Spiritual, psychological and social dimensions of taxpayers compliance

Abstract

Purpose

This paper aims to analyze the role of spiritual, psychological and social dimensions of business taxpayer compliance in micro small and medium enterprises. Tax compliance is an ideal condition for taxpayers who meet tax regulations and report income accurately and honestly. However, the reality in Indonesia shows the voluntary compliance level to the community is still low. This is reflected in the amount of state tax revenue compared to gross domestic product.

Design/methodology/approach

The location of the study was conducted on taxpayers of micro small and medium enterprises in Bali Province. The type of data used in this study is quantitative data with primary data sources in the form of questionnaires to 100 business taxpayers. Data analysis uses multiple linear regression.

Findings

The results showed that money ethics (as a psychological dimension) and tax socialization (as a social dimension), did not significantly influence tax compliance. Karma phala (as a spiritual dimension) has a positive and significant effect on business taxpayers’ compliance. When an individual's behavior has reflected commitment in their religion philosophy, it is expected to be a control of deviant behavior and good behavior in taxation obligations. In the future, it will be able to prevent deviations from perversion and universal undesirable.

Research limitations/implications

Research is only limited to entrepreneurs who are in the micro small and medium business sector, so it is still lacking in representing the public opinions, especially business people in businesses whose scope is wider. In addition, the variables used in this study are still not maximized, one can add more variables, one of which is tax modernization.

Originality/value

Consideration of spirituality dimension use because it is part of individual character formation in attitude and behavior. The psychological and spiritual dimensions include the human behavior theories development that integrate aspects of spirituality to shape human behavior as a whole with a comprehensive perspective, especially religious philosophy through the enforcement of karma phala laws to realize compliance and fulfillment of tax obligations with full responsibility.

Citation

Yuniarta, G.A. and Purnamawati, I.G.A. (2020), "Spiritual, psychological and social dimensions of taxpayers compliance", Journal of Financial Crime, Vol. 27 No. 3, pp. 995-1007. https://doi.org/10.1108/JFC-03-2020-0045