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Determinants of tax compliance: a study on individual taxpayers in Indonesia

Author

Listed:
  • Musthafa Kemal Nasution

    (University of Bengkulu, Indonesia)

  • Fitri Santi

    (University of Bengkulu, Indonesia)

  • Husaini Husaini

    (University of Bengkulu, Indonesia)

  • Fadli Fadli

    (University of Bengkulu, Indonesia)

  • Kashan Pirzada

    (University Utara Malaysia, Malaysia)

Abstract

This study aims to analyze the effect of tax knowledge, tax complexity, and tax justice on taxpayers’ trust and tax compliance as well as the differences in tax compliance levels in South Sumatra. The research is explanatory and takes a quantitative approach. The method of data collection used a questionnaire containing the variables and documentation outlined by the study. The research questions were tested using hypothetical compliance scenarios, with 900 registered individual taxpayers from five major cities in South Sumatra as participants. The researchers used confirmatory factor analysis (CFA) with the structural equation modeling (SEM) approach. Results of the research show that (1) tax knowledge has no effect on taxpayers’ trust, (2) tax complexity has no effect on taxpayers’ trust, (3) tax justice has an effect on taxpayers’ trust, (4) tax knowledge has no effect on tax compliance, (5) tax complexity has no effect on tax compliance, (6) tax justice has an effect on tax compliance, (7) taxpayers’ trust has an effect on tax compliance, and (8) there were differences in the level of tax compliance after the implementation of the SMS blast program.

Suggested Citation

  • Musthafa Kemal Nasution & Fitri Santi & Husaini Husaini & Fadli Fadli & Kashan Pirzada, 2020. "Determinants of tax compliance: a study on individual taxpayers in Indonesia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 1401-1418, December.
    • Handle: RePEc:ssi:jouesi:v:8:y:2020:i:2:p:1401-1418
    DOI: 10.9770/jesi.2020.8.2(82)
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    References listed on IDEAS

    as
    1. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    2. Gitaru, Kelvin, 2017. "The Effect of Taxpayer Education on Tax Compliance in Kenya.( a case study of SME's in Nairobi Central Business District)," MPRA Paper 80344, University Library of Munich, Germany.
    3. Ajzen, Icek, 1991. "The theory of planned behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 50(2), pages 179-211, December.
    4. Asian Development Bank (ADB), 2014. "A Comparative Analysis of Tax Administration in Asia and the Pacific," ADB Reports RPT146322, Asian Development Bank (ADB), revised 24 Jun 2014.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Marius-Răzvan Surugiu & Cristina-Raluca Mazilescu & Camelia Surugiu, 2021. "Analysis of the Tax Compliance in the EU: VECM and SEM," Mathematics, MDPI, vol. 9(17), pages 1-19, September.
    2. Godwin Emmanuel, OYEDOKUN & Victoria Olubose, OLATAYO & Aderemi Kabiru, ADEYEMO, 2023. "Tax Knowledge, Compliance Cost and among Small Scale Enterprises in Ibarapa East Local Government Council of Oyo State, Nigeria," Multidisciplinary Journal of Social Sciences, Association of Forensic Accounting Researchers (AFAR), vol. 3(1), pages 48-72, June.

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    More about this item

    Keywords

    tax compliance; taxpayers’ trust; tax knowledge; tax complexity; tax justice; individual taxpayers;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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