Home⇛International Journal of Multidisciplinary: Applied Business and Education Research⇛vol. 4 no. 4 (2023)

Factors Affecting Tax Compliance of MSMEs in Dipolog City

Janven Granfon | Wella Nova Joy Lagare | Dexter Aling | Neil Bryan Dangcalan | Ara Ebanay

 

Abstract:

This research is made focused on assessing what factors could affect the tax compliance of MSMEs in Dipolog City, one of the major economic drivers are; (1) Tax Inspection Possibility, (2) Tax Rates, (3) Tax Penalties, (4) Tax Policies Complexity, (5) Social Norms and (6) Tax Knowledge. Through random sampling, 96 business owners/managers/bookkeepers of specifically retail MSMEs in Dipolog City were extracted as respondents. A descriptive correlational quantitative method was used in this study, utilizing standardized adapted questionnaires for gathering data which was analyzed and interpreted using frequency, percentage distribution, mean, Kruskal-Wallis test, and Spearman Rho. Findings revealed most of the enterprises belong to a micro level and are still in the business for 2-5 years. Furthermore, among the factors identified, only Tax inspection Possibilities, Tax Penalties, and Tax Knowledge have significant relationships with tax compliance. This means that the possibility of being inspected, delayed payment of obligations, and their knowledge of tax laws increased the respondents’ awareness of tax compliance. If a taxpayer has knowledge about tax laws, payments, and tax rates applied to his/her business, compliance increases. It is also recommended that the taxing authority must conduct a statutory tax seminar to MSMEs as taxpayers.



References:

