The influence of international standards on SME tax compliance in Vietnam

• Published in: Finance research letters 2021-05, Vol.40, p.101750, Article 101750
• Main Authors: Duy, Nguyen Vu, Tran, Tien Quang
• Format: Article
• Language: English
• Subjects: Gender of director; International standards; SMEs; Tax payment
• ISSN: 1544-6123; 1544-6131
• DOI: 10.1016/j.frl.2020.101750

•Few studies consider whether firms should use international standards as a means to combat tax evasion.•Using a fixed-effect instrumental variable approach for data from Vietnamese SMEs in the 2011–2015 period, we find that the application of international standards certification boosts tax compliance from private SMEs in Vietnam.•This effect derives from several mechanisms operating in such a way that certified firms are more likely to engage in export and innovation than non-certified firms.•Also, adherence to international standards increases the likelihood that formal accounting records will be kept, reducing the payment of bribes.•The estimation results suggest that the government should support firms in applying appropriate international standards. Few studies consider whether firms should use international standards as a means to combat tax evasion. Using a fixed-effect instrumental variable approach for data from Vietnamese SMEs in the 2011–15 period, this paper finds that the application of international standards certification boosts tax compliance from private SMEs in Vietnam. This effect derives from several mechanisms operating in such a way that certified firms are more likely to engage in export and innovation than non-certified firms. Also, adherence to international standards increases the likelihood that formal accounting records will be kept, reducing the payment of bribes.