Prioritizing factors affecting tax evasion

A case study of Herat Province, Afghanistan

Abstract

This research focuses on the prioritization of factors influencing tax evasion in order to identify the most significant determinant. The study involves a statistical population consisting of four distinct groups, each comprising 35 individuals: experts and university professors, tax payers and businessmen, tax office employees, and managers of private organizations. The opinions of these groups were examined separately, and the findings are presented in this research.

The research findings are derived from the implementation of the Analytic Hierarchy Process (AHP), a hierarchical analysis method. The AHP results reveal the relative importance of various factors contributing to tax evasion. Economic-technical factors emerge as the most influential, with a weighted value of 0.616. Political-security-administrative factors hold a weighted value of 0.231, while legal-social-cultural factors carry a weighted value of 0.153. Notably, the following four factors exert the greatest impact: economic instability, unemployment rate, inflation, and changes in taxpayers' income, with a weighted value of 0.202. The existence of counterfeit employment and underground activities holds a weighted value of 0.106. Additionally, the absence of an effective electronic system and limited utilization of electronic devices carries a weighted value of 0.106. The proper utilization and allocation of collected budgets receive a weighted value of 0.076. It is worth mentioning that the first three factors pertain to economic-technical considerations, while the fourth factor pertains to political-security-administrative aspects.

Consequently, it is imperative for tax policy makers, tax administrators, and personnel within tax organizations to acknowledge these factors and address any existing deficiencies. Efforts should focus on reducing the issue of tax evasion through the implementation of electronic tax systems, providing training on technological tools, and combating illicit markets and businesses. Moreover, utilizing tax revenues effectively is essential in order to enact more impactful measures.