International Review of Business, Trade, and Economics
How Business Age and Gender Shape the Path from Turnover to Taxable Income via Operational Efficiency: Empirical Evidence from Nepalese Taxpayers
Abstract
Maharaj Koirala
Taxes not only reflect power and legitimacy of the government, but also redistribute private and public resources to the society. Tax policies, tax compliance, taxpayers’ business age and experiences and sexual differences shape the size of taxable income. The paper aims to estimate the moderation effect of business-age and sexual differences on the the relationship between the transaction volume on the taxable income through the operational efficiency. The empirical findings from the analysis of the large dataset of income tax returns derived from the Inland Revenue Department support that transaction volume significantly positively affect taxable income; as the age of the business increases, the effect of the transaction volume on the operational efficiency reduces. The operational efficiency significantly and positively affects taxable income of both female and male taxpayers. As the age of business firm grows, the role of transaction volume in determining the taxable income diminishes more for female taxpayers compared to male taxpayers indicating that the operational efficiency and the reporting behavior of the female taxpayers are better than male taxpayers. The findings contribute to the understanding of relationships between business turnover, efficiency, taxable income in the context of life cycle of the business organization and sexual differences of the owners. It provides policy inputs to the tax policy makers, implementer, tax experts, and academicians Researchers are encouraged to undertake a comprehensive research endeavor to find immediate and ultimate causal factors.