Factors for Tax Compliance of Businesses, a Case Study on Small and Medium Enterprises in Quang Ninh Province, Vietnam

DOI

10.2991/aebmr.k.211119.011How to use a DOI?

Keywords

Small and medium enterprises; tax compliance behavior; tax; factors affecting

Abstract

Tax is the main income source of the state budget, which is associated with economic growth, and social stability. On the national scale, tax is considered to have several responsibilities: providing state income, promoting economic growth regulating the people’s income, regulate the macroeconomy, promote investment, and control inflation. This paper aims at enhancing national tax management by looking at factors that might increase the tax compliance of enterprises.

This research based on behavior theory and overview results from previous studies to build a scale for factors affecting tax compliance of small and medium enterprises in Quang Ninh province. To evaluate the coefficient of variables in the model, the study used the Ordinary Least Squares (OLS) regression for the data collected from 127 small and medium enterprises (SMEs) in Quang Ninh. The results indicated that the four main factors include (1) The fairness of the tax authorities towards businesses; (2) Characteristics and Field of enterprises; (3) Social standard; (4) Tax inspection affecting the tax compliance behavior of small and medium enterprises in Quang Ninh out of a total of 9 factors initially proposed: (1) Characteristics of the enterprise; (2) The field of operation of the enterprise, (3) Truthfulness of enterprise towards agency; (4) Enterprise’s perception of tax law and policy; (5) Tax authority’s power; (6) Tax inspection; (7) Penalty levels; (8) Social standard; (9) Fairness. Research results are the scientific basis for tax authorities, tax revenue management, tax compliance management of the subjects paying taxes, including small and medium enterprises.

Research purpose:

The study tries to determine the factors affecting the tax compliance behavior of small and medium-sized enterprises in Quang Ninh province. Based on our results, authorities could have appropriate measures to correctly and fully collect tax, and enhance fairness for businesses by enhancing tax compliance behavior of businesses

Research motivation:

Tax management is a regular activity of tax authorities in general and tax departments in particular, towards taxpayers in order to ensure adequate, timely and lawful budget collection. In recent years, tax management activities play an important role in increasing state budget in Quang Ninh. However, there are limitation in tax collection that needed to be overcome. The paper builds a theoretical model and identifies factors affecting tax compliance behavior of small and medium-sized enterprises in Quang Ninh to help policymakers take appropriate measures to reduce tax violations, to enhance tax management.

Research design, approach and method:

The study uses a theoretical approach based on a theoretical foundation and an overview of previous studies to build a research framework on factors affecting tax compliance behavior of small and medium-sized enterprises in Quang Ninh. In addition, the study uses a participatory approach through the field survey of small and medium-sized enterprises in Quang Ninh to build a data set for analyzing factors affecting compliance behavior of these enterprises. We used ordinary least squares (OLS) method with 2 analytical steps: factor analysis and regression analysis.

Main findings:

The main four factors that affect the tax compliance behavior of small and medium enterprises in Quang Ninh include: (1) The fairness of the tax authorities towards businesses; (2) Characteristics and Field of enterprises; (3) Social standard; (4) Tax inspection out of a total of 9 factors initially proposed.

Practical/managerial implications:

The research results will be the basis to help tax authorities improve their policies and reform tax administrative procedures which create maximum favorable conditions for enterprises in implementing tax compliance, meeting national budget requirements.

Copyright

© 2021 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Nguyen Thi Mai HUONG
AU  - Pham Mai PHUONG
PY  - 2021
DA  - 2021/12/07
TI  - Factors for Tax Compliance of Businesses, a Case Study on Small and Medium Enterprises in Quang Ninh Province, Vietnam
BT  - Proceedings of the International Conference on Emerging Challenges: Business Transformation and Circular Economy (ICECH 2021)
PB  - Atlantis Press
SP  - 95
EP  - 103
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211119.011
DO  - 10.2991/aebmr.k.211119.011
ID  - HUONG2021
ER  -