The Complexity of the Tax System and Quality Financial Reporting: The Case of Unlisted Companies in Cameroon

Abstract

The complexity of the tax system dramatically affects the efficiency of corporate structures and strategy. This study examines the impact of the complexity of the fiscal system on the quality of financial reporting in unlisted companies in Cameroon. Employing a quantitative approach, data were collected from 65 unlisted public limited companies in the western, central, and the littoral regions of Cameroon. Data analyses using five points rated Likert scale and ordinary least square method, source of data analysis using SPSS. The result shows that rapid change of the tax code have a positive and a significant impact on the quality of financial reporting across both models emphasising that change in tax codes without biased eradicate tax evasion consequently reducing fewer audit and fiscal adjustments, reflecting better reporting quality. Based on these results, it is recommended that the fiscal system should be simple and less complex to make it acceptable at level of compliance amongst tax payers. Taxation should be taught at all levels of education, starting from primary schools to secondary schools, up to university level, with an emphasis of promoting voluntary tax compliance.
Key words: tax complexity, financial reporting quality, unlisted companies and Cameroon