Tax Literacy as a Moderator of the Effects of Digitalization, Tax Socialization, and Tax Sanctions on Taxpayer Compliance

English

Abstract

This study aims to analyze the role of tax literacy in moderating the effects of digitalization, socialization, and sanctions on tax compliance among Micro, Small, and Medium Enterprises (MSMEs) in the Greater Jakarta area. This study employs a quantitative approach using primary data obtained through a questionnaire. The sampling technique used purposive sampling with a total of 167 MSME operator respondents. Data analysis was conducted using the Structural Equation Modeling-Partial Least Square (SEM-PLS) method with SmartPLS 4.0.9.9 software. The results indicate that digitalization, public awareness campaigns, and sanctions have a positive and significant effect on MSME tax compliance. Furthermore, tax literacy was found to positively moderate (strengthen) the influence of digitalization, outreach, and sanctions on SME tax compliance. These findings indicate that improved tax compliance is not only influenced by adequate systems, the intensity of outreach, and the strictness of sanctions, but is also crucially reinforced by the level of taxpayers’ tax literacy.