Determinants of tax morale using structural equation model (SEM)

• Main Authors: Pacaldo, Raymond S., Ferrer, Rodiel C.
• Format: text
• Published: Animo Repository 2020
• Subjects: Taxation—Moral and ethical aspects—Philippines; Taxation
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/9531
• Institution: De La Salle University

This paper analyzes the impact of tax enforcement, trust in government, and demographic characteristics on the tax morale of firms in the Philippines. From the database of Business Environment and Enterprise Performance Survey (BEEPS), 864 firms were taken and analyzed using partial least squares on the structural equation of modeling (PLS-SEM). In the analysis, only trust in government, organizational form, and firm location provided a significant impact to tax morale. Thus, firms pay taxes religiously when the government acts trustworthily. On the other hand, sole proprietorship and Metro Manila firms exhibited lower tax morale as compared to corporations and outside capital city entities. The government should enhance the delivery of services as well as eliminate corruption to improve the firm’s tax compliance.