Provide a 2 pages analysis while answering the following question: Difference Between the Tax System. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is r

Provide a 2 pages analysis while answering the following question: Difference Between the Tax System. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Difference Between the Tax System - the United States vs. Italy

The author’s Proposition

Kelly Arthur authored the case, ‘Italian tax mores,’ in which he proposes a difference between the tax system in the United States and that in Italy. He argues that even though both systems are formal and structured, the Italian tax system is based on an assumption that requires negotiations between taxpayers and the country’s revenue authority. Instead of the revenue authority reviewing tax returns and investigating taxpayers who are suspected to have understated their returns, the Italian authority believes that taxpayers always understate their revenues and therefore establishes a benchmark for negotiating for higher tax payables. The author notes that the assumption by the revenue authority is true as organizations understate their revenues in readiness for bargaining with the tax authority in the actual tax payable. The aim of the approach is to earn more tax from taxpayers, than the amount that the taxpayers would pay based on their returns. The approach has further been integrated in Italy’s corporate culture such that organizations would underestimate their income, while filing tax returns, in order to gain ground for negotiating the final payable amount (Brooks and Dunn, 2009).

The revenue authority also expects higher tax payments than organizations’ reported values and final payable values establish benchmarks for future tax payable amounts. This approach, according to the writer, works well with Italian firms or foreign firms that can adjust to the Italian practice. Those that are rigid to follow legal and moral provisions of their native countries however find it hard to cope with tax demand in Italy. The author also notes that the revenue authority is willing to intimidate taxpayers to adjust to the system and embrace the negotiation approach. The example of an American general manager explains this as he receives intimidating notices following his failure to embrace the negotiation approach. When he finally visits the revenue authority’s office, they inform him of the need to dialogue (Brooks and Dunn, 2009).

Response to the Proposition

I agree with the writer’s proposition that the Italian culture of tax collection is different from approaches in jurisdictions, such as in the United States, and that such differences are likely to create challenges to stakeholders from the other jurisdictions. Existence of differences in other aspects of culture across nations informs my support for the author’s proposition. While some cultures value collectivism, other value individualism. Similarly, while culture in some nations allow for informal appreciations during or after contract formations, other cultures may consider such advances immoral. Differences in legal environments across jurisdiction also promote differences in practices. Consequently, such a difference in tax system between the United States and Italy is possible, together with its reported consequences. Lack of cultural intelligence and cultural sensitivity competencies also reduces ability to adjust to a new environment and therefore explains the American general manager’s position against the Italian negotiation approach.

Observed Presumptions

The author presumes that cultural differences are a barrier to globalization through mediating business environments. In addition, the writer presumes that knowledge of a culture is limited to members of the culture.

Reference

Brooks, L. and Dunn, P. (2009). Business & professional ethics for directors, executives & accountants. Mason, OH: Cengage Learning.