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EXAMINING THE INFLUENCE OF FAIRNESS PERCEPTION ON TAX COMPLIANCE BEHAVIOR OF THE LIBYA INDIVIDUAL TAXPAYERS: THE MODERATING TAX AWARENESS AND TAX COMPLEXITY
Corresponding Author(s) : Morni Hayati Jaafar Sidik
Humanities & Social Sciences Reviews,
Vol. 7 No. 2 (2019): March
Abstract
Purpose of Study: This study examines the impact of the perceptions of fairness among Libyan taxpayers in the Libyan income tax system, where a multidimensional model of justice was introduced. This extends the definition of justice from one to distributive fairness and procedural fairness, along with tax awareness and tax complexity as moderators’ variables. This study is one of the first studies that test the impact of tax awareness and tax complexity as moderators’ variables on tax compliance behavior in a country.
Methodology: Despite the importance of collecting taxes from individual taxpayers, it is a little known about the behavior of tax compliance in general in the Libyan context. This is important for tax authorities to identify behavioral factors that may hinder the successful tax compliance so that remedial action can be taken to improve compliance behavior. It remains currently a severe challenge for the Libyan tax authorities.
Results: The results of this research will contribute significantly to the paucity of current literature on the role of tax awareness and tax complexities as moderators’ variables on tax compliance behavior, particularly in developing countries. The serial exploratory search design will be used in this study. The sub-squares analysis will be used to analyze the surveys.
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- Abodher, F.M., Z.Z. Ariffin and N. Saad, 2018. Effect of political factors on tax noncompliance behavior among Libyan self-employed taxpayers. Academy of Accounting and Financial Studies Journal.
- Alm, J., 2012. Measuring, explaining, and controlling tax evasion: Lessons from theory, experiments, and field studies. International Tax and Public Finance.https://doi.org/10.1007/s10797-011-9171-2 DOI: https://doi.org/10.1007/s10797-011-9171-2
- Awaluddin, I. and T. Sulvariany, 2017. The effect of service quality and taxpayer satisfaction on compliance payment tax motor. The International Journal of Engineering and Science.
- Ayuba, A., N. Saad and Z.Z. Ariffin, 2016. Does perceived corruption moderate the relationship between economic factors and tax compliance? A proposed framework for Nigerian small and medium enterprises. Mediterranean Journal of Social Sciences.https://doi.org/10.5901/mjss.2016.v7n1p402 DOI: https://doi.org/10.5901/mjss.2016.v7n1p402
- Besley, T. and T. Persson, 2014. Why do developing countries tax so little? The Journal of Economic Perspectives.https://doi.org/10.1257/jep.28.4.99 DOI: https://doi.org/10.1257/jep.28.4.99
- Cobham, A., 2014. Nigeria’s upward revision of GDP should sound alarm on tax- to-GDP ratio.
- Doerrenberg, P. and A. Peichl, 2013. Progressive taxation and tax morale. Public Choice.
- Evans, C. and B. Tran-Nam, 2013. Towards the development of a tax system complexity index. UNSW Australian school of business research paper.
- Gemmell, N. and M. Ratto, 2012. Behavioral responses to taxpayer audits: Evidence from random taxpayer inquiries. National Tax Journal.https://doi.org/10.17310/ntj.2012.1.02 DOI: https://doi.org/10.17310/ntj.2012.1.02
- Gencer, Y.G., 2018. Effects of 8-week core exercises on free style swimming performance of female swimmers aged 9-12. Asian Journal of Education and Training, 4(3): 182-185.https://doi.org/10.20448/journal.522.2018.43.182.185 DOI: https://doi.org/10.20448/journal.522.2018.43.182.185
- George, M. and M.M. Georgios, 2017. The expansion of the contemporary economic role of crete throughout its extensive history. International Journal of Economics, Business and Management Studies, 4(1): 17-37.https://doi.org/10.20448/802.4.1.1.17.37 DOI: https://doi.org/10.20448/802.4.1.1.17.37
- Ghorashi, F. and R. Darabi, 2017. Compare value at risk and return of assets portfolio stock, gold, REIT, US & Iran market indices. Asian Journal of Economic Modelling, 5(1): 44-48.https://doi.org/10.18488/journal.8/2017.5.1/8.1.44.48k DOI: https://doi.org/10.18488/journal.8/2017.5.1/8.1.44.48
- Gitaru, K., 2017. The effect of taxpayer education on tax compliance in Kenya. ( a case study of SME’s in Nairobi Central Business District). Munich Personal RePEc Archive.
