Determinants Of Tax Compliance Research Articles

Determinants of tax compliance and their impact on a sustainable information society: an investigation of MSMEs

Determinants of tax compliance and their impact on a sustainable information society: an investigation of MSMEs

EXPLORING THE INFLUENCE OF SMEs DEMOGRAPHIC PROFILE ON TAX COMPLIANCE BEHAVIOUR

Tax compliance is the extent to which a taxpayer complies or fails to comply with the tax rules of the country. Tax compliance is crucial for the government, as taxes constitute the main source of income. In 2023, the Inland Revenue Board of Malaysia (IRBM) collected RM183.3 billion in tax revenue, representing a substantial increase of RM7.8 billion, or 4.49%, compared to the previous year. The amount collected is the highest by IRBM, which reflects the effective tax collection mechanisms. Small and medium-sized enterprises (SMEs) are the main drivers of economies in emerging nations and in Malaysia, SMEs account for 98.5% of all businesses. Therefore, it is vital for tax authorities to understand the diverse profile of SMEs as part of tax-driven strategies to maximise tax collection. The purpose of this study is to provide insights based on previous studies on determinants of tax compliance among SMEs in Malaysia. The study highlights demographic factors, namely age, gender, education level and income level, that influence the tax compliance behaviour of SMEs. The study can add to the literature on factors influencing tax compliance by highlighting how compliance behaviours differ among various demographics of SME owners and how these differences affect their compliance decisions. The paper might assist tax authorities in dealing with tax compliance issues by gaining a deeper insight into the importance of various demographic characteristics of SMEs.

Does Tax Compliance Intention Mediate the Determinant of Tax Compliance? Evidence from Indonesia

Purpose: The increasing use of technology and business complexity means that taxpayers must increase their knowledge in completing tax obligations. Theoretical framework: Tax compliance intention as a mediation was analyzed the relationship among tax knowledge, tax moral, tax rate and tax sanction on tax compliance. Method: A quantitative methods approach was used by distributing questionnaires to 350 of MSMEs in Indonesia. The multiple linear regression analysis result show that there is positive effect about tax knowledge, tax moral and tax sanction on tax compliance intention. Meanwhile, the tax rate does not influence on tax compliance intention. Results and Conclusions: Furthermore, tax knowledge, tax rate and tax sanction does not have influence on tax compliance behavior. Meanwhile, there is positive relation between tax moral and tax compliance intention on tax compliance behavior. Finally, tax compliance intention mediates the influence of tax knowledge, tax moral, tax rate and tax sanction on tax compliance behavior. The tax intention of MSMEs comply tax regulation give significant effect on tax compliance behavior. Research, Practical & Social implications: This study offers implications for tax regulator to conduct tax education for tax payer in order to develop MSMEs motivation intrinsic that can improve taxpayer intention to comply on tax regulation. Originality/value: Our novelty contribution of tax knowledge measurements on task risk knowledge and profit-tax knowledge dimensions can impact MSMEs intention to comply.

Environment care as Intention of non-business undergraduate students to enroll taxation courses

Safe environment and effective taxation is one of the keys to nation-building as this is the lifeblood of the country and this ensures a nation’s economic prosperity and success. The collection process has been continuously challenging as new tax reforms were introduced in the Philippines in 2018. To resolve this challenge, a House Bill was proposed by the Congress in June 2022 to mandatorily teach “tax literacy, consciousness and responsibility in intermediate, secondary, technicalvocational and tertiary education in both public and private schools”. Thus, to assess the need to enhance tax literacy, the study aims to explore the opportunity to develop and introduce taxation courses for non-business collegiate students. The study examined the interest and perceived need for learning taxation among non-business collegiate students. The study utilized a survey method and a Likert Scale to gather data from 518 valid respondents. The study highlighted the significance of formal tax education in fostering tax compliance among taxpayers and its implications for curriculum design and student engagement strategies in taxation education. The study included a literature review exploring the factors contributing to tax evasion and the determinants of tax compliance. The hypothesis that was tested and presented in the study showed that interest and perceived need in learning taxation are key factors positively affecting students' interest in enrolling in taxation courses, while the ease of learning taxation may not play a significant role in this context. The findings of this research provided valuable insights into whether these variables collectively contribute to students' interest in enrolling in taxation courses.

