Journal of Business and Management 1 1.96
37 International Journal of Business and Management Study 1 1.96
38 Asian Development Outlook 1 1.96
39 South Asian Journal of Business Studies 1 1.96
40 Procedia – Social and Behavioral Sciences 1 1.96
41 Economics and Business 1 1.96
42 Energy Reports 1 1.96 Table 3.
43 Journal of Business and Technology 1 1.96 Journals ranked by
Total 51 100 number of articles and
Source(s): Authors’ own creation percentages

5.2 Summary of past studies

Individuals and companies are taking different approaches to evade tax by using the
weakness and complexities in the present tax system of Bangladesh (Islam, 2020). Further
thematic analysis shows that these factors can be classified into three categories (Table 5).
5.2.1 Individual taxpayers. Factors influencing tax avoidance and evasion under
individual taxpayers’ category are immense. Past studies suggest many aspects of

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 AJAR Years Number of articles Percentage (%)
9,3
2023 5 9.80
2022 4 7.84
2021 7 13.73
2020 7 13.73
2019 6 11.76
280 2018 6 11.76
2017 8 15.69
2016 4 7.84
2015 1 1.96
2014 0 0.00
2013 0 0.00
2012 3 5.88
Table 4. 2011 0 0.00
List of articles 2010 0 0.00
published from 2010 Total 51 100
to 2023 Source(s): Authors’ own creation

individual taxpayers are associated with tax avoidance and evasion (Table 6). Factors such
as demographic, administrative and policy, psychological and government factors could
influence the individual taxpayers and lead to tax evasion and avoidance. Education is one of
the key demographic factors that directly exert significant influence on an individual’s tax
compliance (Kazi Abdul and Khandaker Mursheda, 2023; Tishar and Hasanuzzaman, 2019).
Morale (Kemme et al., 2020), ethics (Kazi Abdul and Khandaker Mursheda, 2023) and negative
perceptions (Islam et al., 2021) are amongst the psychological factors. For example, individual
taxpayers from countries with low tax morale and unethical behaviour are likely to engage in
more tax evasion (Kemme et al., 2020; Kazi Abdul and Khandaker Mursheda, 2023).
Corruption (Islam et al., 2021; Rashid, 2020; Sarkar, 2022), high tax rates (Islam et al., 2021;
Kabir, 2020), complex assessment process (Nigar Nargis, 2019; Nargis et al., 2020; Rahman
et al., 2018; Sarkar, 2022), National Board of Revenue (NBR) (Jewel et al., 2020), quality service
(Jewel et al., 2020; Rana and Maskujjaman, 2017) and government initiatives for improving
tax collection service (Abdul et al., 2021) are tax administrative and policy-related factors that
influence individual tax evasion. For example, dissatisfaction with existing complex tax
assessment and payment systems as well as lack of tax collector cooperation and counselling
campaigns can cause tax evasion (Islam et al., 2021; Rahman et al., 2018). A complex tax
system may result in lower fairness, audit probability and tax knowledge, leading to more tax
evasion (Islam et al., 2021; Rashid, 2020; Sarkar, 2022).
Tax evasion can also be influenced by ineffective tax return system, non-transparent tax
collecting system and harassment by tax officers (Jewel et al., 2020). Similarly, high tax rate
motivates individual taxpayers to evade tax (Kabir, 2020). Study by Jewel et al. (2020)
identified that NBR and government are major factors responsible for tax evasion. Corrupt
government officials, together with lack of both audit and transparent tax revenue collection
process (Jewel et al., 2020; Rana and Maskujjaman, 2017; Rashid, 2020), have increased the
corruption of tax evasion. Moreover, poor service quality includes inadequate information,
limited counselling (Rahman et al., 2018) and lengthy documentation could encourage
individuals to evade tax (Jewel et al., 2020).
Furthermore, individual taxpayers’ tax education, monthly income, tax morale (Tishar
and Hasanuzzaman, 2019), high tax rates, complexity of the payment process, non-
cooperation of tax collectors, inadequate information and limited counselling campaigns are
causes of tax evasion and avoidance (Rahman et al., 2018). Researchers pointed out

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 Asian Journal of
Tax Avoidance Accounting
Individual Tax and Corporate Tax Research
Payments Tax Evasion Payments

281

1. Risk of audit 1. Agency Conflict

and penalties 2. Ownership
2. Tax rate 1. Corruption Structure
3. Evaders in society 2. Service Quality 3. Audit
4. Complex 3. Penalties and 4. Financial
Assessment Process Punishment Restrictions
5. Tax Morale 4. Political 5. Employee Training
Influence
5. Governance

Tax
Administration

Tax Payers Types Figure 2.

