The management of tax knowledge

Corporation tax can influence a firm’s operating and financial decisions, not only by the direct imposition of the tax itself, but also indirectly though associated compliance costs. Firms can attempt to reduce the impact of taxation, both through tax planning and by ensuring that compliance-related tasks are carried out efficiently. It goes without saying that tax knowledge is an important determinate of successful corporate tax planning. Paradoxically, governments may also desire firms to be aware of, or sensitive to, tax legislation. This may be in order to reduce administrative and compliance costs and, if tax legislation is being employed as a public policy tool, to change or encourage particular actions or activities, such as investment in research and development-related activities. An important dimension of an efficient tax system is the processes by which taxpayers become aware of tax legislation and other tax-related information, referred to for the purposes of this research as ‘tax knowledge’.