- Goral, R. and E. Akgoz, 2017. Tourism price competition index for national destinations. Journal of Tourism Management Research, 4(1): 17-29.https://doi.org/10.18488/journal.31.2017.41.17.29 DOI: https://doi.org/10.18488/journal.31.2017.41.17.29
- Hallsworth, M., 2014. The use of field experiments to increase tax compliance. Oxford Review of Economic Policy.https://doi.org/10.1093/oxrep/gru034 DOI: https://doi.org/10.1093/oxrep/gru034
- Hashimzade, N., G.D. Myles and B. Tran-Nam, 2013. Applications of behavioral economics to tax evasion. Journal of Economic Surveys.https://doi.org/10.1111/j.1467-6419.2012.00733.x DOI: https://doi.org/10.1111/j.1467-6419.2012.00733.x
- Jimenez, P. and G.S. Iyer, 2016. Tax compliance in a social setting: The influence of social norms, trust in government, and perceived fairness on taxpayer compliance. Advances in Accounting.https://doi.org/10.1016/j.adiac.2016.07.001 DOI: https://doi.org/10.1016/j.adiac.2016.07.001
- Kamil, N.I., 2015. The effect of taxpayer awareness, knowledge, tax penalties and tax authorities services on the tax compliance: (Survey on the Individual Taxpayer at Jabodetabek & Bandung). Research Journal of Finance and Accounting.
- Kirchler, E., 2007. The economic psychology of tax behaviour. New York: Cambridge University Press.https://doi.org/10.1017/CBO9780511628238 DOI: https://doi.org/10.1017/CBO9780511628238
- Li, S.X., 2010. Social identities, ethnic diversity, and tax morale. Public Finance Review.https://doi.org/10.2139/ssrn.1422121 DOI: https://doi.org/10.2139/ssrn.1422121
- Lymer, A. and L. Oats, 2009. Taxation: Policy and practice. 16th Edn., Birmingham: Fiscal Publications.
- Machogu, C.G. and B.A. Jairus, 2013. The effect of taxpayer education on voluntary tax compliance, among SMES Mwanza City-Tanzania. International Journal of Marketing, Financial Services & Management Research.
- Mansour, M., 2015. Tax policy in MENA countries: Looking back and forward. IMF Working Paper No. 15/98, International Monetary Fund, Washington.https://doi.org/10.5089/9781484364789.001 DOI: https://doi.org/10.5089/9781484364789.001
- McKerchar, M., 2005. The impact of income tax complexity on practitioners in Australia. Australian Tax Forum.
- McKerchar, M., K.M. Bloomquist and J. Pope, 2013. Indicators of tax morale: An exploratory study. Ejournal of Tax Research.
- Mohammad, W., 2017. Beyond deterrence: An empirical and experimental analysis of tax compliance behavior in Indonesia.
- Murphy, K., B. Bradford and J. Jackson, 2016. Motivating compliance behavior among offenders. Procedural Justice or Deterrence, Criminal Justice and Behavior.https://doi.org/10.1177/0093854815611166 DOI: https://doi.org/10.1177/0093854815611166
- OECD, 2015. Revenue statistics 2015.
- PwC and WBG, 2016. Paying taxes? The global picture a comparison of tax systems in 189economies worldwide. The World Bank Group (WBG) and Pricewaterhouse Coopers (PwC) Reports.
- Randlane, K., 2016. Tax compliance as a system: Mapping the field. International Journal of Public Administration.
- Richardson, G., 2006. The impact of tax fairness dimensions on tax compliance behavior in an Asian jurisdiction: The case of Hong Kong. The International Tax Journal.