Determinants of Tax Avoidance Conceptual framework
Impacts on Tax Collection on factors affecting tax
avoidance and tax
evasion in Bangladesh
Source(s): Authors’ own creation

government spending transparency (Abdul et al., 2021; Hasan et al., 2017) and tax penalties
(Hasan et al., 2017) influence individual taxpayers’ tax compliance and tax evasion
behaviours. A lack of quality services during tax returns may also lead to tax avoidance
(Rana and Masukujjaman, 2017).
5.2.2 Corporate taxpayers. Corporate taxpayers are motivated to evade tax by three broad
institutional factors, namely corporate governance mechanisms, financial issues as well as
function of tax authorities and taxation policies (Table 7). Corporate governance mechanisms
include firm-level characteristics (Tang, 2020; Wang et al., 2020), tax fairness, tax knowledge
and moral obligation (Kassa, 2021). Social costs (Razen and Kupfer, 2023) and social networks
(Whait et al., 2018) are under financial issues. Function of tax authorities and taxation policies
consists of loopholes in tax legislation (Ftouhi and Ghardallou, 2020), government ownership
and political connections (Tang, 2020).
Tax avoidance has a negative relationship with corporate governance mechanisms (Islam
and Hashim, 2020, 2023). Managers may engage in tax avoidance activities to maximise
opportunistic goals. Therefore, the audit and audit committee’s role are crucial in determining

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 AJAR Categories of factors influencing tax
9,3 No avoidance and tax evasion Citations

1. Individual Taxpayers Abdul et al. (2021), Alam (2021), Hasan et al. (2017), Islam
(2020), Islam et al. (2021), Jewel et al. (2020), Kabir (2020), Kazi
Abdul and Khandaker Mursheda (2023), Kemme et al. (2020),
Rana and Masukujjaman (2017), Rashid (2020), Sarkar (2022)
282 and Tishar and Hasanuzzaman (2019)
2. Corporate Taxpayers Gauthier et al. (2021), Hossain and Noor (2018), Hassan et al.
(2022), Islam and Hashim (2020), Islam and Hashim (2021),
Islam and Hashim (2023), Masum and Hena (2017), Rahman
and Karim (2016), Rashid and Morshed (2021), Rashid et al.
(2023), Razzaque et al. (2023), Sarkar (2022) and Zahid and
Bhuiyan (2012)
3. Tax Administration Abdallah and Ashraf (2018), Ahmed (2019), Jewel et al. (2020),
Islam (2020), Mannan et al. (2021), Monir (2012), Nigar Nargis
(2019), Nargis et al. (2020), Nurunnabi (2017, 2019), Murshed
Table 5. and Saadat (2018), Rahman et al. (2018), Sarkar (2022) and
Categories to classify Torgler, 2004
past studies Source(s): Authors’ own creation

corporate tax avoidance. Rashid and Morshed (2021) documented that external auditing
negatively affects firms’ tax evasion. Islam and Hashim (2023) found that audit committee
size and audit committee meetings have negative association with corporate tax avoidance.
Interaction of audit committee size and audit committee independence has a negative
relationship with corporate tax avoidance. In contrast, interaction between audit committee
meetings and audit committee independence positively affects corporate tax avoidance.
Rashid et al. (2023) found that higher CSR expenditure can reduce corporate tax
avoidance, but political ties reduce the contribution of CSR to tax evasion. Businesses with
political relations are more likely to be tax aggressive by downplaying CSR. Companies with
fewer political ties are more socially responsible than those with substantial political
affiliations. Progressive tax rates, tax policy, improper behaviour of tax officials and hassle at
payment time are other reasons for tax avoidance by firms (Rahman and Karim, 2016).
Recording fake expenses, erroneous classification of expenses and income, overstated
depreciation and raw material wastages, non-compliance of tax laws and unrecorded cash are
major ways to avoid and evade tax (Islam and Hashim, 2021). Moreover, firms have a culture
of giving bribes to public officials of tax authority to evade tax (Gauthier et al., 2021). Firms
facing financial constraints have more tendencies to evade tax than those with bank loans
and are financially stable (Rashid and Morshad, 2021).
Furthermore, Razzaque et al. (2023) have found that the political settlement in
Bangladesh’s tax system has contributed to the prevalence of tax evasion. Because of
political ties, majority of wealthy elites can avoid paying taxes. They can opt to not register
or file low-tax returns that are not subject to audits. Reduction of taxable income or increment
of expenses can reduce tax burden of the business firm (Rahman et al., 2018). Firms usually
use fake expenses like employee training expenses to evade tax (Hossain and Noor, 2018).
They also manipulate financial data or reports to evade tax (Rahman et al., 2018). Firms’
ownership structure is associated with tax evasion (Rashid and Morshad, 2021). Tax evasion
positively relates to domestic, foreign and government ownership. However, proprietorship,
female ownership and familiar international firms are negatively associated with tax evasion.
Similarly, Hassan et al. (2022) and (Masum and Hena, 2017) found that public ownership and
board ownership have positive relationship with corporate tax avoidance.

