INTRODUCTION
Research statement
In recent years, enhancing budget revenues and ensuring tax compliance have become critical priorities for governments worldwide To achieve this, authorities implement administrative enforcement measures and legal sanctions aimed at deterring non-compliance among individuals and organizations, in line with state regulations.
By the close of the 20th century, numerous countries acknowledged the necessity for innovative policies to enhance tax compliance and diversify revenue streams Extensive research has been conducted on the key factors affecting tax compliance behavior, yielding valuable insights that significantly impact tax management and recovery efforts.
Corporate Income Tax (CIT) plays a crucial role in the global economy, and with Vietnam's increasing openness and integration, significant reforms in tax management have occurred Since July 2007, the Vietnamese Tax Management Law has shifted to a self-declaration and self-payment system, reducing direct intervention from tax authorities in the tax processes of businesses and individuals This change promotes accountability and proactivity among taxpayers As the number and scale of businesses grow, ensuring compliance with legal standards becomes vital to avoid penalties that could negatively impact operations Consequently, tax advisory services are essential for businesses to navigate and adhere to tax laws effectively.
In 2021, the ongoing and unpredictable nature of the disease, particularly in many Asian countries, highlighted the urgent need for synchronized solutions addressing various tax obligations Addressing these challenges is essential for supporting businesses, workers, and overall socio-economic development at both local and national levels.
The management of Corporate Income Tax (CIT) in Vietnam, particularly in Ho Chi Minh City (HCMC), faces significant challenges in ensuring proper collection and minimizing tax revenue loss, especially in the post-COVID pandemic context Effective tax compliance is crucial for sustaining national and local socio-economic development policies; otherwise, it risks undermining the fairness of the tax system This study seeks to identify the factors influencing CIT compliance among businesses in HCMC, aiming to foster favorable conditions for taxpayers and enhance compliance behaviors Consequently, the research topic, "Factors Affecting Corporation Income Tax Compliance Behavior of Enterprises Doing Business in Ho Chi Minh City," has been selected for a graduate thesis.
Research aims and objectives
This research aims to assess the factors influencing compliance with corporate income tax (CIT) in Ho Chi Minh City (HCMC) and to suggest strategies for improving tax compliance among local businesses.
Firstly, to identify the factors affecting compliance behavior with CIT among businesses operating in HCMC and measure the level of their impact
Secondly, to provide recommendations for enhancing compliance with CIT among businesses in HCMC.
Research questions
Q1: What factors affect compliance behavior with CIT among businesses operating in HCMC?
Q2: What should be done to address the factors that influence compliance with CIT and thereby enhance compliance behavior among businesses in HCMC?
Subject and scope of the research
The research population of this topic is the factors that affect compliance behavior with CIT among businesses in HCMC
Time scope: the research is conducted from March 2023 to June 2023
Geographic scope: the research is conducted in HCMC, with a focus on businesses operating in HCMC that are obliged to pay CIT.
Research method
The author employs a mixed research methodology that integrates both quantitative and qualitative approaches Drawing on existing literature, a theoretical framework and research model are developed, alongside proposed measurement scales for the relevant variables.
The author conducts research on tax compliance by analyzing previous studies and discussions among various authors to extract relevant information for the research framework Utilizing survey tools such as email questionnaires, online surveys via Google Docs, and direct surveys, the author collects data from business customers in Ho Chi Minh City through Deloitte Vietnam Tax Consulting By integrating findings from both domestic and international studies, the author identifies commonalities, unique aspects, and research gaps, ultimately proposing a suitable research model.
The author collects and compiles data on the factors influencing compliance behavior with CIT from the questionnaire The author then uses the SPSS software to perform the following analyses:
This study employs descriptive statistics, frequency statistics, Cronbach's alpha coefficient, Exploratory Factor Analysis (EFA), and correlation analysis to identify key factors influencing business tax compliance Additionally, ANOVA testing is utilized to compare data sets and evaluate potential differences in dependent proportions, providing a comprehensive understanding of the variables impacting tax compliance among businesses.
- The regression analysis technique is used to test research hypotheses on the impact of factors on the CIT compliance of businesses.
Expected contribution
This dissertation explores the factors influencing enterprise income tax compliance among businesses in Ho Chi Minh City, particularly in the context of economic development and integration It aims to enhance understanding of tax compliance behaviors, thereby reducing risks associated with tax violations and positively impacting the state budget Additionally, the study offers valuable insights for local authorities and tax management agencies, aiding in the formulation of effective policies to promote tax compliance Ultimately, it contributes to improving business tax compliance, which is essential for fostering a stable economic environment and supporting government initiatives.
Previous research
Research on taxpayer compliance and perceptions of tax payment behavior is frequently highlighted in reports by government organizations such as the General Tax Department (GTD) and the Ministry of Finance (MOF) These reports underscore the critical role of tax revenue in funding the state budget and demonstrate a firm stance against tax non-compliance To assist businesses, organizations, and individuals in meeting their tax obligations, tax policies are periodically updated to offer clear guidance.
Foreign studies on tax compliance factors have been extensively researched, yet a clear and focused research model remains underdeveloped Predominantly employing qualitative methods, these studies aim to provide in-depth insights from tax consultants to identify key issues taxpayers should consider and offer recommendations for enhancing Corporate Income Tax (CIT) compliance quality.
1.7.1 Previous research in Viet Nam
Research on Corporate Income Tax (CIT) compliance in Vietnam remains limited, primarily concentrating on factors affecting compliance at local tax offices Several studies have utilized quantitative models to identify and analyze the influence of various factors on tax compliance behavior.
