This document summarizes research on enhancing tax compliance in non-enabling institutional contexts. The researchers conducted focus groups and interviews in Nigeria to understand rationalizations for tax compliance and non-compliance. They found that those who comply and do not comply both rationalize their positions using similar themes of development, legal, and moral justifications, but frame them positively or negatively. To enhance compliance, tax authorities need messaging approaches that address these heterogeneous rationalizations. Understanding rationalizations is important for tax behavior, and the findings can help strategies that fit different groups' views. Emerging areas of research include strengthening Nigeria's tax system and the role of independent oversight.

1. Enhancing tax compliance in non-enabling
institutional contexts
October 24, 2018
Dr Bongo Adi (Lagos Business School)
Professor Kenneth Amaeshi (University of Edinburgh, UK)
Godson Ikiebey (ESG Advisory)

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Research Premise
 Taxation is a social behaviour underpinned by legal and ethical
norms.
 As such, the framing of taxation as a responsible business
behavior may enhance tax compliance (Sikka, 2010).
 However, to understand taxation as a social behavior
underpinned by legal and ethical norms, context matters!

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Research Problem
 The Slippery Slope Framework (Kirchler et al. 2008) claims that tax
compliance is a function of the perceived power of and trust in tax
authorities.
 Tax compliance is highest where perceived power and trust are high and
lowest where perceived power and trust are low.
 Most weak or non-enabling environments are characterised by low trust
and low power (Amaeshi et al., 2015; Sikka, 2010). Does it then mean
that tax compliance is not possible in such contexts?
 However, we see evidence of tax compliance in non-enabling
environments despite the predictions of the Slippery Slope Framework.

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Research Questions
 How can one explain tax compliance in non-
enabling institutional contexts?
 How can tax compliance be enhance in non-
enabling institutional contexts?

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Methodology
We analysed data from the following sources:
 Three focus group discussion (FGD)sessions (FGDs) with
diverse participation of business owners, tax practitioners and
tax authorities- 28 participants in all.
 Followed by five key informant interviews with subject matter
experts.
 A Tax Research Group with 38 participants on WhatsApp.

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Findings
 The Nigeria tax environment is low trust and low enforcement
as voluntary tax compliance is low. Tax as CSR is secondary!
 Those who easily comply and those who do not easily comply
rationalise their justifications for or against from similar broad
themes/repertoires.
 However they differ in the framing of their justifications;
positive for compliance and negative for non-compliance.
 These disparate framing sustain both compliance and non-
compliance behaviours.

7. Compliance Non-compliance
1. Development
2. Legal
3. Moral
Low trust and
enforcement
Negative Frames
“Why will l encourage tax
payment by citizens where
individuals provide
borehole, buy generators
and construct roads
leading to their houses”?
(WhatsApp Group)
Positive Frames
“Tax payment is a responsible
business practice because of
its developmental purpose,
which include: social
amenities, public facilities,
security and safety, creating
an enabling environment for
employment opportunities”
(Interview)
Rationalisation &
Justifications

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Tentative Findings (examples)
1st order coding Compliance framing Non-compliance framing 2nd order
rationalisation
Economic, social and
governance issues
“Tax payment is a responsible business
practice because of its developmental
purpose, which include: social amenities,
public facilities, security and safety,
creating an enabling environment for
employment opportunities” (Interview)
“Why will l encourage tax payment by
citizens where individuals provide
borehole, buy generators and
construct roads leading to their
houses”? (WhatsApp Group)
Development
Enforcement and
compliance risks and duty
“I pay my taxes because I want to sleep
and sleep well” (Interview)
“But why will l support tax payment in
an environment where such funds will
end up in politicians pocket without
any consequences” (WhatsApp
Group)
Legal
Social responsibility,
virtuousness and education
“I pay my taxes. I pay because it is moral
and a civic responsibility” (FCDs)
“he nor dey pay tax, na me go come
pay?”(If he does not pay tax, am I the
one to pay?- FCDs)
Moral

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Tentative Findings
 In essence, justification for tax behaviours is not homogenous
 To counteract or enhance the disparate framing deployed in
sustaining the justification of tax behaviours, the tax authority
would require an heterogeneous messaging approach.
 Framing of tax compliance as a responsible business practice
in the light of these justification frames needs to be further
explored for messaging fit

10. 10
Tentative Implications
Contribution to the literature:
 Understanding rationalisations is important to understanding
tax behaviours and motivations.
Contribution to practice and policy:
 The findings will enable tax authorities to develop strategies
to fit the rationalisations advanced by the heterogeneous
groups.

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Emerging areas of research interests
 How can the tax ecosystem in Nigeria be strengthened?
 What do government officials (apart from the FIRS) make of
the trust and accountability deficits in the system?
 Is there a place for an independent tax
accountability/communication body in the Nigerian tax
ecosystem?

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Thank you