Analisis Faktor-Faktor Yang Menentukan Kepatuhan Wajib Pajak UMKM

Public awareness as a compliant taxpayer is closely related to public perceptions of taxes that will affect taxpayer motivation to pay taxes. This study aims to determine the factors that influence the compliance of small and medium enterprises (SMEs) taxpayers in Timika City so that it can be taken into consideration for the government or tax authorities in improving community tax compliance, especially MSME actors. The data collected in this study are quantitative data from non-taxpayer respondents who are SME taxpayers. The sample of this study came from MSME actors in Timika City as many as 100 respondents. Data analysis in this study used confirmatory factor analysis. From the analysis conducted, it was found that knowledge, tax system effectiveness, and income are determinants of tax compliance among SME taxpayers in Timika city.

Determinants of tax compliance of micro, small, and medium enterprises (MSMEs) in Pekanbaru, Indonesia

Taxes are the most significant contributor to the Indonesian budget; therefore, increasing taxpayer compliance is crucial for achieving tax revenue realization. This study aims to investigate the role of tax incentives and motivational postures in increasing taxpayer compliance. The analysis was conducted in Pekanbaru, Riau, Indonesia, and the sample consisted of MSME taxpayers registered at the Pekanbaru Tax Service Office. Purposive sampling was utilized to collect data, and of the 384 returned questionnaires, 254 were used for statistical analysis. Multiple regression analysis was utilized to examine the impact of tax incentives on taxpayer compliance, and moderated regression analysis was applied to test the moderating role of motivational postures. The findings showed that the p-values of the first and second hypotheses were 0.00 and 0.001 (0.05, with a positive β value), and the third hypothesis had 0.001 (< 0.05, with a negative β value). This result indicates that the first, second, and third hypotheses are accepted, which means that the more taxpayers feel that tax incentives are beneficial, the greater their compliance with their tax responsibilities. Additionally, tax incentives significantly raise taxpayer compliance when they have a positive motivational posture and decrease it if they have a negative one. The implications of this study influence tax authorities to incentivize taxpayers to increase compliance. Knowledge of the taxpayer’s motivational postures will make it easier for tax authorities to manage taxpayer behavior to increase taxpayer compliance.

The Determinant of Tax Compliance in Indonesia (Experience in E-Commerce Environment)

The characteristics of e-commerce transactions that are fast, cross national borders, and present business model innovations that are increasingly developing raise new challenges in terms of taxation. The purpose of this research is to investigate the influence of the self-assessment system, tax socialization, and tax administration modernization on tax awareness and its implications for taxpayer compliance. The population in this study consists of taxpayers engaged in online trading (e-commerce). The data analysis technique employed in this research is quantitative, utilizing the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach. The findings of this study indicate that the self-assessment system has a significant impact on tax awareness, tax socialization significantly affects tax awareness, and tax administration modernization has a significant influence on tax awareness. Furthermore, the self-assessment system significantly influences taxpayer compliance, tax socialization has a significant impact on taxpayer compliance, and tax administration modernization significantly affects taxpayer compliance. The study concludes that higher levels of self-assessment system, tax socialization, and tax administration modernization lead to increased tax awareness. Additionally, as tax awareness levels increase, taxpayer compliance also tends to rise.

Voluntary and enforced tax compliance determinants and impact among agrochemical businesses in Ghana

PurposeThis paper examined tax compliance and its impact on agrochemical traders in Ghana.Design/methodology/approachBased on the registered agrochemical lists obtained from the Plant Protection and Regulatory Service Department, 92 agrochemical traders were sampled for data collection. Probit regression was used to estimate determinants of tax compliance, whereas the Inverse Probability Weighted Regression Adjustment Model was employed to evaluate the impact of tax compliance on business performance.FindingsThe results revealed that age and gender relate positively to enforced tax compliance, while education positively impacts voluntary tax compliance. Nonetheless, tax rate, trust and monthly sales positively affect voluntary tax compliance but negatively impact enforced tax compliance. Inversely, while authorities’ power negatively impacted voluntary compliance, it positively influenced enforced tax compliance confirming the Slippery Slope Framework.Originality/valueTo the best knowledge of the authors, this paper is the first to investigate tax compliance determinants and impact among agrochemical traders, despite the tremendous growth of the agrochemical sub-sector in Africa and Ghana. Therefore, this study makes a modest contribution to empirical studies that validate the Slippery Slope Framework in promoting tax compliance in the agricultural and agribusiness sectors of a developing country. Similarly, it also unearths the impact of tax compliance on agribusiness growth which has yet to be highlighted in the extant literature.