The study conducted by Le Thi Nga (2016) on “Analysis of factors affecting tax compliance of enterprises: A case study of Tan An city tax department”
The proposed research model includes four factors influencing CIT compliance: (1) Economic factors; (2) Tax policy factors; (3) Social value perception factors; (4) Perception of psychological factors
Figure 1.1 Model of factors affecting tax compliance behavior
This study investigates the hypotheses related to social values, economic factors, tax policies, and psychological perceptions that influence corporate tax compliance The findings suggest that these elements play a significant role in enhancing compliance obligations among corporations.
Businesses with robust financial resources generally exhibit greater awareness of tax compliance The author highlights variations in tax compliance levels across different business categories, influenced by factors such as scale, type, and operational duration The study also offers recommendations for policy enhancements aimed at improving corporate income tax compliance.
The study conducted by Nguyen Thi Le Thuy (2009) on "Enhancing State Tax Administration to Strengthen Corporate Tax Compliance - A Case Study of Hanoi."
This research examines the current state of tax administration in Hanoi and suggests strategies to improve tax compliance among businesses Utilizing a model that encompasses various levels of tax compliance—voluntary, timely, and accurate—the study identifies key influencing factors through an economic and socio-psychological lens.
This qualitative study identifies six key factors affecting CIT compliance, including industry characteristics, social influences, economic conditions, and legal frameworks It also suggests measures to improve state tax administration, aiming to boost overall tax compliance among businesses, particularly in Hanoi However, the research lacks a specific estimation of the influence each factor has on business tax compliance.
The study conducted by Bui Ngoc Toan (2017) on “Factors affecting income tax compliance behavior of companies - experimental research in
Seven key factors affect businesses' income tax compliance behavior, with the characteristics of the tax authority having the most significant influence in Ho Chi Minh City This new finding highlights the importance of the tax authority's role and adds a fresh perspective to existing research on the topic.
Figure 1.2 Model of factors afecting tax compliance behavior
The research findings aim to enhance taxation policies and administrative procedures implemented by tax authorities, ensuring optimal conditions for taxpayers to adhere to tax laws while fulfilling budget revenue requirements.
The study conducted by Nguyen Khac Duy (2019) on “Factors affecting tax compliance behavior of enterprises – the case of Dong Thap province”
Tax compliance behavior theories typically focus on individuals as taxpayers, but in a business context, it is the owners or managers who determine the tax compliance levels for their enterprises This thesis identifies six key factors influencing business tax compliance behavior: (1) Business characteristics, (2) Industry sector, (3) Social factors, (4) Economic factors, (5) Tax system, and (6) Perceptual factors.
The thesis presents solutions focused on tax policies, communication strategies, taxpayer support, and improving the quality and effectiveness of human resources This research project yields practical outcomes and supports the advancement of a contemporary tax management model tailored to the current economic landscape.
Extensive research has been conducted on the factors influencing tax compliance in foreign studies; however, a clear and specific research model remains underdeveloped Most studies have employed in-depth research methods from the viewpoint of tax consultants to identify key considerations for tax-paying entities and to offer recommendations aimed at improving corporate income tax compliance.
The study conducted by the Organization for Economic Co-operation and Development (OECD) in 2004 on "Tax Administration and Compliance Enhancement."
The OECD has created a model to analyze tax compliance behavior by focusing on businesses and their operational contexts, identifying two main approaches The first approach utilizes economic rationality and economic analysis, while the second approach explores broader behavioral aspects through psychological and sociological insights.
Figure 1.3 Model of factors affecting tax compliance
This study highlights the necessity of establishing a fair and reliable tax environment, emphasizing the importance of enhancing tax compliance management and enforcement Key factors for improving tax compliance include offering comprehensive information, support, and guidance to taxpayers, as well as fostering trust and creating incentives for compliance.
Research by Larissa – Margareta et al (2012) about Understanding the Determinants of Tax Compliance Behavior as a Prequisite for Increasing Public Levies
The research article examines the factors affecting tax compliance behavior, summarizing key studies from various countries These factors are organized into three distinct research models based on their characteristics, highlighting the diverse influences on taxpayer compliance.
Thesis structure
The dissertation is organized into five chapters, excluding the introduction, conclusion, table of contents, and reference list, with a primary focus on the factors influencing compliance with enterprise income tax among businesses operating in Ho Chi Minh City.
Chapter 4: Data analysis and discussion
Chapter 1 provides an overview of domestic and international research related to the topic, identifying research gaps and highlighting the relevance and contribution of the study The research aims to enhance tax compliance of individual businesses and those operating in HCMC The study uses a mixed- method approach, combining qualitative and quantitative methods to identify factors affecting tax compliance and assess their impact on CIT compliance Based on the findings, practical solutions will be proposed.
LITERATURE REVIEW
Concepts related to Corporate Income Tax Compliance
2.1.1 Concepts related to Corporation Income Tax
Corporate income tax plays a vital role in a nation's tax framework, and ensuring tax compliance is essential for maintaining fairness and stability Recognizing the factors that affect corporate income tax compliance is crucial for developing effective tax policies, enhancing tax administration, and fostering a robust business environment.
Taxation serves as a means of redistributing financial resources within society, rather than providing immediate benefits to the taxpayer It is viewed as a civic duty and obligation to the state, where individuals and organizations contribute legally without expecting a direct reimbursement These funds are utilized for essential public services, including national defense, security, transportation, education, and healthcare, and are enforced according to legal regulations.
Taxation is essential for generating state revenue, facilitating the redistribution of goods and social income, and addressing budget deficits while controlling inflation and maintaining social order It promotes economic equality and social fairness, supporting a balanced economic life and commercial activity that benefits the government Moreover, taxes influence pricing and income, allowing the state to actively regulate the economy based on prevailing circumstances.
Corporate income tax is a significant revenue source for Vietnam, contributing approximately 7% to the country's GDP in recent years The tax system is characterized by a uniform law that applies equally to both domestic and foreign enterprises, ensuring a fair competitive environment.
