Abstract
Compliance to tax payment generally results in mitigating fiscal deficit and public debt, and in turn, provides funding to meet the economic and social development. However, regardless of the directed efforts of the government to increase sales tax compliance (or value added tax as it is referred to globally), Jordanian listed firms on the Amman Stock Exchange, compliance remains an issue in light of its negative impact on the government revenues. Literature dedicated to tax rate effects on sales tax compliance in the context of listed Jordanian firms on the Amman Stock Exchange has largely been lacking and as such, the study’s main objective is to examine the effect of tax rate on sales tax compliance among such firms. The study adopted a survey method with questionnaire copies distributed to 191 listed Jordanian firms. In the tabulation of data, only 169 questionnaire copies were deemed to be valid for the analysis. The formulated study hypotheses were tested using PLS-SEM and based on the results, tax rate has an insignificant effect on sales tax compliance. Future studies are recommended to provide further insight into the study determinants. The study contributes by furnishing information to and guiding policymakers and the listed Jordanian firms in enhancing sales tax compliance.
Highlights
One of the main elements in national income management in both developing and developed nations is taxes (Alshir’ah et al, 2016)
This study found the tax rate to have an insignificant relationship with the sales tax compliance among Jordanian companies
The study contributes to theory dedicated to accounting literature, to the relationship between sales tax compliance and tax rate in Jordan, and other developing nations
Summary
One of the main elements in national income management in both developing and developed nations is taxes (Alshir’ah et al, 2016). Suffice it to say that taxes and the tax system form a crucial element in building and developing nations, developing nations and transitional economies (McKerchar & Evans, 2009). Taxes are deemed to be a basic pillar of social, political and economic development (Marandu et al, 2015), making collection of tax revenues a top significant issue. This is especially true following the 2008 economic crisis, which led to increased public fiscal deficits of states, raising the need for tax revenues, and urging the states to turn towards universal collaboration to resolve non-compliance of taxes (Sawyer, 2014). Sales tax or as referred to by the majority of
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