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Apr 24, 2023
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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.
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
Granfon, J. A., Lagare, W. N. J. D., Aling, D. A., Dangcalan, N. B. D., & Ebanay, A. A. (2023). Factors Affecting Tax Compliance of MSMEs in Dipolog City. International Journal of Multidisciplinary: Applied Business and Education Research, 4(4), 1350-1364. https://doi.org/10.11594/ijmaber.04.04.29
References
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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.
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
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
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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
Tilahun, M. (2019). Determinants of Tax Compliance: a Systematic Review. Economics, 8(1), 1. https://doi.org/10.11648/j.eco.20190801.11
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
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
Winslade, W. (2013). Menschenwürde, Bewusstsein und menschliche Existenz. In Menschenwürde und Medizin (pp. 686–695).
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/wp-content/uploads/2017/07/ACC-342.pdf
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
Clifford Machogu, D. G., & Jairus Amayi, D. B. (2013). The Effect of Taxpayer Education on Voluntary Tax Compliance, Among SMES in Mwanza City-Tanzania. International Journal of Marketing, Financial Services & Management Research, 2(8), 12–23. www.indianresearchjournals.com
Edlund, J., & Aberg, R. (2002). Social norms and tax compliance. Swedish Economic Policy Review, 9, 201–228.
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
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
Gambo, E., Masud, A., Mustapha, N., & Oginni, S. (2014). Tax complexity and tax compliance in African self-assessment environment. International Journal of Management Research & Review, 4(5), 575–583.
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.
Inasius, F. (2019). Factors Influencing SME Tax Compliance: Evidence from Indonesia. International Journal of Public Administration, 42(5), 367–379. 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/
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
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
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.
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).
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/TAX-RATE-AND-TAX-COMPLIANCE-IN-AFRICA.pdf
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
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
Noor Sharoja Sapiei, & Jeyapalan Kasipillai. (2013). Impacts of the Self-Assessment System for Corporate Taxpayers. American Journal of Economics, 3(2), 75–81. https://doi.org/10.5923/j.economics.20130302.03
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
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
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.
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
Pervez Ghauri, K. G. (2005). Research Methods in Business Studies.
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.
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
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
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
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
Tilahun, M. (2019). Determinants of Tax Compliance: a Systematic Review. Economics, 8(1), 1. https://doi.org/10.11648/j.eco.20190801.11
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
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
Winslade, W. (2013). Menschenwürde, Bewusstsein und menschliche Existenz. In Menschenwürde und Medizin (pp. 686–695).
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/wp-content/uploads/2017/07/ACC-342.pdf