National culture and tax evasion: The role of the institutional environment quality

Amir Allam, Tantawy Moussa, M. Abdelhady, A. Yamen

Research output: Contribution to journalArticlepeer-review


This study examines the role of institutional environment quality (IEQ) in the relationship between national culture (NC) and tax evasion (TE). Prior research examined the direct impact of culture on tax evasion but did not examine potential mechanisms that may influence this relationship. Using structural equation modeling and examining data for the European Union (EU) countries over the 2004-2018 period, we find that countries that exhibit high levels of power distance, uncertainty avoidance, collectivism, and restraint are associated with higher levels of tax evasion. The results indicate that IEQ has a mediating effect on the NC–TE nexus, suggesting that policymakers should aim at improving the quality of national institutions to diminish the undesirable influence of culture on tax evasion levels. More specifically, we find that the rule of law, regulatory quality, and government effectiveness are the IEQ indicators that fully mediate the NC-TE relationship. Moreover, splitting the sample into older and newer EU countries shows a partial mediation effect in older EU countries and a full mediation effect in newer EU countries. Enhancing IEQ can play a more prominent role in newer EU countries to reduce the detrimental impact of cultural values on tax evasion.
Original languageEnglish
Article number100559
JournalJournal of International Accounting, Auditing and Taxation
Early online date28 Jun 2023
Publication statusPublished - Sept 2023


  • European Union
  • Institutional environment quality
  • National culture
  • Structural equation modeling
  • Tax evasion


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