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 Asian Journal of
Factors Citations Findings Accounting
Demographic factors Education (Tishar and Tax education significantly influences tax Research
Hasanuzzaman, 2019) non-compliance behaviour
Education (Kazi Abdul and Individual tax compliance amongst
Khandaker Mursheda, 2023) taxpayers whose primary sources of income
are businesses, salaries and other sources is
directly and significantly impacted by their 283
educational background
Administrative and Complexity and a Tax System, The higher level of corruption and
policy factors Corruption (Islam et al., 2021; Rashid, complexity in a tax system will result in
2020; Sarkar, 2022) lower fairness, audit probability and tax
knowledge, leading to greater tax evasion
Process of Assessment (Islam et al., Main cause of tax avoidance and tax
2021; Rahman et al., 2018) evasion is dissatisfaction with the complex
payment system, tax assessment system,
lack of tax information and lack of
counselling campaigns
Tax Rate (Islam et al., 2021; Kabir, Higher tax rate decreases wealth disclosure
2020) in the tax return and hence causes low tax
collection, implying high tax avoidance and
tax evasion
National Board of Revenue (NBR) and Poor services of public administrators
Government including NBR, corrupt government
Jewel et al. (2020) officials, lack of audit and transparency
have worsened the situation
Psychological factor Subjective Norm (Hasan et al., 2017) Subjective norm has a significant influence
on tax compliance behaviour
Morale (Kemme et al., 2020) Individuals in countries with low tax morale
engage in tax evasion
Ethics (Kazi Abdul and Khandaker Individual tax compliance amongst
Mursheda, 2023) taxpayers whose primary sources of income
are businesses, salaries and other sources is
directly and significantly impacted by their
ethical standards
Negative Perceptions (Islam et al., Negative perceptions of taxpayers to get
2021) service in return for paying tax can
influence individuals to evade tax
Government factor Government Initiatives for Improving The absence of a participatory policy-
Tax Collection Service (Abdul et al., making process, lack of research into and
2021) reform of the tax system, short-term
oriented and politically motivated tax
policies, loopholes, anomalies and
complexities of tax laws and policies are
responsible for creating scope for tax
evasion
Table 6.
Quality Service (Jewel et al., 2020; Rana Inefficient tax return system, lack of
Factors influencing tax
and Maskujjaman, 2017) transparency in the tax collection system, avoidance and tax
harassment by the tax officer can influence evasion under
the tax evasion and tax individual taxpayers’
Source(s): Authors’ own creation category

5.2.3 Tax administration. Under tax administration category, factors could be classified as
social networks, complex processes, policy-making, political influence and administrative
cultural factors (Table 8). Taxpayers’ distrust in national officials and legal and government
systems have negatively influenced tax morale (Ahmed, 2019). Low probability of detection,

