Brazilian entrepreneurs’ tax morale from an institutional perspective: evidence from the telecommunications sector

Abstract

Purpose

This research aims to describe the factors influencing the tax morale of entrepreneurs in the Brazilian telecommunications industry.

Design/methodology/approach

The authors surveyed a sample of 167 entrepreneurs from the sector using structured online self-assessment questionnaires analyzed quantitatively through the partial least squares structural equation modeling technique.

Findings

The results indicate that risk of detection, severity of punishments and tax justice represent determining factors for the tax morale of entrepreneurs, though their age also contributes to explaining tax behavior, proving to be a significant control variable. These findings presuppose a predominance of institutional pressures from the regulatory and normative pillars on this group, in contrast to evidence from previous studies dealing with tax morale among ordinary citizens.

Originality/value

The theoretical implications are fourfold. The authors address a gap in the study of tax morale at the organizational level, integrate the entrepreneurship literature in specific sectors with tax policies through neo-institutional theory, support changes in the tax legislation of an emerging economy with widespread biases of corruption and add more diversity to the perceived legitimacy of its current tax system. Practical recommendations include the creation of public policies particularly targeted at younger entrepreneurs predominant in this sector to build a regulatory framework that incorporates both tax justice and severity of punishments to foster trust between taxpayers and tax authorities; using the institutional legitimacy mechanism to elicit a more isonomic performance of the tax authorities; and reevaluating the risk of detection strategies.