Determinants of Tax Compliance among Higher Income Group Earners using Social Influence Theory

Determinants of Tax Compliance among Higher Income Group Earners using Social Influence Theory

Tax Compliance and Its Determinants: A Study on Small and Medium Enterprises (SMEs)

This study explores the determinants of tax compliance among Small and Medium Enterprises (SMEs), focusing on factors such as financial literacy, regulatory environment, and perceived fairness of the tax system. Through a survey of SMEs across various industries, the research reveals that higher levels of financial literacy and a supportive regulatory environment encourage tax compliance. The study offers recommendations for policymakers to improve tax compliance rates among SMEs.

Doctoral dissertation summary: Economic and psychological determinants of tax compliance

Doctoral dissertation summary: Economic and psychological determinants of tax compliance

The Moderating Role of Social Norms on Tax Compliance Model: A Laboratory Experimental Evidence in Indonesia

This study aims to examine the role of social norms in increasing tax compliance. The traditional model of tax compliance predicts that audits and tax fines are the determinants of tax compliance. This study proposes that social norms would strengthen the effect of the economic factors (i.e., audits and penalties) on tax compliance behavior. Social norms regard tax fraud as incorrect behavior. From an economic perspective, taxpayers consider the social norms because violations of the tax rules bring social pressures that have an economic impact on the perpetrators of tax fraud. This study uses an experimental laboratory method with a 2x2 between subjects factorial design. Our final sample consisted of 198 subjects. This study provides empirical evidence that social norms strengthen the effect of tax fines, hence improving tax compliance. However, this study fails to provide empirical evidence that social norms enhance the effect of the probability of being audited and thus enhance tax compliance. This study contributes to the recent literature about non-standard motivations for tax compliance. Theoretically, this study implies that the standard model of tax compliance is not enough to explain taxpayer compliance behavior. This study also suggests the importance of developing social norms to the policymakers.

Trust, Power, and Tax Risk into the “Slippery Slope”: A Corporate Tax Compliance Model

(1) Background: There are still few studies that discuss corporate tax risk, especially those related to tax compliance and the Slippery Slope Framework. Meanwhile, in practice, tax risk, which is tax uncertainty, is essential in corporate tax compliance. Tax risk has not been discussed in the Slippery Slope Framework in previous research, which has become a reference in various tax compliance studies. Therefore, this study aims to analyze the effect of tax risk induced into the slippery slope framework at corporate taxpayer compliance. Dynamic interactions between power, trust, and tax risk (TPR) in one framework are essential to see the tax compliance model’s determinants comprehensively; (2) Methods: We defined our model using a mathematical and economic approach with a Likert scale, as well as geometrical inferences based on the Slippery Slope Framework. (3) Results: This study found that tax risk affects the effort and tendency of corporate taxpayers to comply. The level of tax risk will make it easier or more difficult for corporate taxpayers to comply. Tax risk will affect the level of tax compliance regardless of the quality of trust and existing power; (4) Conclusions: This research’s theoretical contributions are that trust and power are determinants of tax compliance and that tax risk influences companies to be more compliant. This model is to complete the conceptual gap of the determinants of tax compliance from the perspective of the Slippery Slope Framework. The practical implication is that corporate taxpayers should manage tax risk to avoid unexpected tax outcomes in the future and be more compliant. Therefore, the government needs to help companies reduce compliance risks that cannot be controlled by companies but can be influenced by tax authorities.