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 AJAR Factors Citations Findings
9,3
Corporate Agency Problem (Islam and Superior corporate governance is negatively
governance Hashim, 2020) associated with tax avoidance
mechanism Corporate Social Responsibility Higher CSR expenditure reduces tax avoidance, but
(CSR) (Rashid et al., 2023) political connection weakens its role in tax avoidance.
Firms with strong political connections are more tax
284 aggressive, whilst weaker connections are more
socially responsible
Audit Committee (AC) Attributes AC size has a negative insignificant association with
Islam and Hashim (2023) corporate tax avoidance, whilst AC meeting has a
negative significant relationship to corporate tax
avoidance
The interaction of AC size and AC independence has
a negative significant relationship to corporate tax
avoidance. In contrast, the interaction of AC meeting
and AC independence positively affects corporate tax
avoidance
Audit (Rashid and Morshed, 2021) The external auditing has a negative effect on tax
evasion by firms
Financial issues Internal Culture of Giving Bribe Corruption in tax administration tends to be mainly a
(Gauthier et al., 2021) demand-side phenomenon
Training Employees (Hossain Training can be used as a tax evasion tool, and in
and Noor, 2018) many organisations, it is being used somewhat
Report Manipulation (Rahman The reserve and provision are the main way of tax
et al., 2018) avoidance and evasion, followed by help from a legal
advisor, showing less income, more expenses,
investment allowances and individual intention
Ownership and Financial 1) The firm’s domestic, foreign and government
Restrictions (Rashid and ownership increases tax evasion
Morshad, 2021) 2) Proprietorship and female ownership decrease
tax evasion
3) The negative relationship between audit and tax
evasion implies that the government should
make it compulsory to check the financial
statements of the firms by external auditors,
which, in turn, reduces the firms’ tax evasion
4) The firms that face more financial constraints
evade more tax than those with access to bank
loans and solvent ones
Ownership (Hassan et al., 2022; 1) Board ownership and public ownership are
Masum and Hena, 2017) significantly and positively associated with
corporate tax avoidance
Role of tax Corruption, Improper Behaviour, The contemporary tax policy of Bangladesh, its
authority and Tax Policy (Rahman and Karim, multiplying tax burden, and its loopholes are the
policies 2016) probable stimulus behind the practice of earnings
management
Political settlement, inefficient Tax evasion activities have been significantly
and manual tax auditing system increased by the political settlement in Bangladesh’s
and very high marginal tax rate tax system. Most rich elites can avoid paying taxes
(Razzaque et al., 2023) because of their political connections; they can file
low-tax returns that are not auditable or choose not to
register
Table 7.
Factors influencing tax An ineffective, manual tax auditing system
avoidance and evasion exacerbated the prevalence of tax evasion and
from corporate avoidance
taxpayers’ perspective Source(s): Authors’ own creation

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 Asian Journal of
Factors Citations Findings Accounting
Behavioural aspects Ethical and Behavioural Aspects Tax fairness, taxpayer services, Research
(Mannan et al., 2021) complexities in the tax regime, tax rates,
penalties and enforcement and tax
amnesties and the black economy are
associated with tax evasion in Bangladesh
Penalties and Punishment (Islam, 2020) Taxpayer behaviour is influenced by several 285
factors, such as the probability of detection
and penalties for fraud, the corrupt practices
of tax advisors and tax officials, an
inefficient tax auditing system, very low
punishment practices and a low risk of
getting caught
Complex process Complex Tax Assessment (Nigar Dissatisfaction with existing complex
Nargis, 2019; Nargis et al., 2020; payment systems, lack of tax collector
Rahman et al., 2018; Sarkar, 2022) cooperation and lack of counselling
campaigns can cause tax avoidance and
evasion
Political influence Politicisation of Tax Authority Theoretically, a lack of institutionalisation, a
(Nurnnabi, 2019) higher level of political influence and
corruption result in higher tax evasion
Good Governance (Rashid et al., 2023) Sound governance leads to lower tax evasion
in developed and developing countries
Good Governance (Murshed and The key role of ensuring good governance
Saadat, 2018) within the economy is to incentivise the
taxpayers to declare their taxable income
correctly
Lack of Political Stability (Murshed Political instability is found to be attributed
and Saadat, 2018) to tax evasion in South Asia
Government Services (Abduallah and A greater access to public services results in
Ashraf, 2018) lower tax evasion
Administrative Culture of Corruption (Rana and The corrupting practice of government tax
cultural factors Maskujjaman, 2017) and administration authority, lack of
transparency in the tax collecting system
can influence tax evasion or avoidance
Insufficient Recording, Poor Services The inefficient tax auditing system and a
(Islam, 2020) lack of proper record-keeping system are the
factors that influence tax evasion
Lack of Accountability (Nurnnabi, Tax evasion may be mainly due to the
2019) corruption and politicisation of the state
actors and, of course, to lack of enforcement
Distrust in the Government (Torgler, Distrust of national officials, legal and
2004) government systems has negatively
influenced tax morale and vice versa.
Tax Act Execution, Public Spending Tax legislation and regulations’
and GDP Growth (Murshed and implementation have no statistically
Saadat, 2018) significant impact on the decline in tax
evasion in the economy. Effective
governmental spending and allocations are a
factor in South Asia’s declining rate of tax
evasion. A decline in tax evasion can be
Table 8.
started by a specific GDP growth rate and
Factors influencing
GDP level association between
Compromising in Tax Prosecution Tax amnesty has failed to be an effective the tax avoidance and
Cases (Ahmed, 2019) legal mechanism to prevent tax evasion evasion and tax
Source(s): Authors’ own creation administration