Tax compliance, as defined by ICTD, refers to the timely and complete adherence of individuals, organizations, and businesses to the legal tax obligations within a specific country or region This process requires the accurate reporting of financial information, income, and business activities to ensure proper calculation and payment of taxes in accordance with established regulations.
2.1.2 Concepts related to Tax Compliance
Tax compliance has long been a focus of research, with traditional views suggesting that taxpayers often comply only under coercion from tax authorities or due to economic incentives Consequently, adhering strictly to tax legislation is seen as a way to reduce tax evasion rather than improve overall compliance.
Tax compliance raises the question of whether it is voluntary or enforced The primary goal of tax administration is to foster a willingness among citizens to pay taxes, leading to a focus on voluntary compliance in research James and Alley (1999) explored whether compliance stems from choice or coercion, suggesting that compliance driven solely by threats or administrative actions does not equate to true compliance, even if tax revenue reaches the statutory amount Consequently, the prevailing perspective is that effective tax administration is achieved when it encourages voluntary compliance without relying on inspections, verification, or fear of administrative consequences.
Many concepts of compliance have been mentioned around the world, specifically as follows:
According to James, S., Alley, C (1999): “Compliance with taxes, in the simplest terms, refers to the extent to which taxpayers fulfill their tax obligations as stipulated in tax laws.”
The Australian Taxation Office (ATO) defines tax compliance as "The act of businesses meeting their tax obligations as prescribed by tax laws and in accordance with court decisions."
Tax compliance policy encompasses the regulations and strategies implemented by tax authorities to promote adherence to tax obligations within the economy This policy aims to improve the efficiency of tax administration, enhance transparency, and offer support to taxpayers, while also imposing strict penalties for violations Ultimately, it seeks to cultivate a societal culture that values tax compliance (OECD, 2016).
Tax compliance, as defined by the OECD Committee on Fiscal Affairs (2004), refers to the degree to which taxpayers meet their tax obligations In numerous countries, taxpayers typically have three fundamental responsibilities: timely filing of tax returns, accurately reporting necessary information to determine tax liability, and making timely payments of the tax owed These responsibilities are often categorized into three areas: compliance in filing, compliance in reporting, and compliance in payment.
Tax compliance for businesses involves fulfilling tax obligations fully, willingly, and on time, as outlined by legal requirements While a business may eventually settle its tax bill, late payments indicate a lack of complete compliance, even if interest is incurred Therefore, timely payment is essential to achieve true compliance with tax responsibilities (Nguyen Thi Le Thuy, 2009).
The definition of voluntary compliance is often limited by behavioral influences, making it essential for tax authorities to differentiate between compliance that requires minimal enforcement and that which does not To foster voluntary compliance, it is crucial to encourage compliant behavior while simultaneously deterring non-compliance.
Tax compliance refers to the timely and complete fulfillment of tax obligations as mandated by tax law, where taxpayers voluntarily and consciously meet their responsibilities Tax authorities play a critical role by promoting awareness, educating the public, and monitoring compliance, while also taking measures to prevent and address instances of tax non-compliance.
The Internal Revenue Service (IRS) assesses tax compliance behavior through various indicators and evaluation systems Key measures include the tax compliance rate, penalties for violations, transparency in tax reporting, frequency of audits, and taxpayer satisfaction with the tax process.
Factors affecting on CIT compliance
Economic factors significantly influence corporate income tax compliance among enterprises, affecting their decisions and leading to variations in compliance levels across different businesses.
The monetary value of tax compliance is influenced by interest rates and inflation, which are critical factors in economic analysis These elements are closely linked and play a significant role in fostering economic growth Specifically, rising market and bank interest rates can lead to increased tax deferral, involuntary compliance, or potential tax evasion among taxpayers with low tax morale Additionally, inflation impacts firm tax compliance by affecting profitability; excessive inflation can hinder businesses' ability to generate profit, thereby discouraging compliance with tax obligations.
Effectiveness of government spending through tax policies
According to Paul Webley (2004), there is a positive relationship between taxpayers' trust in the effectiveness of tax spending and their compliance or non- compliance tendencies
Businesses' perceptions of public expenditure efficiency significantly influence their tax compliance Issues like corruption, budgetary losses, and ineffective public investments can negatively affect how companies adhere to tax obligations.
Tax compliance costs significantly impact compliance decisions, as increases in these costs can lead to reduced tax compliance and vice versa A firm's tax compliance expenses extend beyond just financial outlays and time; they are influenced by the local tax system, which varies by industry and business characteristics Additionally, compliance costs encompass the implications of tax avoidance, where non-compliant companies may gain an unfair advantage over those that adhere to tax regulations.
The burden on the financial resources of the business
Financial challenges greatly impact tax compliance behavior, as businesses experiencing financial strain often view the costs associated with tax compliance as an added burden on their limited resources.
This can lead to a higher likelihood of non-compliance or the adoption of aggressive tax planning strategies" (Nguyen, 2016)
Businesses often encounter financial burdens due to economic downturns, high operating costs, debt obligations, and cash flow constraints These challenges compel companies to implement cost-cutting measures, which may lead to a focus on minimizing tax liabilities Consequently, some businesses might resort to tax evasion or adopt aggressive tax avoidance strategies.
A study by Tran and Nguyen (2017) reveals that financial distress significantly influences tax compliance behavior, with businesses facing financial challenges more prone to tax evasion as a strategy to relieve their burdens The research underscores how liquidity constraints and the pressing need for cash flow can drive companies to neglect their tax obligations.
The availability of financial resources and access to tax planning expertise significantly impact tax compliance behavior Businesses with constrained finances or insufficient professional guidance often struggle to understand and adhere to complex tax regulations This can lead to unintentional mistakes or non-compliance, stemming from a lack of knowledge and inadequate resources for effective tax management.
The financial challenges encountered by businesses can greatly influence their tax compliance behavior, often leading to non-compliance or aggressive tax strategies due to financial distress and resource limitations Therefore, it is crucial for tax authorities to acknowledge these financial realities and offer support, guidance, and incentives to encourage voluntary compliance among businesses.