DETERMINAN KEPATUHAN WAJIB PAJAK: KONDISI KEUANGAN SEBAGAI PEMODERASI

The tax ratio from 2014 to 2020 did not show any significant development. The Covid-19 pandemic that is currently happening has caused the 2020 tax ratio to decrease to 9.73. The tax ratio can be increased by increasing tax compliance. This study aims to measure "Determinants of Tax Compliance with Financial Conditions as Moderators". The variables in this study are Tax Knowledge, Tax Sanctions, Tax Audit and Trust with Financial Conditions as Moderation Variables. The type of research used is quantitative research with a survey research form. This study uses primary data through a questionnaire, with corporate taxpayer respondents who are registered at KPP Pratama Jakarta Kebayoran Baru Dua. The sample used in this study were 169 respondents. Quantitative data analysis was performed using the Partial Least Square (SEM-PLS) technique which was processed through the SmartPls 3.0 software. This study shows that knowledge of taxation and tax sanction has a positive and insignificant effect on tax compliance, while tax audit and taxpayer trust have a positive and significant effect on tax compliance. Financial conditions are not able to moderate the influence of tax knowledge, tax sanction, tax audit and trust on tax compliance

Determinants Of Tax Compliance for Business Actors and Independent Workers in The Perspective of Theory of Planned Behavior and Theory of Fiscal Psychology

Purpose—This study aims to analyze determinants of tax compliance intentions and behaviour using constructs derived from the Theory of Planned Behavior, i.e., tax morale, social norms, detection risk, penalty magnitude, and tax complexity, and the Theory of Fiscal Psychology, i.e., perception about the government. Design/methodology/approach —This research was conducted on 120 business actors and independent workers in the Greater Malang region using a survey and partial Least Squares analysis performed in SmartPLS. Findings — This study finds that tax morale, social norms, penalty magnitude, tax complexity, and perception about the government and that tax compliance intention, detection risk, and penalty magnitude influence tax compliance behaviour to determine tax compliance intention. Furthermore, detection risk does not affect tax compliance intention, and tax complexity does not influence tax compliance behaviour. Practical implications —Based on the findings, the government is advised, through the Directorate General of Tax, to develop policies and approaches supporting tax morale, strengthen community bases to create tax-aware environments, maintain law enforcement through investigation and application of penalties, build an easy-to-reach taxation system, and create transparency to enhance taxpayer’s trust to the government that eventually leads to higher tax compliance intention and behaviour. Originality/value—The findings support the inclusion of the Theory of Fiscal Psychology in the development of the Theory of Planned Behavior to explain tax compliance behaviour and provide a new perspective that, in the context of tax compliance, not all aspects of perceived behavioural control have the same effect on both behavioural intention and produced behaviour. Keywords — Tax compliance behaviour; Theory of Planned Behavior; Theory of Fiscal Psychology. Paper type — Positive paradigm

A Conceptual Review of Tax Compliance Studies of Some Selected Developing Countries

It is pertinent that sustainable tax compliance is achieved only if the tax policy takes the main determinants of tax compliance into consideration. Meanwhile, tax compliance has been seen as one of the critical tax administration issue particularly amongst the developing countries of the world. In that regards, scholars have contributed immensely in studying the causes or determinants of the phenomenon based on some prevailing factors associated to economic, social and psychological conditions of our society. And the factors are basically linked to some suggested theories. Nevertheless, the study premised on reviewing some related studies conducted amongst the developing countries of the world based on thematic and chronological approach, in order to know the most commonly identified determining factors of tax compliance between the periods of 1998 to 2022. it is imperative to note that the major determining factors extracted from the reviewed literatures are basically ranked from the most commonly identified to the least identified as: taxpayers attitudes and tax fairness perceptions were frequently identified six times each, secondly, tax payers knowledge, perceived behavior and subjective norms were identified four times each, thirdly, sources of income, complexity of tax laws, ethical sensitivity and religiosity knowledge were frequently identified three times, and lastly, perceive tax system and perceived usefulness were frequently identified from the literatures two times each respectively. Therefore, the study concludes that the commonly identified determining factors of tax compliance in the developing countries based on reviewed literature are taxpayer’s attitude and fairness perception. Hence, other empirical studies may need to be conducted to justify the position of this study.

