CT-Model: An Explanation of Corporate Tax Payers' Attitude

Whether it be in developed or in developing countries, complying with corporate tax is necessary. However, little is known about the behavior and attitudes of corporate tax payers towards tax compliance in Mauritius. Therefore, this paper adapts the theory of planned behavior concept to develop a new model, CT-model, explaining corporate tax payers' attitudes with the inclusion of organizational characteristics, perceived risks, level of understanding and government accountability. A total of 58 companies responded to the survey. Quantitative research was adopted in the study. The methodology used in the study consists of a random sampling. Data are collected from secondary sources such as articles published by the well-known periodicals, books, and dissertations in order to base the construction of the theoretical framework. The population that was considered for this study was a variety of companies involving in different business activities which included those registered as management companies, construction companies, listed companies, banking and finance companies, textile and manufacturing companies, those involve in plantation and services, as well as SMEs, all over Mauritius. Our main findings of this paper confirm that the relation between organizational characteristics, perceived risks, level of understanding and government accountability with attitudes of corporate tax payers is positively correlated, while perception of the burden of tax has no significant relationship with corporate taxpayers' attitudes. The results also show there is a strong, positive correlation between level of understanding and attitudes/compliance, with high levels of corporate tax understanding with higher levels of tax compliance. This implies that if government encourages tax payment and use the money judiciously (Ayee, 2007), then the higher will be the corporate tax compliance. In addition, the higher the perceived risk which is associated if corporate tax is not paid, such as penalties, sanction, reputational risk, then the more companies will abide to corporate tax payment. These results indicate that, the more government shows higher responsibility towards tax, the higher the companies will pay tax, or the simple the tax procedure the more corporations will abide to tax. Results are consistent with Isa (2012) and Sapiei & Kasipillai (2013) who identified that an important corporate taxpayers' compliance variable that influences compliance behavior is tax complexity / understanding. Results also indicate that firm's characteristics such as business size and tax liability influenced compliance while business age and business activity have no impact on compliance.