Taxpayer behavior is influenced not only by financial motivations to avoid or evade taxes but also by institutional factors that affect business operations Effective tax policy and management can significantly enhance compliance among enterprises (Le Thi Nga, 2016).
Tax policy encompasses a framework of principles and values that govern the taxation of individual and corporate income within society This is supported by tax law, which establishes mandatory regulations for conduct Additionally, research by Richardson (2008) highlights that government involvement positively influences public attitudes toward taxation.
Tax policy plays a crucial role in understanding tax compliance from both economic and socio-psychological perspectives High compliance rates are achieved when tax laws are stable, predictable, clear, simple, and equitable, as businesses can only adhere to regulations that are straightforward, intelligible, and free from contradictions (Nguyen Thi Le Thuy, 2009).
Clear and straightforward tax policies enhance compliance, as taxpayers are more inclined to adhere to regulations that are easily understood and consistently enforced Conversely, complex or ambiguous tax rules can lead to confusion and increase the chances of noncompliance.
The tax rate refers to the specific amount of tax owed per unit of taxable income or assets, determining the financial obligation based on either earnings or asset value.
The corporate income tax rate is a crucial factor influencing business behavior, as high rates can lead to increased tax evasion and the pursuit of legal loopholes for tax avoidance Conversely, lower tax rates may enhance tax compliance and reduce incentives for evasion Additionally, corporate tax rates significantly affect competition among companies, especially in price-sensitive sectors.
RESEARCH METHODOLOGY
Research model and hypothesis
Economic factors play a crucial role in shaping financial landscapes, encompassing elements such as interest rates and inflation The effectiveness of government spending, influenced by tax policies, significantly impacts economic stability Additionally, the costs associated with tax compliance and the financial burdens placed on businesses are vital considerations for maintaining a healthy economy.
Interest rates and inflation significantly impact tax compliance behavior among individuals and businesses A study by González-Ayala and Gutiérrez (2018) indicates that rising interest rates and inflation can lead to decreased tax compliance, as they create challenges in payment capacity and financing Consequently, implementing stable economic and financial policies that mitigate the adverse effects of interest rates and inflation is essential for enhancing tax compliance levels.
Taxpayers face various costs, including time spent on procedures, accounting fees, and indirect expenses stemming from complex tax laws, which can lead to a perception of a higher tax burden than the actual liability (OECD, 2004) Reducing these costs could enhance tax compliance.
Nguyen (2016) highlights that financial burden significantly impacts tax compliance behavior, as businesses experiencing financial difficulties often view tax compliance costs as an added strain on their limited resources This perception can result in non-compliance or the adoption of aggressive tax planning strategies Conversely, improved tax compliance is noted when businesses exhibit positive financial indicators that do not obstruct their operations.
Based on the research findings above, the author proposes the hypothesis:
Hypothesis H 1 : The more favorable the economic aspects for businesses, the better their tax compliance behavior
Tax policy factors: This includes content related to clear, simple, and understandable tax policy; tax rate; and the complexity of the tax system
Stable and transparent tax policies are essential for enhancing tax compliance, as highlighted by Nguyen Thi Le Thuy (2009) Taxpayers are more likely to adhere to regulations that are clear, simple, and equitable across various industries Conversely, the complexity and perceived unfairness of tax laws pose significant barriers to compliance Thus, improving tax policies will lead to increased compliance behavior among businesses.
Tax rates play a crucial role in influencing taxpayer compliance behavior, despite ongoing debates about their exact impact (Kirchler, 2007) In practice, higher tax rates often lead to increased motivations for non-compliance and aggressive tax planning Therefore, comprehending the relationship between tax rates, taxpayer behavior, and compliance is essential for crafting effective tax policies and encouraging voluntary compliance.
Nguyen Thi Thanh Hoai et al (2011) emphasize that transparent and efficient tax management processes—encompassing registration, filing, payment, and refunds—enhance convenience for taxpayers and lower compliance costs Simplifying the tax system and streamlining administrative procedures can significantly reduce corruption risks and encourage voluntary compliance among taxpayers.
Based on the research findings above, the author proposes the hypothesis:
Hypothesis H 2 : As tax policies improve, the tax compliance behavior of businesses increases
Tax administrative factors encompass various elements such as the tax inspection activities conducted by tax authorities, incentives for tax compliance, and the penalties and sanctions imposed to deter tax evasion Additionally, it involves the efforts made by tax authorities to promote and support taxpayers through effective communication and guidance.
Pomeranz (2015) found that tax inspections significantly enhance compliance, as they not only detect and prevent evasion but also promote fairness in tax contributions Furthermore, the examination process aids taxpayers in comprehending tax procedures and reporting requirements, reducing confusion and errors in filings while improving the accuracy of tax settlements.
A study by Kirchler et al (2008) highlights that incentivizing tax compliance through transparency, clarity, and support from tax authorities can significantly improve compliance rates By offering effective incentives, taxpayers gain a better understanding of tax regulations, filing processes, and their rights Enhanced transparency and clarity in tax guidelines reduce ambiguity and misunderstandings, ultimately increasing the likelihood of tax compliance.
Effective punishments and deterrent measures are crucial for fostering tax compliance, as they encourage taxpayers to meet their obligations fairly (Kirchler et al., 2008) While penalties may deter some from fulfilling their tax responsibilities, they ultimately serve as the most equitable approach to tax management for businesses that comply fully and transparently.
The OECD (2004) indicates that most taxpayers are willing to meet their tax obligations, and tax authorities can enhance compliance by offering clear guidance from the outset of business operations Over time, these authorities are also expanding electronic services to streamline processes, reduce costs for businesses, and increase the reliability of the information they receive.