Determinants of Tax Compliance among Small and Medium Enterprises in Tanzania: Insights from Ilala Municipality

This study investigated on Determinant of tax compliance among Small and Medium Enterprises in Tanzania specifically Ilala municipality, Particular objectives included evaluating the influence of economic factors and taxpayer personal demographics on tax compliance. The descriptive cross-sectional survey design and quantitative research approach were used in the current study. The study's population consisted of 5324 Small and Medium Enterprises from Ilala Municipality, from where a random sample of 98 respondents was drawn. Structured questionnaires were used to collect data, which was then analyzed using The Multiple Linear Regression, which provided a comprehensive proof that helped to answer the research questions. The study's findings demonstrated a positive and statistically significant association between the study independent variables and the dependent variable. Taxpayer, economic, and institutional factors all influence taxpayers' willingness to engage in tax evasion, according to the regression analysis. Study findings reveal that all taxpayer predictors, including economic and institutional factors, have a significant impact on tax compliance since all have mean of above 3.0. Furthermore, regression analysis supports the findings, since all three factors were found to have a significant impact on tax compliance, with p-values less than the 0.05 cutoff limit. The study concludes Tax morality can help increase voluntary tax compliance on the country through this taxpayer will have a positive perception toward government spending. Maintaining tax fairness, appropriate and moderate levels of penalty, and keeping tax rates as low as possible can all foster taxpayers' voluntary compliance. Fairness in the execution of tax regulations should be enshrined, and tough measures to combat tax revenue corruption should be implemented.

Government Trust as a Significant Determinant of Tax Compliance: A Study of Pakistan

Tax compliance behavior of individuals is ascertained in this research. Among the variables which affect the tax compliance behavior, government trust and tax justice perception are studied. 300 individuals were taken as sample from Pakistan to study the relationship between variables of government trust, tax compliance and tax justice perception. Data is obtained through questionnaire and analyzed using reliability test, correlation and regression analysis. The results of the study showed that tax justice perception and government trust are the major determinants of tax compliance behavior in Pakistan. Tax justice perception plays the role of mediator through government trust to enhance tax compliance. Study implicates some useful suggestion that government should always put efforts in gaining public trust by increasing public services, making tax system understandable for everyone by making documentation easier so that more and more people can obey the rules which can increase compliance level.

Determinants of Tax Compliance among Micro Business: Malaysian Perspective

The landscape of Micro, Small, and Medium Enterprises (MSMEs) worldwide has grown considerably well since 2016 until 2021. In Malaysia, micro-businesses were prominent as they accounted for the largest share of MSMEs components. However, the majority of micro-businesses owners are operating in the informal sector and some do not even register their businesses with the government. This may lead to difficulties for the tax authority in collecting taxes from them. Therefore, this study is vital to identify what are the possible factors that influence the tax compliance of micro-businesses in Malaysia. This study focused on the influence of tax morale, simplicity, and knowledge on tax compliance. An online questionnaire was distributed to micro-business owners, and 152 micro-business owners responded. The researcher used simple random sampling technique to collect data focusing on micro-business owners in Malaysia. This study employed the Statistical Package for the Social Sciences (SPSS) to analyse the data in order to derive useful information. Based on these 152 respondents, the study revealed that tax morale, tax simplicity, and tax knowledge have a positive and significant impact on tax compliance. The findings are crucial for the policymakers to improve the current tax policies. More effective tax education programmes should be crafted to convey tax knowledge and awareness to business owners, especially among those in the informal sector. It is advisable for future researchers to concentrate on other substantial variables that may affect tax compliance. Apart from that, the research methodology also needs to be diversified such as to include focus group discussions and field experiments to obtain more useful findings related to the issue of tax compliance among micro-business owners.

A Study on Critical Factors of Tax Compliance Behaviour among Small and Medium Enterprises in Libya

Tax compliance can be described as the level to which taxpayers obey or fail to obey the rules of taxation of their country. This is an admitted fact that the aim of an effective administration of tax is to enhance the voluntary compliance of tax with the use of all possible approaches that may include penalties as well. The primary purpose of this study is to assess the tax compliance behaviour among small and medium enterprises in Libya. This study provides a cornerstone for those who are looking for the reasons for tax compliance to be low. Therefore, this study examines the determinants of tax compliance and tax compliance behaviour. To achieve the goals of this study, a questionnaire survey was administered. Multiple regressions were used to test the formulated hypotheses. The results of this study show how the behaviour of tax compliance can be influenced by poor awareness, unfair taxes, low morale, strict authorities, tax rate and tax penalties. In relation to the practical and theoretical contributions, so far, to the best of the researcher’s knowledge, no scientific research has been done on this. This research would assist politicians, tax officials and the government of Libya in researching this phenomenon. Keywords: Tax compliance, Tax compliance behaviour, Determinants of tax, Tax knowledge, Tax penalty