- Sapiei, N.S., J. Kasipillai and U.C. Eze, 2014. Determinants of tax compliance behavior of corporate taxpayers in Malaysia. Journal of Tax Research.
- Slemrod, J., 2015. Tax compliance and enforcement: New research and its policy implications. Working Draft.https://doi.org/10.2139/ssrn.2726077 DOI: https://doi.org/10.2139/ssrn.2726077
- Susilawati, KetutEvi and Budiartha, 2013. The effect of taxpayer awareness, tax knowledge, taxation sanction, and public service accountability on tax compliance on vehicles taxpayer compliance. Journal Accounting of Universities Udayana, 4(2): 345-357.
- Suyanto, T., 2016. The influence of tax payer awareness toward tax compliance of entrepreneurial taxpayers a celenganpadjeg program as moderating variable: Case study at the pratama tax office of Wonosari Town.https://doi.org/10.18326/infsl3.v10i1.47-68
- Suyanto, T., 2016. The influence of tax payer awareness toward tax compliance of entrepreneurial taxpayers a celenganpadjeg program as moderating variable: Case study at the pratama tax office of Wonosari Town. INFERENSI, Journal Religious Social Research.https://doi.org/10.18326/infsl3.v10i1.47-68 DOI: https://doi.org/10.18326/infsl3.v10i1.47-68
- Thibaut, J.W. and L. Walker, 1975. Procedural justice: A psychological analysis. Hillsdale: Lawrence Erlbaum.
- Torgler, B., 2016. Can tax compliance profit from biology? Review of Behavioral Economics.https://doi.org/10.1561/105.00000045 DOI: https://doi.org/10.1561/105.00000045
- Van, D.M. and P. Verboon, 2010. Trust in authorities as a boundary condition to procedural fairness effects on tax compliance. Journal of Economic Psychology.
- Verboon, P. and M.V. Dijke, 2007. A self-interest analysis of justice and tax compliance: How distributive justice moderates the effect of outcome favorability. Journal of Economic Psychology.https://doi.org/10.1016/j.joep.2007.09.004 DOI: https://doi.org/10.1016/j.joep.2007.09.004
- Vince, R., N.S. Ria and P. Sem, 2018. Factors affecting taxpayer compliance.
- Wenzel, M., 2004. An analysis of norm processes in tax compliance. Journal of Economic Psychology.https://doi.org/10.1016/S0167-4870(02)00168-X DOI: https://doi.org/10.1016/S0167-4870(02)00168-X
- Zandi, G. and A.S.M. Elwahi, 2016. Tax compliance audit: The perspectives of tax auditors in Malaysia. Asian Development Policy Review, 4(4): 143-149.https://doi.org/10.18488/journal.107/2016.4.4/107.4.143.149 DOI: https://doi.org/10.18488/journal.107/2016.4.4/107.4.143.149
References
Abodher, F.M., Z.Z. Ariffin and N. Saad, 2018. Effect of political factors on tax noncompliance behavior among Libyan self-employed taxpayers. Academy of Accounting and Financial Studies Journal.
Alm, J., 2012. Measuring, explaining, and controlling tax evasion: Lessons from theory, experiments, and field studies. International Tax and Public Finance.https://doi.org/10.1007/s10797-011-9171-2 DOI: https://doi.org/10.1007/s10797-011-9171-2
Awaluddin, I. and T. Sulvariany, 2017. The effect of service quality and taxpayer satisfaction on compliance payment tax motor. The International Journal of Engineering and Science.
Ayuba, A., N. Saad and Z.Z. Ariffin, 2016. Does perceived corruption moderate the relationship between economic factors and tax compliance? A proposed framework for Nigerian small and medium enterprises. Mediterranean Journal of Social Sciences.https://doi.org/10.5901/mjss.2016.v7n1p402 DOI: https://doi.org/10.5901/mjss.2016.v7n1p402
Besley, T. and T. Persson, 2014. Why do developing countries tax so little? The Journal of Economic Perspectives.https://doi.org/10.1257/jep.28.4.99 DOI: https://doi.org/10.1257/jep.28.4.99
Cobham, A., 2014. Nigeria’s upward revision of GDP should sound alarm on tax- to-GDP ratio.
