Perception on tax system structure, tax compliance costs and tax compliance behaviour in Yemen
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Date
2022-10Author
Mohammed Mahdi Obaid
Idawati, Ibrahim
Zakariya’u, Gurama
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This study considered the tax system structure into tax penalty, tax rate, and tax audit,
and then examined their effects on tax compliance behaviour among small and medium sized enterprises (SMEs) in the manufacturing sector of Yemen. Also, the tax compliance
cost in Yemen was considered as a mediating factor in the tax system structure and tax
compliance model. The study used a survey questionnaire to collect data based on
previous studies. The study empirically found a strong positive and significant
association between the tax rate, tax penalty, and tax audit and manufacturing SME tax
compliance behaviour in Yemen. Whereas tax compliance cost is negatively related to
tax compliance behaviour. For the mediation effect, only the relationship between two
factors, that is tax rate and tax penalty with tax compliance behaviour were mediated
by of tax compliance costs. While no evidence for the mediating effect of tax compliance
costs on the relationship between tax audit and the tax compliance behaviour is found.
By referring to Deterrence Theory, this study has contributed by extending the tax
literature through a framework that examined tax compliance cost as a mediator in the
association between manufacturing SME tax compliance behavior in Yemen and the
structure of the Yemeni tax system.