Based on the research findings above, the author proposes the hypothesis:
Hypothesis H 3 : The better the tax administration and development, the higher the level of tax compliance by businesses
Social factors: This includes content related to standards and social rules on tax compliance; the role, status, and reputation of enterprises in society; and the stability of tax policies
Believing that non-compliance is common can lead individuals to engage in similar behavior (Paul Webley, 2004) In small communities, tax compliance is significantly influenced by social perceptions, where the majority's adherence to tax laws encourages others to comply as well Consequently, strong social norms foster a culture of compliance, enhancing overall tax behavior among citizens.
Nguyen Thi Thanh Hoai and colleagues (2011) highlight the significant impact of social factors on tax compliance behavior, encompassing elements such as social norms, social influence, and individual responsibilities within a community Additionally, public opinion, reputation, status, and the roles individuals play in their social environments further contribute to these social determinants of tax compliance.
Based on the research findings above, the author proposes the hypothesis:
Hypothesis H 4 : The increasing social aspects and improvements will have a positive impact on the tax compliance behavior of businesses
Psychological factors influencing behavior in the tax system encompass perceptions of fairness, the perceived risks associated with tax non-compliance, and overall satisfaction with tax authorities Understanding these elements is crucial for improving taxpayer compliance and fostering a more effective tax environment.
Scale formulation
Based on the theoretical basis and review of relevant experimental studies, the author constructed a preliminary scale for the factors of the model
The Likert scale is a widely utilized measurement tool in quantitative research, featuring five levels from 1 to 5 to evaluate respondents' opinions This scale is structured with specific questions, assigning a value of 1 to indicate the lowest level of agreement or satisfaction.
"Strongly Disagree," 2 for "Disagree," 3 for "Neutral," 4 for "Agree," and 5 for
Reducing the negative impact of interest rates and inflation in the state's economy will contribute to a higher level of tax compliance behavior
Lower compliance costs (such as transportation for tax payment, purchasing digital signatures, bank fees, etc.) will increase tax compliance behavior
The state effectively uses tax money, it will increase the sense of tax compliance
Companies with strong financial capacity are more likely to comply with EF4 tax regulations
Clearer tax laws provide businesses with a higher opportunity for tax compliance
Higher tax rates result in lower tax compliance behavior TP2 Simplified and understandable tax administrative procedures enhance the level of tax compliance
Regular tax audits have an impact on enhancing tax compliance behavior
Penalties for non-compliance behavior reinforce better tax compliance TA2 Rewards and recognition for good adherence to tax laws strengthen tax compliance behavior
Public awareness campaigns and support for taxpayers create conditions for higher tax compliance behavior
The stable societal perception of tax policies increases tax compliance SF1
A stronger societal awareness of tax obligations leads to higher levels of tax compliance
The position and reputation of a business in society positively influence tax compliance behavior
The fairness of the tax system enhances tax compliance PBF1
Accurate enforcement of penalties and rewards for taxpayers with tax obligations increases satisfaction and tax compliance
If fraud cannot be concealed, businesses will enhance their tax compliance behavior
Enterprises submit declarations on time according to the provisions of the Tax Law
Enterprises pay the full amount of tax on time as prescribed by the Tax
In general, your business complies with tax regulations TT3
Survey questionnaire
Based on the research on factors influencing the tax compliance behavior of businesses in Chapter 1, the survey questionnaire was designed with three sections as follows:
Part 1: Collecting general information about the enterprises
Part 2: Assessing the level of impact of the factors on the tax compliance behavior of businesses (including 20 observed variables)
Following the design of the questionnaire, interviews were conducted with tax consultants at Deloitte Vietnam Tax Consulting Co., Ltd to assess the legitimacy, clarity, and comprehensibility of the questions Subsequently, the finalized survey questionnaire was prepared for distribution.
1) was finalized and sent out to the businesses.
Sampling method
The study utilized a convenience sampling method to select a sample size of 150 observations Formal interviews were conducted with the legal representatives of 150 corporate income taxpayers operating within the jurisdiction of Ho Chi Minh City (HCMC).
Survey implementation: Indirect interviews were conducted by sending questionnaires via email and other communication tools After collecting 150 responses, the author proceeded to input and clean the data for analysis
The study involves 20 observed variables, comprising 5 independent factors and 1 dependent factor, with an estimated sample size of n = 150 The definition of a sufficient sample size remains ambiguous among researchers, as it varies based on the estimation methods employed in each study According to Hair et al., for effective exploratory factor analysis (EFA), a minimum of 5 samples per observed variable is recommended, and the total sample size should ideally be at least 100.
This thesis research model includes 15 observed variables, necessitating a minimum sample size of 100, calculated as 20 times the number of variables Consequently, the chosen sample size of 150 for the survey is deemed appropriate for thorough analysis.
Data analysis
The study employed SPSS 20.0 software to analyze survey data, focusing on factors that impact the compliance behavior of corporate income taxpayers in businesses operating in Ho Chi Minh City (HCMC) The findings from the Exploratory Factor Analysis (EFA) will help identify the key influencing factors on taxpayer compliance.
Descriptive statistical analysis serves to outline the fundamental characteristics of collected data, offering a broad overview of the research sample It categorizes variables like gender, occupation, work experience, and type of business through essential descriptive statistics, including observation counts and frequency tables based on established distinguishing indicators.
The reliability of the scale was assessed using Cronbach's Alpha coefficient, which evaluates the consistency of the results and helps identify and eliminate variables that do not meet the necessary criteria The presence of such variables could lead to latent variables and spurious factors, ultimately affecting the relationships within the research model Variables with inter-item correlation coefficients below 0.3 were excluded, and a Cronbach's Alpha coefficient of 0.60 or higher was established as the criterion for scale selection.
After confirming the measurement scale's reliability, exploratory factor analysis (EFA) is employed to uncover factor groups that represent the 17 observed variables, while excluding the three variables related to tax compliance behavior The criteria for testing in EFA are also established.