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 AJAR low penalties, corrupting practices of tax advisors and tax officials, inefficient tax auditing
9,3 system, very low punishment practices and low risk of getting caught are common factors in
evading tax (Islam, 2020). Mannan et al. (2021) also identified factors like tax fairness,
taxpayer services, tax complexities, tax rates, enforcement, tax amnesties and black
economy. In addition, complex tax assessment process could highly impact corporate tax
avoidance (Nargis et al., 2020; Nigar Nargis, 2019; Sarkar, 2022). Politically motivated and
short-term goal-oriented tax policies, lack of coordinated policy-making system and
286 complexities of policies and laws are liable for tax evasion (Monir, 2012). Politicisation of
NBR also facilitates evading tax (Nurunnabi, 2019).
Sound governance incentivises taxpayers to correctly declare their taxable income
(Murshed and Saadat, 2018) and leads to lower tax evasion in developing countries (Rashid
et al., 2023). Greater access to public services will also lower tax evasion (Abduallah and
Ashraf, 2018). More so, relationships between private and public sectors with politics and
unaccountability have association with tax evasion (Nurunnabi, 2017). Besides, tax evasion
in South Asia is attributed to political instability (Murshed and Saadat, 2018). For social
networks, NBR is unaware of the social interaction that leads to tax evasion (Mannan et al.,
2021). Complexities of policies (Monir, 2012) and tax assessment (Rahman et al., 2018) are
parts of complex mechanisms to discourage tax revenue collection.

6. Comparison of Bangladesh’s tax avoidance and evasion factors to the world

Bangladesh is far behind in tax avoidance and evasion research. Table 9 shows the
comparison on factors impacting tax avoidance and evasion between Bangladesh and the
world. Tax evasion continues to happen despite efforts from tax authorities and the tax
system in place (Levaggi and Menoncin, 2016). Taxpayers know the benefits and risks
related to tax evasion and it is their choice (Iancu and Popovici-Coita, 2016). A study in Italy
by Mittone (2006) discovered that detection and punishment risk and local environment
impact tax evasion. This study identified common factors that influence corporate
taxpayers to engage in tax avoidance and evasion worldwide. They are agency conflict,
ownership structure, governance, complex assessment process and audit. Past studies
explore additional factors from the global perspective. Researchers found that external
market and governance, social network, firm-level characteristics (Wang et al., 2020) and
corporate social responsibility (CSR) (Whait et al., 2018) were motivators for corporate tax
avoidance.
Social costs like consumer boycotts can determine corporate tax avoidance (Razen and
Kupfer, 2023). Zhu et al. (2023) found that firm performances, economic growth, country-level
stability and interest obligations are connected with corporate tax avoidance. Tang (2020)
noticed that government ownership, agency problems, political connections, tax enforcement,
corporate governance and consumption bribery are associated with corporate tax avoidance
in China. In Bangladesh, different factors including corruption, NBR service quality, penalties
and punishment, political influence, financial restrictions and employee training are found.
Only one Bangladeshi study explored tax avoidance techniques such as transfers of revenues
by geographical area (Tang, 2020), redevelopment of companies (Barrios et al., 2009) and
loopholes in tax legislation (Ftouhi and Ghardallou, 2020). No research covers internal and
external organisational factors for tax avoidance in Bangladesh.

