Abstract
The advancement of digital technology encourages the growth of MSMEs transacting online. However, the phenomenon shows that the Indonesian tax ratio declines because the tax compliance increase rate does not accompany the potential tax base growth. This study analyzed the determining factors of tax compliance: tax knowledge, tax sanctions, peer influence, and the quality of tax authority services moderated by risk preferences. Because of the data analysis, it was discovered that only tax knowledge had a clear impact and risk preferences had no significant influence on the factors that influenced MSME tax compliance in digital transactions. Limited information circulating citizens about MSME-specific policies in digital commerce and rules that have not been communicated in online marketplaces are the main tasks for tax authorities in Indonesia. This study proposes a model of MSME's tax compliance in a digital transaction.
Highlights
IntroductionCompared to the average tax ratio of other countries in the Asia Pacific, the amount is low because the figure is smaller than regional and global standards, so the Indonesian tax authorities are working on expanding the tax base (Direktorat Jenderal Pajak, 2019)
The surge in tax receipts over the last five years is not in line with the tax ratio in Indonesia
This study proposes a model of MSME's tax compliance in a digital transaction
Summary
Compared to the average tax ratio of other countries in the Asia Pacific, the amount is low because the figure is smaller than regional and global standards, so the Indonesian tax authorities are working on expanding the tax base (Direktorat Jenderal Pajak, 2019). These efforts have a stimulating effect and are proven by the increasing number of tax receipts in 2019, with a total of Rp 1,545.3 trillion. The tax authority uses preventive measures in the form of tax sanctions to raise fears from taxpayers to use their knowledge in matters that harm the country. Risk preferences have a considerable negative moderating effect on the connection between taxpayer attitudes toward avoidance and taxpayer compliance (Alabede et al, 2011)
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