Kaiser-Meyer-Olkin (KMO) measure, which assesses the appropriateness of factor analysis
Bartlett's test, which examines whether the observed variables in the factor are correlated with each other
Eigenvalue, a common criterion used to determine the number of factors in EFA
Factor loading, or factor weights, signifies the correlation between an observed variable and a specific factor, with higher values indicating a stronger relationship.
The selected criteria for suitability are a KMO coefficient greater than 0.5, factor loadings greater than 0.5, statistically significant Bartlett's test, and a variance explained greater than 50% (Hair et al., 2006)
Multiple regression analysis is performed to identify the key factors affecting corporate income tax compliance among businesses in Ho Chi Minh City (HCMC) and to evaluate the proposed research hypotheses.
The Adjusted R Square and R Square values reflect the degree of influence of independent variables on the dependent variable
The Durbin-Watson (DW) statistic is used to test for first-order autocorrelation
The significance value (Sig.) of the F-test is used to assess the goodness of fit of the regression model
The significance value (Sig.) of the t-test is used to test the significance of individual regression coefficients If Sig < 0.05, the independent variable has a significant impact on the dependent variable
The Variance Inflation Factor (VIF) is used to test for multicollinearity
Chapter 3 presents the research methodology, including the data analysis method involves descriptive statistical tests of the research sample, the reliability test of Cronbach's Alpha, EFA, and multiple regression analysis, including the analysis of Adjusted R Square and R Square values, DW statistic, and Sig of the F- test The descriptive statistical method is used to present the current situation of tax compliance among businesses operating in HCMC, providing a scientific basis for identifying the key factors influencing tax compliance behavior.
DATA ANALYSIS AND DISCUSSION
Results of descriptive statistics
The study categorizes survey taxpayers by gender, industry, work experience, and business characteristics A total of 189 responses were collected from tax experts at Deloitte Tax Consulting Co., Ltd and their clients in Ho Chi Minh City through a Google Form survey After removing 3 invalid questionnaires due to duplicate answers, the final sample size for analysis consisted of 186 observations.
The survey included 98 males (52.7%) and 88 females (47.3%), representing a diverse range of career fields to analyze current business tax compliance behavior Half of the respondents (50%) have 1 to 5 years of experience in economics, management, and consulting, while 43.5% possess over 5 years of experience, indicating a strong reliability of the responses gathered through Google Forms.
Table 4.1 Sample size regarding the participants in the survey
Year of experience Less than 1 year 12 6.5%
In the manufacturing sector, there are 72 enterprises, accounting for 38.7% of the total, while the service sector comprises 60 enterprises (32.2%), and the commercial sector includes 48 enterprises (25.8%) Additionally, one-third of respondents are employed in the tax consulting industry, with half of the respondents having 1 to 5 years of professional experience in tax and business consulting, along with management economics.
Table 4.2 Sample size of businesses participating in the survey
Business sectors of the enterprise's operations
Cronbach’s Alpha
To ensure the reliability of our scale, we employ Cronbach's Alpha coefficient, which helps identify and remove unnecessary variables in subsequent research steps Typically, variables with a total correlation coefficient below 0.3 are discarded Many researchers agree that a Cronbach's Alpha value of 0.7 or above is essential for establishing the credibility of the scale.
The evaluation of the scales' reliability in the theoretical model indicates a high level of reliability, with all scales achieving a Cronbach's Alpha coefficient greater than 0.7 Additionally, the total Cronbach's Alpha for the model's 20 observed variables exceeds 0.7, while the correlation coefficients among the observed variables are all above 0.4.
As a result, all observed variables are acceptable and will be included in the following factor analysis
Table 4.1 shows the findings of Cronbach's Alpha analysis of the observed variables:
Table 4.1 Cronbach's Alpha analysis of the observed variables
Cronbach's Alpha if item deleted
The lowest total correlation is EF4 = 0.560 > 0.3, satisfying the condition
The lowest total correlation is TP2 = 0.637 > 0.3, satisfying the condition
The lowest total correlation is TA2 = 0.878 > 0.3, satisfying the condition
The lowest total correlation is SF2 = 0.642 > 0.3, satisfying the condition
The lowest total correlation is PBF1 = 0.687 > 0.3, satisfying the condition
Tax compliance behavior factor (TC)
The lowest total correlation is TC1 = 0.800 > 0.3, satisfying the condition
Source: Author’s results of analysis using SPSS software
The Cronbach's Alpha coefficient for the Economic factor is 0.807, exceeding the acceptable threshold of 0.6, while all correlation coefficients among the variables are above 0.3, with the lowest being EF4 at 0.560 The analysis indicates that the Cronbach's Alpha for EF4 (0.786) is lower than the overall group coefficient (0.807), suggesting that EF4 does not meet the necessary criteria and can be excluded Consequently, the exploratory factor analysis (EFA) will incorporate only the remaining three observed variables within the Economic factor component.
The Tax Policy factor (TP) demonstrates a strong reliability with a Cronbach's Alpha coefficient of 0.824, exceeding the acceptable threshold of 0.6 All variable correlation coefficients are above 0.3, with the lowest being TP2 at 0.637, meeting the necessary criteria Consequently, all three observed variables within the TP component are included in the exploratory factor analysis (EFA).
The Tax Administration factor (TA) demonstrates a strong reliability with a Cronbach's Alpha coefficient of 0.960, exceeding the acceptable threshold of 0.6 Additionally, all total variable correlation coefficients are above 0.3, with the lowest being TA2 at 0.878, meeting the necessary criteria Consequently, the exploratory factor analysis (EFA) incorporates all four observed variables within the TA component.
The Social factor (SF) demonstrates a Cronbach's Alpha coefficient of 0.808, exceeding the acceptable threshold of 0.6 Additionally, all total variable correlation coefficients are above 0.3, with the lowest being SF2 at 0.642, confirming its validity Consequently, the exploratory factor analysis (EFA) incorporates all three observed variables within the SF component.
