Factors Affecting Tax Compliance

Abstract

The purpose of this paper is to go through previous studies in order to bring into light those factors affecting tax compliance so as to help interested individuals and institutions get necessary information to create a model which shows important factors that influence decisions about tax compliance in their area of interest. In order to do this the researcher employed the review of literature as the method of this study. Tax compliance has been studied in economics by analysing the individual decision of a representative person between paying taxes and evading taxes. In the research of tax compliance many empirical studies have been done that emphasized the impact of a wide variety of potential determinants of voluntary compliance with individual income/profit tax filing and reporting obligations. The review of literature identified that the most important determinants identified are: economic factors as the level of income, audit probabilities, tax audit, tax rate, tax benefits, penalties, fines, complexity of tax system. and other non‐economic factors as attitudes toward taxes, personal, social and national norms, perceived fairness, tax morale, perception of government accountability, tax information and perception of public service.