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

Abstract

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.