MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF BANKING GRADUATION THESIS FACTORS AFFECTING CORPORATE INCOME TAX COMPLIANCE BEHAVIOR OF ENTERPRISES DOING BUSINESS IN HO CHI MINH CITY[.]
MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF BANKING GRADUATION THESIS FACTORS AFFECTING CORPORATE INCOME TAX COMPLIANCE BEHAVIOR OF ENTERPRISES DOING BUSINESS IN HO CHI MINH CITY NGUYEN TRAN NHU PHUONG HO CHI MINH CITY – 2023 Tai ngay!!! Ban co the xoa dong chu nay!!! MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF BANKING GRADUATION THESIS FACTORS AFFECTING CORPORATE INCOME TAX COMPLIANCE BEHAVIOR OF ENTERPRISES DOING BUSINESS IN HO CHI MINH CITY NGUYEN TRAN NHU PHUONG HO CHI MINH CITY – 2023 ABSTRACT The thesis "Factors affecting Corporate Income Tax compliance behavior of enterprises doing business in Ho Chi Minh City" focuses on studying and analyzing the factors that influence compliance with corporate income tax by enterprises in Ho Chi Minh City The research aims to better understand the factors affecting tax compliance behavior and provide recommendations to improve the effectiveness of tax management for corporate income In this thesis, the author conducts an analysis such as the economic environment, tax policies, tax administration, social factors, and the psychological behavior of taxpayers The research methods include surveys, statistical analysis, and quantitative regression models The study results demonstrate that higher authorities' tax administration plays a crucial role in tax compliance behavior When inspection and enforcement activities, including penalties and rewards, are conducted rigorously, it leads to a more positive attitude and behavior toward tax compliance Additionally, the financial motivation of businesses also influences tax compliance behavior, with financially stable enterprises exhibiting a higher tendency to comply with tax regulations Based on the research findings, the thesis proposes recommendations to improve compliance behavior, emphasizing the need to enhance collaboration among relevant stakeholders, including tax authorities, businesses, and specialized organizations, to collectively promote tax compliance Creating a collaborative environment that fosters information exchange and sharing of experiences will contribute to raising awareness and improving the effectiveness of tax management iv DECLARATION This thesis is the original work of the author, and the research findings are truthful, with no content that has been previously published or work done by others, except for the duly cited and referenced sources within the thesis Ho Chi Minh City, June 21, 2023 Author Nguyen Tran Nhu Phuong v ACKNOWLEDGEMENTS During the process of completing this graduation thesis, I have received tremendous help, support, and encouragement from individuals and groups Firstly, I would like to express my heartfelt gratitude to all the respected professors and lecturers at the in Ho Chi Minh City University of Banking who have imparted profound knowledge and enhanced my skills in the field, providing me with a solid foundation of knowledge This has made it easier for me to absorb and integrate into future work Secondly, I would like to give my special thanks go to Dr Huynh Thi Ngoc Anh, my supervisor, for her dedicated guidance, invaluable advice, and assistance in correcting errors and providing important recommendations to improve the quality of my thesis Lastly, I am deeply grateful to my family for their unwavering support throughout my academic journey and life Their encouragement and sacrifices have been instrumental in my completion of this thesis I extend my heartfelt appreciation and love to them for their exceptional care and dedication Due to my limited knowledge and practical experience, this thesis may still have some shortcomings I sincerely request the esteemed professors and lecturers to provide feedback to help me improve this thesis and enhance my knowledge for future endeavors Ho Chi Minh City, June 21, 2023 Author vi Nguyen Tran Nhu Phuong vii TABLE OF CONTENT ABSTRACT iii DECLARATION iv ACKNOWLEDGEMENTS v LIST OF TABLES xi LIST OF FIGURES xi CHAPTER 1: INTRODUCTION 1.1 Research statement 1.2 Research aims and objectives 1.2.1 Overall objective 1.2.2 Specific objective 1.3 Research questions 1.4 Subject and scope of the research 1.4.1 Research subject 1.4.2 Research scope 1.5 Research method 1.6 Expected contribution 1.7 Previous research 1.7.1 Previous research in Viet Nam 1.7.2 Previous international