Doerrenberg, P. and A. Peichl, 2013. Progressive taxation and tax morale. Public Choice.
Evans, C. and B. Tran-Nam, 2013. Towards the development of a tax system complexity index. UNSW Australian school of business research paper.
Gemmell, N. and M. Ratto, 2012. Behavioral responses to taxpayer audits: Evidence from random taxpayer inquiries. National Tax Journal.https://doi.org/10.17310/ntj.2012.1.02 DOI: https://doi.org/10.17310/ntj.2012.1.02
Gencer, Y.G., 2018. Effects of 8-week core exercises on free style swimming performance of female swimmers aged 9-12. Asian Journal of Education and Training, 4(3): 182-185.https://doi.org/10.20448/journal.522.2018.43.182.185 DOI: https://doi.org/10.20448/journal.522.2018.43.182.185
George, M. and M.M. Georgios, 2017. The expansion of the contemporary economic role of crete throughout its extensive history. International Journal of Economics, Business and Management Studies, 4(1): 17-37.https://doi.org/10.20448/802.4.1.1.17.37 DOI: https://doi.org/10.20448/802.4.1.1.17.37
Ghorashi, F. and R. Darabi, 2017. Compare value at risk and return of assets portfolio stock, gold, REIT, US & Iran market indices. Asian Journal of Economic Modelling, 5(1): 44-48.https://doi.org/10.18488/journal.8/2017.5.1/8.1.44.48k DOI: https://doi.org/10.18488/journal.8/2017.5.1/8.1.44.48
Gitaru, K., 2017. The effect of taxpayer education on tax compliance in Kenya. ( a case study of SME’s in Nairobi Central Business District). Munich Personal RePEc Archive.
Goral, R. and E. Akgoz, 2017. Tourism price competition index for national destinations. Journal of Tourism Management Research, 4(1): 17-29.https://doi.org/10.18488/journal.31.2017.41.17.29 DOI: https://doi.org/10.18488/journal.31.2017.41.17.29
Hallsworth, M., 2014. The use of field experiments to increase tax compliance. Oxford Review of Economic Policy.https://doi.org/10.1093/oxrep/gru034 DOI: https://doi.org/10.1093/oxrep/gru034
Hashimzade, N., G.D. Myles and B. Tran-Nam, 2013. Applications of behavioral economics to tax evasion. Journal of Economic Surveys.https://doi.org/10.1111/j.1467-6419.2012.00733.x DOI: https://doi.org/10.1111/j.1467-6419.2012.00733.x
Jimenez, P. and G.S. Iyer, 2016. Tax compliance in a social setting: The influence of social norms, trust in government, and perceived fairness on taxpayer compliance. Advances in Accounting.https://doi.org/10.1016/j.adiac.2016.07.001 DOI: https://doi.org/10.1016/j.adiac.2016.07.001
Kamil, N.I., 2015. The effect of taxpayer awareness, knowledge, tax penalties and tax authorities services on the tax compliance: (Survey on the Individual Taxpayer at Jabodetabek & Bandung). Research Journal of Finance and Accounting.
Kirchler, E., 2007. The economic psychology of tax behaviour. New York: Cambridge University Press.https://doi.org/10.1017/CBO9780511628238 DOI: https://doi.org/10.1017/CBO9780511628238
Li, S.X., 2010. Social identities, ethnic diversity, and tax morale. Public Finance Review.https://doi.org/10.2139/ssrn.1422121 DOI: https://doi.org/10.2139/ssrn.1422121
Lymer, A. and L. Oats, 2009. Taxation: Policy and practice. 16th Edn., Birmingham: Fiscal Publications.
Machogu, C.G. and B.A. Jairus, 2013. The effect of taxpayer education on voluntary tax compliance, among SMES Mwanza City-Tanzania. International Journal of Marketing, Financial Services & Management Research.