The Cronbach's Alpha coefficient for the Psychological Behavior Factor (PBF) is 0.835, exceeding the acceptable threshold of 0.6 Additionally, all overall correlation coefficients are above 0.3, with the lowest being PBF1 at 0.687, which satisfies the required criteria Consequently, during the exploratory factor analysis (EFA), all three observed variables within the PBF component are included.
The dependent variable, Tax Compliance Behavior (TC), is evaluated through three observable variables: TC1, TC2, and TC3 With a Cronbach's Alpha coefficient of 0.922, significantly exceeding the 0.6 threshold, and total correlation coefficients above 0.3, all three variables are utilized in the exploratory factor analysis (EFA).
Result of exploratory factor analysis (EFA)
To evaluate scientific theories effectively, it is essential to assess the reliability and validity of the scale used A key method for this assessment is exploratory factor analysis (EFA), which is instrumental in examining both convergent and discriminant validity of scales.
The EFA method, an interdependent multivariate analysis technique, emphasizes the correlation among variables rather than relying on dependent and independent factors Its primary goal is to condense a set of k observable variables into a smaller number of significant factors, denoted as F (where F < k) This reduction process is grounded in the linear relationships between the original observed variables and the identified factors.
4.3.1 EFA results for independent variables
To be eligible for factor analysis, the KMO coefficient must be 0.5 or above 0.5 (0.5 < KMO < 1), according to Hoang Trong and Chu Nguyen Mong Ngoc
(2008) A value < 0.05 for Bartlett's test is regarded statistically significant, demonstrating the correlation between observed variables in the same factor
The factor analysis results show that the KMO index is 0.763 > 0.5, indicating that the data utilized for the factor analysis is totally consistent
Table 4.3 KMO and Bartlett's Test of independent variables
Kaiser-Meyer-Olkin Measure of Sampling Adequacy .763
Source: Author’s results of analysis using SPSS software
Barlett's test yielded a result of 2330.165 with a significance level (p_value) of 0.000, which is less than 0.05 This indicates that the hypothesis of a homogeneous correlation matrix among the variables is rejected, confirming that the variables are correlated and meet the criteria for factor analysis.
Using perpendicular rotation, the fraction of variance contained in the initial analysis was 100% According to Hoang Trong and Chu Nguyen Mong Ngoc
(2008), factors having Eigenvalue coefficients greater than one will be retained in the analytical model The following are the outcomes of exploratory factor analysis:
Table 4.4 EFA's result of independent variables
Source: Author’s results of analysis using SPSS software
Eigenvalue is widely used in EFA analysis to calculate the number of components Only factors with Eigenvalue 1 will be retained in the model, according to this criterion
The analysis of the data table categorized the 17 initially observed variables into 5 distinct groups, retaining all factor groups with an Eigenvalue of 1 or higher Notably, the first factor, identified as the economic factor, accounts for an extracted variance of 36.36%, underscoring its substantial impact on the research findings.
As a result, factor 1 can be kept in the current research
The four groups of components collectively account for over 50% of the variance, with percentages of 54.35%, 63.05%, 70.91%, and 77.07% This indicates that each category of factors significantly contributes to explaining the variation in the data.
Table 4.5 Factor rotation matrix of independent variables
Source: Author’s results of analysis using SPSS software
Factor loading indicates how much a variable contributes to a particular factor Matt C Howard (2015) suggests that if an observed variable has loadings in two factors with a difference of less than 0.2, it is advisable to remove that variable.
The variable EF1 in the table shows load factors for factors No 2 and No 3 at 0.580 and 0.377, respectively The difference between these load factors is 0.203, which is less than 0.3 Therefore, it is recommended to remove the variable EF1.
The factor loading for variable TP1 is 0.336 and 0.785, with a difference of 0.785 - 0.336 = 0.449 > 0.3 As a result, the variable TP1 remains approved and is not rejected
The EFA analysis confirms that the factors meet the criteria for convergence and discriminant validity, leading to the retention of independent factors while excluding variable EF1 to optimize the study's matrix Consequently, the EFA model aligns with the original hypothesis, comprising five independent variables.
Economic factor (social health): It is measured by 3 observed variables (from EF2 to EF4)
Tax policy factor (TP): It is measured by 3 observed variables (from TP1 to TP3)
Tax administration factor (TA): Measured by 4 observed variables (from TA1 to TA4)
Social factors: Measured by 3 variables (SF1 to SF3)
Psychological behavior factors (PBF): Measured by 3 variables (PBF1 to PBF3)
4.3.2 EFA results for independent variables
The results of the table below show that the KMO coefficient = 0.701 (> 0.5 standard), passing Bartlert's Test Significance level 0.000 or 100% confidence, in other words, factor analysis is appropriate
Table 4.6 KMO and bartlett's Test of dependent variable
Kaiser-Meyer-Olkin Measure of Sampling Adequacy .701
Source: Author’s results of analysis using SPSS software
Table 4.8 indicates that there is a single factor with Eigenvalues greater than 1, which accounts for 86.547% of the model, surpassing the 50% standard This finding supports the initial assumption of the research model, which includes a dependent variable.
Component Initial Eigenvalues Extraction Sums of Squared
Source: Author’s results of analysis using SPSS software Conclusion : Using the Cronbach's Alpha test and exploratory factor analysis
The exploratory factor analysis (EFA) confirmed five independent factors and one dependent variable, aligning with the original hypothesis Notably, one variable, EF1, was removed from the independent variable EF based on the factor loading coefficients These robust findings provide a foundation for further research.
Linear regression analysis
The results of the Cronbach's Alpha analysis and exploratory factor analysis (EFA) indicate that the extracted factors demonstrate strong value and reliability Consequently, all five components of the independent variable and one component of the dependent variable have been retained in the original proposed model Following this, a multivariable linear regression analysis is conducted to assess the factors influencing the research problem, based on specific assumptions.
