Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation
Despite tax being a fundamental method to redistribute wealth and achieve a sustainable economic and social system, tax agencies and institutions in most countries are struggling with low tax collections. This issue is often attributed to the level of compliance among taxpayers. To gain more insight...
| Main Authors: | , , , , , , , , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-09-01
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| Series: | Journal of Open Innovation: Technology, Market and Complexity |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2199853123002007 |
| _version_ | 1797391760463233024 |
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| author | Abdalwali Lutfi Ahmad Farhan Alshira’h Malek Hamed Alshirah Hassan Ali Al-Ababneh Mahmaod Alrawad Mohammed Amin Almaiah Firas Abu Dalbouh Ali Mustafa Magablih Fatihelelah Mohammed Mohammed Mohamed Wedad Alardi |
| author_facet | Abdalwali Lutfi Ahmad Farhan Alshira’h Malek Hamed Alshirah Hassan Ali Al-Ababneh Mahmaod Alrawad Mohammed Amin Almaiah Firas Abu Dalbouh Ali Mustafa Magablih Fatihelelah Mohammed Mohammed Mohamed Wedad Alardi |
| author_sort | Abdalwali Lutfi |
| collection | DOAJ |
| description | Despite tax being a fundamental method to redistribute wealth and achieve a sustainable economic and social system, tax agencies and institutions in most countries are struggling with low tax collections. This issue is often attributed to the level of compliance among taxpayers. To gain more insight into this problem, a study was conducted to examine how socio-economic determinants such as probability of detection, tax complexity, tax penalty, tax sanctions, tax ethics, tax justice, government spending, and tax services quality impact VAT compliance decisions. The study drew a random sample of 770 retail industry participants from Jordan, an Arabic country, for a self-administered survey. Smart-PLS structural equation modeling was used to analyze and estimate the compliance model. The results indicated that all proposed direct relationships were supported, and the interactions between tax knowledge and the socio-economic determinants on VAT compliance were found to be significant. The findings of this research can be useful for policymakers and institutions responsible for taxpayers' communities to understand the role of tax knowledge in VAT compliance in the retail industry. The study emphasizes the significance of instilling tax knowledge, social and moral values among VAT payers, establishing an equitable system, and launching awareness programs in Jordanian society. Additionally, it contributes to existing literature by confirming a practical compliance model rooted in the socio-economic theory of regulatory compliance. This model incorporates the moderating effect of tax knowledge within socio-economic aspects of VAT compliance. By understanding the importance of tax knowledge, policymakers and institutions can develop effective strategies to boost VAT funds and improve compliance in the retail industry. This can ultimately lead to increased government revenues without placing an undue economic burden on lower-income taxpayers. |
| first_indexed | 2024-03-08T23:38:19Z |
| format | Article |
| id | doaj.art-0045cdd48c9b48e1888148a31440cadd |
| institution | Directory Open Access Journal |
| issn | 2199-8531 |
| language | English |
| last_indexed | 2024-03-08T23:38:19Z |
| publishDate | 2023-09-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Open Innovation: Technology, Market and Complexity |
| spelling | doaj.art-0045cdd48c9b48e1888148a31440cadd2023-12-14T05:22:24ZengElsevierJournal of Open Innovation: Technology, Market and Complexity2199-85312023-09-0193100098Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderationAbdalwali Lutfi0Ahmad Farhan Alshira’h1Malek Hamed Alshirah2Hassan Ali Al-Ababneh3Mahmaod Alrawad4Mohammed Amin Almaiah5Firas Abu Dalbouh6Ali Mustafa Magablih7Fatihelelah Mohammed Mohammed8Mohamed Wedad Alardi9Department of Accounting, College of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia; Applied Science Research Center, Applied Science Private University, Amman 11931, Jordan; Corresponding author at: Department of Accounting, College of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia.Accounting Department, Faculty of Administrative and Financial Sciences, Irbid National University, Irbid 2600, Jordan; Corresponding authors.Department of Accounting, Faculty of Economics and Administrative Sciences, Al al-Bayt University, Al-Mafraq 130040, Jordan; Corresponding authors.Faculty of Administrative and Financial Sciences, E-Marketing and Social Communication, Irbid National University, JordanCollege of Business Administration and Economics, Al-Hussein Bin Talal University, Ma’an 71111, JordanCollege of Computer Sciences and Information Technology, Department of Computer Networks, King Faisal University, Al-Ahsa 31982, Saudi Arabia; Faculty of Information Technology, Applied Science Private University, Amman 11931, Jordan; Department of Computer Science, King Abdullah the II IT School, the University of Jordan, Amman 11942, JordanAccounting Department, Faculty of Administrative and Financial Sciences, Irbid National University, Irbid 2600, JordanAccounting Department, Faculty of Administrative and Financial Sciences, Irbid National University, 21110, JordanAccounting Department, King Khalid University, Abha, Saudi ArabiaAccounting Department, Faculty of Commerce and Business Administration Helwan University, EgyptDespite tax being a fundamental method to redistribute wealth and achieve a sustainable economic and social system, tax agencies and institutions in most countries are struggling with low tax collections. This issue is often attributed to the level of compliance among taxpayers. To gain more insight into this problem, a study was conducted to examine how socio-economic determinants such as probability of detection, tax complexity, tax penalty, tax sanctions, tax ethics, tax justice, government spending, and tax services quality impact VAT compliance decisions. The study drew a random sample of 770 retail industry participants from Jordan, an Arabic country, for a self-administered survey. Smart-PLS structural equation modeling was used to analyze and estimate the compliance model. The results indicated that all proposed direct relationships were supported, and the interactions between tax knowledge and the socio-economic determinants on VAT compliance were found to be significant. The findings of this research can be useful for policymakers and institutions responsible for taxpayers' communities to understand the role of tax knowledge in VAT compliance in the retail industry. The study emphasizes the significance of instilling tax knowledge, social and moral values among VAT payers, establishing an equitable system, and launching awareness programs in Jordanian society. Additionally, it contributes to existing literature by confirming a practical compliance model rooted in the socio-economic theory of regulatory compliance. This model incorporates the moderating effect of tax knowledge within socio-economic aspects of VAT compliance. By understanding the importance of tax knowledge, policymakers and institutions can develop effective strategies to boost VAT funds and improve compliance in the retail industry. This can ultimately lead to increased government revenues without placing an undue economic burden on lower-income taxpayers.http://www.sciencedirect.com/science/article/pii/S2199853123002007VAT complianceGovernment spendingTax service qualityModerating role of tax knowledge |
| spellingShingle | Abdalwali Lutfi Ahmad Farhan Alshira’h Malek Hamed Alshirah Hassan Ali Al-Ababneh Mahmaod Alrawad Mohammed Amin Almaiah Firas Abu Dalbouh Ali Mustafa Magablih Fatihelelah Mohammed Mohammed Mohamed Wedad Alardi Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation Journal of Open Innovation: Technology, Market and Complexity VAT compliance Government spending Tax service quality Moderating role of tax knowledge |
| title | Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation |
| title_full | Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation |
| title_fullStr | Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation |
| title_full_unstemmed | Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation |
| title_short | Enhancing VAT compliance in the retail industry: The role of socio-economic determinants and tax knowledge moderation |
| title_sort | enhancing vat compliance in the retail industry the role of socio economic determinants and tax knowledge moderation |
| topic | VAT compliance Government spending Tax service quality Moderating role of tax knowledge |
| url | http://www.sciencedirect.com/science/article/pii/S2199853123002007 |
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