THE ROLE OF INCOME TAX SYSTEM STRUCTURE IN TAX NON-COMPLIANCE BEHAVIOUR AMONG SMEs IN YEMEN

Author:

Al-Ttaffi Lutfi Hassen1,Abdul-Jabbar Hijattulah2,Bin-Nashwan Saeed Awadh3

Affiliation:

1. College of Administrative Science, Seiyun University, Yemen

2. Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia

3. Islamic Business School, Universiti Utara Malaysia

Abstract

Tax is the main source of government revenue. However, a number of countries worldwide are increasingly besieged by challenges regarding compliance levels with the rules of tax systems. Thus, this paper aims to enhance an understanding of tax non-compliance behaviour by investigating the effect of the income tax system structure on Yemeni taxpayers’ behaviour. The study focuses on income tax compliance behaviour of owner-managers of small and medium enterprises (SMEs), as the Yemeni economy relies heavily on this sector. The SME sector represents 99.6 percent of business in Yemen. Based on a quantitative approach using a self-administered survey instrument, a total of 330 valid questionnaires were collected and the feedback provided analyzed. The results demonstrate that SME taxpayers exhibited a high level of tax non-compliance. Furthermore, the multiple regression analysis shows that the tax rate had a positive and significant influence on tax non-compliance behaviour, but the tax penalties rate did not. These results can be especially relevant to policymakers and practitioners of tax systems structures, particularly in a developing country such as Yemen.

Publisher

UUM Press, Universiti Utara Malaysia

Subject

General Earth and Planetary Sciences,General Environmental Science

Reference97 articles.

1. Al-Doais, F. A. (2008). The role of accounting information system in reducing tax evasion n the Republic of Yemen (Unpublished master's thesis). University of Al-Albait, Jordan.

2. Ali, M. M., Cecil, H. W., & Knoblett, J. A. (2001). The effects of tax rates and enforcement policies on taxpayer compliance: A study of self-employed taxpayers. Atlantic Economic Journal, 29(2), 186-202.

3. Alm, J. (1999). Tax compliance and administration. Public

4. Administration and Public Policy, 7(2), 741-768.

5. Al-Ttaffi, L. H. A. (2009). Determinants of tax evasion: An empirical evidence from the Republic of Yemen (Unpublished master's thesis). Universiti Utara Malaysia.

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