Determinants of tax compliance behavior of micro-small and medium enterprises (SMEs) in Kelantan / Roslizawati Muhammad Yusof

Small and Medium Enterprises (SMEs) play an essential role towards economic growth in Malaysia. SMEs face a greater risk of non-compliance due to factors such as limited financial resources, unstable revenue streams, insufficient tax expertise, and inadequate systems for maintaining records, conducting independent audits, and managing cash. This makes them more susceptible to under-reporting compared to larger businesses. Tax compliance is a significant concern for the government regarding SMEs. This study focused on psychological factors by using the expanded Theory of Planned Behaviour components as the variables, with the additional of patriotism to measure the determinants of tax compliance behaviour of the micro­SMEs in Kelantan. Taxation is not solely a matter of economic or legal rules, it is also influenced by individual and social behavior, attitudes, beliefs, and emotions. By considering psychological factors, researchers aim to understand the underlying motivations and drivers behind taxpayers' decisions to comply or evade their tax obligations. fu the context of Malaysia, there is a lack of research focusing on the extended components of the Theory of Planned Behavior (TPB). The respondents comprised of 112 taxpayers who are in micro-SMEs or Sole Proprietor category. A questionnaire of 26 items was distributed through Google form (via WhatsApp application) and hardcopy distribution. The data were analysed using SPSS version 28. The results show that attitude, subjective norms, and patriotism have a significant positive relationship with tax compliance of the SMEs in Kelantan, while no significant relationship was found between perceived behavioural control and tax compliance. The results might be beneficial to Inland Revenue Board Malaysia (IRBM) in which the determinants of tax compliance can be influenced by psychological factors such as TPB elements and ought to explore methods to enhance tax incentives for small and medium-sized enterprises (SMEs) as to boost tax conformity and government revenue generation.