The variables in the model must have a linear relationship
The variables in the model do not have multicollinearity
The observations must be in a standard distribution
To identify the factors affecting the tax compliance behavior of enterprises, the multiple regression model was built in the form:
TT = β 0 + β 1 × EF + β 2 × TP + β 3 × TA + β 4 × SF + β 5 × PBF
The DW value ranges from 0 to 4, indicating the correlation of adjacent errors A DW value near 2 suggests no correlation, while a value approaching 4 indicates negative correlation, and a value close to 0 signifies positive correlation among errors.
DW < 1 and DW > 3, there is a very high probability of first-order sequence autocorrelation
The results obtained from the table 4.9 when performing the Durbin - Watson test gives a value of 1,902 in the range from 1 to 3 Therefore, the model does not have autocorrelation
Std Error of the Estimate
Source: Author’s results of analysis using SPSS software
Multicollinearity arises when independent variables in a model are strongly correlated, complicating the assessment of each variable's effect on the dependent variable A Variance Inflation Factor (VIF) exceeding 10 indicates the presence of multicollinearity, as noted by Hoang Trong and Chu Nguyen Mong Ngoc (2005).
According to the table 4.10, the average value of the VIF coefficient for the independent variables in the model is less than 10 As a result, the model does not have multicollinearity
Table 4.9 VIF’S result of independent variables
Standardized Coefficients t Sig Collinearity Statistics
Source: Author’s results of analysis using SPSS software
Regression analysis utilizes the overall regression method to assess the impact of various factors on the relationship between five components of the independent variable and the dependent variable.
The coefficient of determination (R²) and the adjusted coefficient (R²) range from 0 to 1, indicating the significance of a model; values closer to 1 signify a stronger model, while those nearer to 0 suggest weaker significance Specifically, a value between 0.5 and 1 indicates a moderately strong model.
- 1, it is a good model and less than 0.5 is a bad model The results of multivariable linear regression analysis in Table 4.11 show that the coefficient of determination
The R-squared value of 0.605 and the adjusted R-squared value of 0.595 indicate that the independent variables in the research model account for 59.5% of the variation in the dependent variable The remaining variation is attributed to external factors not included in the model or random errors.
Std Error of the Estimate
Source: Author’s results of analysis using SPSS software
In Table 4.12, the regression analysis yields an F-value of 55.247 and a p-value of 0.000, which is less than the significance level of 0.05 Consequently, we reject the null hypothesis (H0: R2 overall is zero) and accept the alternative hypothesis (H1), indicating that at least one independent variable significantly influences the dependent variable This confirms that utilizing a linear regression model is suitable for analyzing the relationship between the factors involved.
Model Sum of Squares df Mean Square F Sig
Source: Author’s results of analysis using SPSS software
The findings from the table indicate that all Standardized Coefficients Beta values are greater than 0, demonstrating a positive influence of the independent variables on the dependent variable This outcome supports the acceptance of the model's hypotheses, confirming their validity Additionally, the significance levels of the variables are below 0.05, indicating that the variables are statistically significant.
Standardized Coefficients t Sig Collinearity Statistics
Source: Author’s results of analysis using SPSS software
The model is represented as a Standardized linear regression under the influence of 5 independent variables as follows:
TC = 0.126 × EF + 0.172 × TP + 0.312 × TA + 0.275 × SF + 0.247 × PBF
Conclusion of research hypotheses
Hypothesis H 1 : The more favorable the economic aspects for businesses, the better their tax compliance behavior
The regression analysis indicates that economic factors (EF) significantly influence tax compliance behavior (TC) among enterprises With a Beta coefficient of 0.126, the positive correlation suggests that favorable economic conditions enhance the likelihood of tax compliance in businesses.
Hypothesis H 2 : As tax policies improve, the tax compliance behavior of businesses increases
The regression analysis indicates that tax policy (TP) significantly influences tax compliance (TC) among enterprises, with a Beta coefficient of 0.172 suggesting that favorable tax policies enhance business compliance behavior Therefore, hypothesis H2 is accepted.
Hypothesis H 3 : The better the tax administration and development, the higher the level of tax compliance by businesses
The regression analysis indicates that tax management (TA) significantly influences tax compliance behavior (TC) in enterprises, with a positive Beta coefficient of 0.312 This suggests that effective tax management enhances businesses' compliance with tax regulations, leading to the acceptance of hypothesis H3.
Hypothesis H 4 : The increasing social aspects and improvements will have a positive impact on the tax compliance behavior of businesses
The regression analysis indicates that social factors (SF) significantly influence tax compliance behavior (TC) among enterprises The positive Beta coefficient of 0.275 suggests that favorable social conditions enhance tax compliance, supporting the hypothesis that social factors play a crucial role in shaping corporate tax behavior.
Hypothesis H 5 : A higher level of awareness of psychological factors related to tax obligations leads to a higher degree of influence on the tax compliance behavior of businesses
The regression analysis indicates that the psychological and behavioral factors (PBF) significantly influence tax compliance (TC) among enterprises, with a positive Beta coefficient of 0.247 This suggests that favorable psycho-behavioral factors enhance the tax compliance behavior of businesses, leading to the acceptance of hypothesis H5.
In Chapter 4, the author outlines the findings from empirical research examining the factors influencing tax compliance behavior among enterprises in Ho Chi Minh City The study collected a total of 189 responses, with 186 valid observations utilized for analysis after excluding three invalid entries.
Empirical research has confirmed the validity of all five research hypotheses presented in chapter 3, demonstrating that economic factors, tax policy factors, tax management factors, social factors, and psychological behavior factors significantly influence enterprise tax compliance This evidence underscores the correctness of the author's initial assertions regarding these factors.