Determinants tax compliance behavior of small and medium-sized enterprises

Abstract

The paper aims to factor in the effect of tax compliance on small and medium-sized enterprises (SMEs) in Vietnam. For SMEs, tax compliance is a critical aspect of financial management. In an emerging market with a dramatically growing economy, Vietnam provides a wide range of opportunities for SMEs to thrive. The author’s 91 samples were collected from individuals specializing in accounting, auditing, and tax fields in some places in Vietnam. Efebera et al. (2004) applied an extension of the theory of planned behavior (TPB) model to demonstrate a positive relationship between equity perception, normative expectations, legal sanctions, and the intention to comply with tax regulations of individual taxpayers. We assess and analyze four factors including the perception of the utility of tax compliance, subjective norms, characteristics of tax policies, and economic environment affecting the tax compliance behavior of SMEs. The data analysis is carried out by using partial least squares structural equation modeling (PLS-SEM). The result shows that the perception of the utility of tax compliance, the characteristics of tax policies, and the economic environment have a positive and significant impact on tax compliance behavior. However, the research fails to test the influence of subjective norms on tax compliance behavior.