7. Discussion and future research agenda

Tax audits concerning tax avoidance have not been studied substantially or with due care in
past studies. In some studies, audit is a deterrent against tax avoidance (Kabir, 2020).
Incompetent auditing is responsible for tax evasion (Islam, 2020). External auditing has a

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 Asian Journal of
Factors in the Bangladesh Accounting
Discussion topics context Factors in the world context
Research
Corporate tax 1. Agency conflict 1. External market (Wang et al., 2020)
avoidance 2. Ownership structure 2. External governance (Wang et al., 2020)
3. Audit and role of 3. Social network (Wang et al., 2020; Whait et al., 2018)
audit committee 4. Firm-level characteristics (Wang et al., 2020)
4. Financial restrictions 5. Agency conflict (Wang et al., 2020) 287
5. Training employee 6. Ownership structure (Khelil and Khlif, 2023; Wang
6. Internal Corruption et al., 2020)
7. CSR 7. Internal governance (Wang et al., 2020)
8. Tax fairness, tax knowledge and moral obligation
(Kassa, 2021)
9. Social costs_consumer boycott (Razen and Kupfer,
2023)
10. During 1989–2020, firm performances, reduced
economic growth, lower country-level stability and
more interest obligations (Zhu et al., 2023)
11. Agency problems, corporate governance and
consumption bribery (Tang, 2020)
Individual 1. Risk of audit and 1. Benefits and risks associated with engaging in tax
taxpayers penalties evasion (Iancu and Popovici-Coita, 2016)
2. Tax rate 2. Tax fairness, tax knowledge and moral obligation
3. Evaders in society (Kassa, 2021)
4. Complex assessment 3. Detection and punishment risk, influenced by their
process local environment (Mittone, 2006)
5. Morale
6. Education
Tax administration 1. Corruption 1. Government ownership
2. Service quality 2. Political connections
3. Penalties and 3. The roles of book-tax conformity and
punishment 4. Tax enforcement (Tang, 2020)
4. Political influence
5. Governance
6. Distrust the tax
officials
7. Political stability
Tax avoidance 1. Report manipulation 1. Tax planning techniques _ tax haven (Armstrong
techniques 2. Fake expense voucher et al., 2019), loopholes in tax legislation_complex
Table 9.
assessment process (Ftouhi and Ghardallou, 2020)
Comparison between
2. Location migration, income shifting through transfer the key tax avoidance
mispricing and intertemporal income shifting and tax evasion factors
through accruals management (Tang, 2020) of Bangladesh and
Source(s): Authors’ own creation world context

negative effect on corporate tax evasion (Rashid and Morshed, 2021). Unfortunately, the tax
audit is not examined. This factor may deter tax avoidance in Bangladesh. Future research
should study how these factors affect tax avoidance in Bangladesh.
Firm-level characteristics, earnings management, board size, tenure and educational
quality of board of directors are potential areas of future research in corporate tax avoidance.
Political affiliation of firms’ top management will be another area for future research.
Involvement of more than 50% of Members of the Parliament who have professional or
business backgrounds in several parliaments have transformed Bangladesh (Jahan and
Amundsen, 2012). There will be a conflict of interest at the time of making tax-related laws

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 AJAR and regulations. Informal economy of Bangladesh has been increasing over the years. Thus,
9,3 the formal economy is shrinking, and this may lead to tax avoidance and evasion. Future
study can explore it as well. In addition, the impact of green tax on tax avoidance (Uddin et al.,
2023) highlights the significance of future studies on how green tax can ensure sustainable
development in emerging countries like Bangladesh.

288 8. Conclusion
This study, using the SLR, reported the factors that influence the individual and corporate
taxpayers’ tax avoidance and evasion behaviour. The findings are beneficial for
Bangladesh’s tax policymakers to alleviate these unethical behaviours. One of the crucial
areas that need to be covered in future is examining how to curtail the use of informal
economies for tax avoidance. This is because Bangladesh lost tax revenue totalling Tk 840bn
(The Financial Express, 2023), as people tend to engage in informal economy to avoid tax
payments. This paper was limited to studies that are available from Scopus search.
Therefore, caution should be made to draw conclusion based on the current review. More
studies are required to generalise the findings.

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Further reading
Kanagaretnam, K., Lee, J., Lim, C.Y. and Lobo, G. (2018), “Societal trust and corporate tax avoidance”,
Review of Accounting Studies, Vol. 23 No. 4, pp. 1588-1628, doi: 10.1007/s11142-018-9466-y.
292 Kerr, J.N. (2019), “Transparency, information shocks, and tax avoidance”, Contemporary Accounting
Research, Vol. 36 No. 2, pp. 1146-1183, doi: 10.1111/1911-3846.12449.

Corresponding author
Md Shamim Hossain can be contacted at: mhossain@swinburne.edu.my

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