  1. Battiston, P., & Gamba, S. (2013). Is Tax Compliance a Social Norm? A Field Experiment. SSRN Electronic Journal, 249. https://doi.org/10.2139/ssrn.2294384
  2. Battiston, P., & Gamba, S. (2016). The impact of social pressure on tax compliance: A field experiment. International Review of Law and Economics, 46, 78–85. https://doi.org/10.1016/j.irle.2016.03.001
  3. Clifford Machogu, D. G., & Jairus Amayi, D. B. (2013). The Effect of Taxpayer Education on Voluntary Tax Compliance, Among SMES in Mwanza CityTanzania. International Journal of Marketing, Financial Services & Management Research, 2(8), 12–23. www.indianresearchjournals.com
  4. Edlund, J., & Aberg, R. (2002). Social norms and tax compliance. Swedish Economic Policy Review, 9,201–228.
  5. Fisman, R., & Wei, S. J. (2004). Tax rates and tax evasion: Evidence from “missing imports” in China. Journal of Political Economy, 112(2), 471–496. https://doi.org/10.1086/381476
  6. Fjeldstad, O. H., & Semboja, J. (2001). Why people pay taxes: The case of the development levy in Tanzania. World Development, 29(12), 2059–2074. https://doi.org/10.1016/S0305-750X(01)00081-X
  7. Gambo, E., Masud, A., Mustapha, N., & Oginni, S. (2014). Tax complexity and tax compliance in African selfassessment environment. International Journal of Management Research & Review, 4(5), 575–583.
  8. Guztaman. (2019). Single Tariff and Tax Compliance of Micro Small and Medium Enterprises in Indonesia (Case Study in DKI Jakarta Province). Proceeding UII-ICABE, 51–57.
  9. Inasius, F. (2019). Factors Influencing SME Tax Compliance: Evidence from Indonesia. International Journal of Public Administration, 42(5), 367379. https://doi.org/10.1080/01900692.2018.1464578 index @ ntrc.gov.ph. (n.d.). https://ntrc.gov.ph/ Index @ Www.Bir.Gov.Ph. (n.d.). https://www.bir.gov.ph/
  10. Jimenez, P., & Iyer, G. S. (2016). Tax compliance in a social setting: The influence of social norms, trust in government, and perceived fairness on taxpayer compliance. Advances in Accounting, 34, 17–26. https://doi.org/10.1016/j.adiac.2016.07.001
  11. Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2),210–225. https://doi.org/10.1016/j.joep.2007.05.004
  12.  Liu, X. (2014). Use tax compliance: The role of norms, audit probability, and sanction severity. Academy of Accounting and Financial Studies Journal, 18(1), 65–80.
  13. Manaye, M. K. (2018). Determinants of Taxpayers Voluntary Compliance with Taxation: The Case of Wolaita Sodo and Tercha Town in Dawuro Zone. Global Journal of Management and Business Research, 18(3).
  14. Masud, A., & Gambo, E. J. (2019). Tax Rate and Tax Compliance in Africa. European Journal of Accounting Auditing and Finance Research, 2(3), 4–10. file:///C:/Users/ADMIN/Downloads/TAXRATE-AND-TAX-COMPLIANCE-IN-AFRICA.pdf
  15. Musimenta, D. (2020). Knowledge requirements, tax complexity, compliance costs and tax compliance in Uganda. Cogent Business and Management, 7(1). https://doi.org/10.1080/23311975.2020.1812220
  16. Nguyen, H. T. (2022). Factors affecting tax compliance of small and medium enterprises in Hung Yen province, Vietnam. Accounting, 8(2), 111–122. https://doi.org/10.5267/j.ac.2021.7.010
  17. Noor Sharoja Sapiei, & Jeyapalan Kasipillai. (2013). Impacts of the Self-Assessment System for Corporate Taxpayers. American Journal of Economics, 3(2), 7581. https://doi.org/10.5923/j.economics.20130302.03
  18. Oladipupo, A. O., & Obazee, U. (2016). Tax Knowledge, Penalties and Tax Compliance in Small and Medium Scale Enterprises in Nigeria. IBusiness, 08(01), 1–9. https://doi.org/10.4236/ib.2016.81001
  19. Olatunji Olaoye, C. (2017). Tax Information, Administration and Knowledge on Tax Payers’ Compliance of Block Moulding Firms in Ekiti State. Journal of Finance and Accounting, 5(4), 131. https://doi.org/10.11648/j.jfa.20170504.12
  20. Osebe, R. (2013). An Analysis of Factors Affecting Tax Compliance in the Real Estate Sector in Kenya: A Case Study of Real Estate Owners in Nakuru Town. Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB), 1(4), 7–9.
  21. Paco, Donna Lerma Janica A., Q., & S, M. (2022). Tax Awareness and Compliance of Micro and Small Enterprises. Journal of Positive School Psychology, 2022(4), 6264–6281. http://journalppw.com
  22. Pervez Ghauri, K. G. (2005). Research Methods in Business Studies.
  23. Pope, J., & Jabbar, H. A. (2008). Tax Compliance Costs of Small and Medium Enterprises in Malaysia: Policy Implications. Journals in Business & Management, 3(4), 289–307.
  24. Prihandini, W. (2018). The optimum level of tax compliance based on power of authority and trust in an antagonistic climate. European Research Studies Journal, 21(1), 362–373. https://doi.org/10.35808/ersj/954
  25. Rahmayanti, N. P., Sutrisno T., S., & Prihatiningtias, Y. W. (2020). Effect of tax penalties, tax audit, and taxpayers awareness on corporate taxpayers’ compliance moderated by compliance intentions. International Journal of Research in Business and Social Science (2147- 4478), 9(2), 118–124. https://doi.org/10.20525/ijrbs.v9i2.633
  26. Saad, N. (2014). Tax Knowledge, Tax Complexity and Tax Compliance: Taxpayers’ View. Procedia - Social and Behavioral Sciences, 109(January 2014), 1069–1075. https://doi.org/10.1016/j.sbspro.2013.12.590
  27. Siamena, E., Sabijono, H., & Warongan, J. D. . (2017). Pengaruh Sanksi Perpajakan Dan Kesadaran Wajib Pajak Terhadap Kepatuhan Wajib Pajak Orang Pribadi Di Manado. Going Concern : Jurnal Riset Akuntansi, 12(2), 917–927. https://doi.org/10.32400/gc.12.2.18367.2017
  28. Tilahun, M. (2019). Determinants of Tax Compliance: a Systematic Review. Economics, 8(1), 1. https://doi.org/10.11648/j.eco.20190801.11
  29. Traxler, C. (2010). Social norms and conditional cooperative taxpayers. European Journal of Political Economy, 26(1), 89–103. https://doi.org/10.1016/j.ejpoleco.2009.11.001
  30. Wijayanti, P., Saraswati, N., Kartika, I., & Mutoharoh. (2020). The Improvement Strategy of Tax Compliance from MSME Sector in Indonesia. 115(Insyma), 167–171. https://doi.org/10.2991/aebmr.k.200127.034
  31. Winslade, W. (2013). Menschenwürde, Bewusstsein und menschliche Existenz. In Menschenwürde und Medizin (pp. 686–695).
  32. Yunus, N. bt, Ramli, R. bt, & Hasan, N. S. bt A. (2017). Tax Penalties and Tax Compliance of Small Medium Enterprises (SMEs) in Malaysia. International Journal of Business, Economics and Law, 12(1), 81–91. http://ijbel.com/wpcontent/uploads/2017/07/ACC-342.pdf

Tools


Copyright © 2024  KITE Digital Educational Solutions |  Exclusively distributed by CE-Logic