Abstract
This study aims to empirically examine the effect of tax fairness and tax knowledge on tax compliance for Micro, Small and Medium Enterprises (MSMEs). Azmi and Perumal (2008) identified five of tax fairness dimensions: general fairness, exchanges with the government, special provisions, tax rates structure, and self-interest. Tax knowledge related to tax calculation, tax payment, and tax reporting. This study used a survey method by distributing the questionnaire. The sample used was Micro, Small and Medium Enterprises (MSMEs) in Malang city through the cluster random sampling method. The data obtained were 107 respondents who were processed with the help of SPSS 24. Two regression analyses used in this study are multiple linear regression analysis and simple linear regression analysis. The results of the study using multiple linear regression analysis showed that the three dimensions of tax fairness that affect MSMEs compliance are general fairness, tax rates structure, and self-interest. The results from the simple linear regression analysis show that tax knowledge influences MSMEs' compliance.
Highlights
Compliance of taxpayers is the fulfillment of tax obligations as a form of taxpayer's contribution to the country's development
This study examines the effect of perspective tax fairness using five dimensions of tax fairness according to Gerbing (1988) by adding tax knowledge variables as independent variables and focusing on Government Regulation No 23 of 2018 towards MSME tax compliance
The significance value for the general fairness variable of 0.007 is smaller than 0.05, so general fairness has a significant effect on MSME tax compliance
Summary
Compliance of taxpayers is the fulfillment of tax obligations as a form of taxpayer's contribution to the country's development. Small and Medium Enterprises (MSMEs) are one of the taxpayer models that dominate and become an economic milestone in Indonesia. The Indonesian Micro, Small and Medium Enterprises Association (AKUMINDO) recorded the contribution of the MSME sector to GDP in 2018 increasing to 60.34 percent (Lukihardianti, 2019). The large number of business operators and the contribution of MSMEs to GDP has not been comparable with tax revenues from the MSME sector. This is because the level of compliance of UMKM taxpayers is still relatively low
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