The Impact of Field Tax Audits on the Formation of Taxpayers’ Opportunistic Behaviour: The Case of Russia’s Timber Industry

The purpose of the study is to assess the impact of field tax audits on the formation of opportunistic behaviour by taxpayers, who seek to avoid accountability for tax offenses revealed by such audits. A representative sample of the study included 176 logging and wood processing enterprises. The sample was made up of enterprises that were going through bankruptcy, liquidation or had already been liquidated as of 1 March 2024. Before going into liquidation or bankruptcy, all respondents in the sample were parties to arbitration proceedings following field tax audits. For the three-year period prior to the field tax audit, tax risk was determined for each company on the basis of the Concept for the Planning of Field Tax Audits. In addition to assessing the integrity of the surveyed taxpayers, the indicators of the financial condition of their activities were analysed. Based on the results of the analysis of the activities of the respondents for the three-year period prior to the field tax audit, they were found to have violated selection criteria specified in the Concept of Planning Field Tax Audits, therefore, the field tax audit of the respondents was justified. Additionally, 146 entities, or 82.95% of the sample, displayed a sharp deterioration dynamic in terms of the indicators of solvency, financial stability, liquidity, and business performance in general, which further led to bankruptcy and liquidation of the organizations. In the course of the study, both hypotheses of the research were confirmed. We were able to confirm that organizations with an opportunistic behaviour deliberately create a state of insolvency of their business following a field tax audit. We also confirmed that for the majority of organizations with an opportunistic behaviour the decision to conduct an on-site tax audit is a motive for deliberately driving their business into a state of insolvency.