Mansour, M., 2015. Tax policy in MENA countries: Looking back and forward. IMF Working Paper No. 15/98, International Monetary Fund, Washington.https://doi.org/10.5089/9781484364789.001 DOI: https://doi.org/10.5089/9781484364789.001
McKerchar, M., 2005. The impact of income tax complexity on practitioners in Australia. Australian Tax Forum.
McKerchar, M., K.M. Bloomquist and J. Pope, 2013. Indicators of tax morale: An exploratory study. Ejournal of Tax Research.
Mohammad, W., 2017. Beyond deterrence: An empirical and experimental analysis of tax compliance behavior in Indonesia.
Murphy, K., B. Bradford and J. Jackson, 2016. Motivating compliance behavior among offenders. Procedural Justice or Deterrence, Criminal Justice and Behavior.https://doi.org/10.1177/0093854815611166 DOI: https://doi.org/10.1177/0093854815611166
OECD, 2015. Revenue statistics 2015.
PwC and WBG, 2016. Paying taxes? The global picture a comparison of tax systems in 189economies worldwide. The World Bank Group (WBG) and Pricewaterhouse Coopers (PwC) Reports.
Randlane, K., 2016. Tax compliance as a system: Mapping the field. International Journal of Public Administration.
Richardson, G., 2006. The impact of tax fairness dimensions on tax compliance behavior in an Asian jurisdiction: The case of Hong Kong. The International Tax Journal.
Sapiei, N.S., J. Kasipillai and U.C. Eze, 2014. Determinants of tax compliance behavior of corporate taxpayers in Malaysia. Journal of Tax Research.
Slemrod, J., 2015. Tax compliance and enforcement: New research and its policy implications. Working Draft.https://doi.org/10.2139/ssrn.2726077 DOI: https://doi.org/10.2139/ssrn.2726077
Susilawati, KetutEvi and Budiartha, 2013. The effect of taxpayer awareness, tax knowledge, taxation sanction, and public service accountability on tax compliance on vehicles taxpayer compliance. Journal Accounting of Universities Udayana, 4(2): 345-357.
Suyanto, T., 2016. The influence of tax payer awareness toward tax compliance of entrepreneurial taxpayers a celenganpadjeg program as moderating variable: Case study at the pratama tax office of Wonosari Town.https://doi.org/10.18326/infsl3.v10i1.47-68
Suyanto, T., 2016. The influence of tax payer awareness toward tax compliance of entrepreneurial taxpayers a celenganpadjeg program as moderating variable: Case study at the pratama tax office of Wonosari Town. INFERENSI, Journal Religious Social Research.https://doi.org/10.18326/infsl3.v10i1.47-68 DOI: https://doi.org/10.18326/infsl3.v10i1.47-68
Thibaut, J.W. and L. Walker, 1975. Procedural justice: A psychological analysis. Hillsdale: Lawrence Erlbaum.
Torgler, B., 2016. Can tax compliance profit from biology? Review of Behavioral Economics.https://doi.org/10.1561/105.00000045 DOI: https://doi.org/10.1561/105.00000045
Van, D.M. and P. Verboon, 2010. Trust in authorities as a boundary condition to procedural fairness effects on tax compliance. Journal of Economic Psychology.
Verboon, P. and M.V. Dijke, 2007. A self-interest analysis of justice and tax compliance: How distributive justice moderates the effect of outcome favorability. Journal of Economic Psychology.https://doi.org/10.1016/j.joep.2007.09.004 DOI: https://doi.org/10.1016/j.joep.2007.09.004
Vince, R., N.S. Ria and P. Sem, 2018. Factors affecting taxpayer compliance.
Wenzel, M., 2004. An analysis of norm processes in tax compliance. Journal of Economic Psychology.https://doi.org/10.1016/S0167-4870(02)00168-X DOI: https://doi.org/10.1016/S0167-4870(02)00168-X
Zandi, G. and A.S.M. Elwahi, 2016. Tax compliance audit: The perspectives of tax auditors in Malaysia. Asian Development Policy Review, 4(4): 143-149.https://doi.org/10.18488/journal.107/2016.4.4/107.4.143.149 DOI: https://doi.org/10.18488/journal.107/2016.4.4/107.4.143.149