Financial crime, corruption and tax evasion: a cross-country investigation
| Pages | 545-554 |
| Published date | 01 October 2018 |
| Date | 01 October 2018 |
| DOI | https://doi.org/10.1108/JMLC-10-2017-0059 |
| Author | Ines Amara,Hichem Khlif |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Financial crime, corruption and
tax evasion: a cross-country
investigation
Ines Amara
King Faisal University, College of Business Administration-
Department of Accounting, Al-Ahsa, Saudi Arabia, and
Hichem Khlif
Faculty of Economics and Management of Sfax, University of Sfax, Kerkennah,Tunisia
Abstract
Purpose –This paper aims to examine the relationship between the financial crime and tax evasion and
tests whethercorruption moderates such a relationship.
Design/methodology/approach –Tax evasion measure is based on Schneider etal. (2010). Financial
crime is collectedfrom Basel anti-money laundering (AML) report.
Findings –Using a sample of 120 countries,the authors find that the level of financial crime is positively
associated with tax evasion. When testing for the moderating effect of corruption, they document that the
positive relationship between financial crime and tax evasion is more pronounced for high corrupt
environments.
Originality/value –The findings havepolicy implications for governments aimingto combat tax evasion
and financialcrimes.
Keywords Corruption, Financial crime, Tax evasion
Paper type Research paper
1. Introduction
Financial crime becomes a widespread phenomenon for both developed and developing
countries and it has an adverse effect on social and economic progress, particularly in
developing and transition economies (Witherell, 2004). Therefore, examining the economic
consequences of financial crime is critical for governments to alert them about its heavy
costs. More specifically, understanding its economic consequence on tax evasion is crucial
for governments thataim to combat tax evasion practices.
Previous studies dealing with the determinants of tax evasion at country level have
considered several variables including economic and demographic determinants (Gabor,
2012;Picur and Riahi-Belkaoui, 2006;Riahi-Belkaoui, 2004;Richardson, 2006), national
culture (Richardson, 2008;Tsakumis et al.,2007)[1] and sustainability level (Khlif et al.,
2016). Accordingly, we try to extend this stream of research by integrating a new variable
namely, financial crime, based on the recent Basel anti-money laundering (AML).
Furthermore, we try to investigate whether corruption level moderates the association
between financial crime and tax evasion.To the best of our knowledge, this study is the first
to examine empirically the directeffect of financial crime on tax evasion[2].
The author acknowledges the Deanship of Scientific Research at King Faisal University for the
financial support.
Corruption and
tax evasion
545
Journalof Money Laundering
Control
Vol.21 No. 4, 2018
pp. 545-554
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-10-2017-0059
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