MODERATION OF TRUST IN GOVERNMENT IN MODELLING TAX COMPLIANCE BEHAVIOUR BASED ON TAX FEATURES

Abstract

SMEs in Jordan is important to the national employment and government revenue. While sales tax are the major source of tax revenue, Jordan government is haunted by a high rate of tax non-compliance behaviour that cost around JD1.4 billion in 2017. Thus, revealing the factors that determine the compliance behaviour has become imperative. Therefore, this study investigates the possible factors of tax compliance among SMEs in Jordan with consideration of trust in government as a moderator. The conceptual framework of this study include sales tax compliance behaviour as the dependent variable and the antecedents are tax knowledge, tax fairness, tax morale, tax authority, tax rate, and tax penalties. The population of this study is the small and medium size firms (SMEs) in Amman, Jordan. Approximately 59.9 percent (8,485 firms) of Jordanian SMEs are located in the capital city of Amman and the suitable sample size based on Morgan-Kerjice formula is 373. Unit of analysis for this research is the company principals (owners, CEOs, Financial managers) of the SMEs. The study adopts the direct collect survey technique to reach a relatively specific-target sample of SME principals. For data analysis, SmartPLS is used to do the regression-based analysis, but SPSS is used for data cleaning, demographic and descriptive analysis. Tax fairness has no significant impact while the other five antecedents have significant impacts. The precedence for the relations based on the path coefficient value is tax penalty (0.436), tax rate (0.233), tax authority (0.199), TK (0.142), and tax morale (0.103). Government trust have a significant moderation in two relationships that associated with tax authority and tax rate.