The effect of business characteristics on tax compliance costs

Abstract

Compliance fee is the cost incurred by the taxpayers in fulfilling the taxation requirements imposed on the taxpayers by the law and the authority of the country. The company expects to incur the minimum tax costs associated with fulfilling its tax obligations. Research on the influence of business characteristics to tax compliance cost is still scanty. This research examined the effect of business characteristics (age, size, sector and risk management) on tax compliance costs. The research design adopted in this study is survey design. The questionnaires were distributed to the members of Department of Cooperatives and Micro Small-Medium Enterprises in Padang City. The non-probability sampling was used as the sampling method and 92 respondents participated in this research. The data obtained were analyzed using Statistical Package for Social Sciences (SPSS). The research findings indicate that age, size and sector have no effect on tax compliance costs while risk management has an effect on tax compliance costs.

How Tax Knowledge Mediates Business Performance?

“…This finding is consistent with the research by Bhalla et al (2022), which states that tax knowledge can enhance taxpayers' efficiency and effectiveness in tax administration, leading to improved company performance. Having good tax knowledge and understanding encourages companies to utilize appropriate tax incentives and deductions, as well as effective tax management (Fauziati & Kassim, 2018;Makeeva et al, 2019). With effective tax management, companies can handle long-term financial and tax-related risks, contributing to better and sustainable business performance (Saragih & Ali, 2023).…”

“…This condition supports the company in reducing the potential for fraudulent activities, improving operational efficiency, and achieving a higher level of profitability (Kalgutkar, 2018;Susyanti & Askandar, 2019). Corporate profitability is attained through optimizing the utilization of appropriate incentives and deductions, coupled with effective tax management, enabling the company to avoid potential sanctions and penalties (Fauziati & Kassim, 2018).…”

“…This condition helps companies minimize fraudulent activities and improve efficiency and profitability achievements (Kalgutkar, 2018;Susyanti & Askandar, 2019). The attainment of corporate profitability can be attributed to the utilization of suitable incentives and deductions, coupled with efficient tax administration aimed at circumventing penalties and levies (Fauziati & Kassim, 2018).…”

Impact Of Pandemic On Tax-Paying Compliance

“…Taxpayers gain an understanding and knowledge of the mechanism for reporting tax incentives so that MSME actors in Pontianak City take advantage of these facilities to fulfill their tax obligations during the Covid-19 period. Without tax knowledge, taxpayers do not want to comply with tax law intentionally (Fauziati et al, 2016). This is following the compliance statement not only driven by inhibiting factors (such as: Education, age, finances etc.)…”

Tax Risks of the State and Taxpayer Organizations: Development of Theoretical Regulations in the Republic of Belarus

“…Значительно сократить финансовые расходы налогоплательщиков и сохранить их деловую репутацию как в глазах партнеров и конкурентов, так и государства позволит управление налоговыми рисками, контроль и мониторинг возможных опасностей, которые они за собой несут (Eichfelder and Schorn, 2012;Fauziati and Kassim, 2018). При этом выстроенная система налогового риск-менеджмента сделает возможным системное видение вопросов минимизации и прогнозирования расходов от налоговых поступлений в государственный бюджет, что будет способствовать обеспечению стабильности в социальной, правовой и финансово-экономической среде (Schoenmaker De et al, 2012;Лавренчук и Мингалева, 2010).…”