TAX COMPLIANCE OF SMALL AND MEDIUM ENTERPRISES: EVIDENCE FROM INDONESIA

Fany Inasius
Finanace Program, Accounting Department, Faculty of Economics & Communication,
Bina Nusantara University, Jakarta, Indonesia 11480

ABSTRACT

It has been argued that regulatory requirements on business, especially those on SMEs can be a constraint on their growth. Indonesian Small and Medium Enterprises (SMEs) play a significant role in the national economy. This paper measures the tax compliance rate of particular individual retailers known as individual taxpayers on SMEs with annual income ranging from IDR 600 millions up to IDR 4.8billion (around USD 400,000 with the exchange rate at the time when the research was undertaken) in Indonesia. Four tax compliance variables were examined namely the perception of tax rate, the referral group, the probability of being audited and the tax knowledge. From 319 respondents, who are individual retailers, the result shows the income tax rate is negatively correlated to tax compliance while probability of being audited, referral group, and tax knowledge are positively correlated by taxcompliance. Tax knowledge, however, has a more significant impact on individual tax compliance JEL: H20

KEYWORDS: Tax Compliance, SMEs, Individual Taxpayers, Retailers

 

 

ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-5.pdf

 

SCOPUS  Indexing