Factors Affecting the Tax Compliance Among MSME’S in the Municipality of Cabarroguis

Abstract

The role of taxation pays not only for public services and goods, it is also a key ingredient on the social contract between citizens and the economy. All governments need revenue, but the challenge is to carefully choose not only the level of tax rates but also the tax base. This study is focused on the objectives of identifying various deterrents of Micro, Small, Medium Enterprises (MSME’s) on their tax compliance, determining their different problems encountered on tax compliance, assessing the impacts of Tax Compliance among the MSME’s, and being able to recommend possible interventions. Technology based interviews were applied and data gathered were reliant on survey questionnaires, and document analysis, or a combination of these. Thus, this study was able to identify that some respondents were unanimously aware of R.A. no. 10653 and honestly file and pay their corresponding taxes. On the other hand, reasons of the MSME’s for non-filing were high tax rates and complexity of procedures. These implied that respondents are selective in terms of filing taxes and are fairly knowledgeable of taxation policies. In addition, hindrances such as Psychological, Social, Fiscal Factors, and Financial Hindrances were determined. Furthermore, external factors were identified, whereas tax programs, reforms, rates were involved. Internal factors whereas respondents were identified to have low understanding on technical matters especially in preparation was imminent. Two dimensions of tax fairness evolved, respectively are the benefits received for tax payment given, and the taxpayers’ perception of the vertical equity of the taxation system.