research 1.8 Thesis structure 11 SUMMARY OF CHAPTER 12 CHAPTER 2: LITERATURE REVIEW 13 2.1 Concepts related to Corporate Income Tax Compliance 13 2.1.1 Concepts related to Corporation Income Tax 13 2.1.2 Concepts related to Tax Compliance 14 2.2 Factors affecting on CIT compliance 16 2.2.1 Factor of Economy 16 2.2.2 Factor of Tax policy 19 2.2.3 Factor of Tax administration: 21 2.2.4 Factor of social 24 2.2.5 Factor of psychology behavior: 26 viii SUMMARY OF CHAPTER 28 CHAPTER RESEARCH METHODOLOGY 29 3.1 Research model and hypothesis 29 3.1.1 Hypothesis 29 3.1.2 Research model 34 3.2 Scale formulation 36 3.3 Survey questionnaire 38 3.4 Sampling method 38 3.5 Data analysis 39 3.5.1 Descriptive statistics 39 3.5.2 Scale test 40 3.5.3 EFA analysis 40 3.5.4 Regression analysis 41 SUMMARY OF CHAPTER 41 CHAPTER DATA ANALYSIS AND DISCUSSION 42 4.1 Results of descriptive statistics 42 4.2 Cronbach’s Alpha 44 4.3 Result of exploratory factor analysis (EFA) 47 4.3.1 EFA results for independent variables 48 4.3.2 EFA results for independent variables 51 4.4 Linear regression analysis 52 4.4.1 Correlation test 53 4.4.2 Testing for multicollinearity 54 4.4.3 Regression analysis 54 4.5 Conclusion of research hypotheses 56 SUMMARY OF CHAPTER 58 CHAPTER CONCLUSION AND IMPLICATIONS 59 5.1 Conclusions 59 5.2 Implications 60 5.2.1 Recommendation for the economic factor 60 5.2.2 Recommendation for the tax policy factor 61 5.2.3 Recommendation for the tax administrative factor 62 5.2.4 Recommendation for the Social factor 63 5.2.5 Recommendation for the Psychogical behavior factor 64 ix 5.3 Limitations and future research 64 SUMMARY OF CHAPTER 65 REFERENCES 66 APPENDIX 1: QUESTIONNAIRE SURVEY 69 APPENDIX 2: DESCRIPTIVE STATICTICS 73 APPENDIX 3: CRONBACH’S ANPHA 74 APPENDIX 4: EFA 77 APPENDIX 5: REGRESSION STATISTICS 80 x LIST OF ACRONYMS Acronyms Meaning SPSS Statistical Package for the Social Sciences EFA Exploratory Factor Analysis ANOVA KMO Analysis of Variance Kaiser-Meyer-Olkin Measure of Sampling Adequacy VIF Variance Inflation Factor Sig Significance value DW Durbin – Watson CIT Corporate Income Tax VAT Value Added Tax HCMC Ho Chi Minh City GTD General of Tax Department MOF Ministry of Finance Organization for Economic Co-operation and Development OECD 67 10 International Centre for Tax and Development (ICTD) - "Tax Compliance in Developing Countries: An Overview", 2015 11 Organisation for Economic Co-operation and Development (OECD) "Improving Tax Compliance in a Globalised World", 2016 12 Internal Revenue Service (IRS) - "Understanding Taxpayer Attitudes: Research Findings and Policy Implications", 2019 13 Torgler, B (2007) Tax compliance and tax morale: A theoretical and empirical analysis Cheltenham: Edward Elgar Publishing 14 Pomeranz, D (2015) No taxation without information: Deterrence and selfenforcement in the value added tax American Economic Review, 105(8), 25392569 15 Torgler, B., & Schneider, F (2009) The impact of tax complexity on tax morale and compliance: Evidence from a quasi-natural experiment In J Martinez-Vazquez & A Jorge (Eds.), Taxation and the Financial Crisis (pp 237-257) Edward Elgar Publishing 16 Braithwaite, V (2009) DSFiance in taxation and governance: Resisting and dismissing authority in a democracy Edward Elgar Publishing 17 Feld, L P., & Frey, B S (2007) Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation Law & Policy, 29(1), 102-120 18 González-Ayala, C., & Gutiérrez, L H (2018) "Determinants of tax compliance in developing countries." International Journal of Economics, Commerce, and Management, 6(9), 15-29 19 James, S.Alley, C, 1999 Tax Compliance, self – assessment and administration in Newzealand Journal of Taxation law and policy 20 ATO (2010) Forum on Tax administration: small/medium enterprise group – understanding and influencing tax “payers” compliance behavior 68 21 OCED (2004) Compliance Risk Management: Managing and Improving Tax Compliance Forum on Tax Administraion, Centre for Tax Policy and Administration 22 Schneider, F and Klinglmair, R (2004) Shadow Economies around the World: What Do We Know? IZA Discussion Paper No 1043; CESifo Working Paper Series No 1167 23 Kleven, H J., Knudsen, M B., Kreiner, C T., Pedersen, S., & Saez, E (2011) Unwilling or unable to cheat? Evidence from a tax audit experiment in Denmark Econometrica, 79(3), 651-692 24 Alm, J., Martinez-Vazquez, J., & McClelland, R (2012) Tax evasion and firm survival in competitive markets Journal of Public Economics, 96(11-12), 930938 25 Wenzel, M (2004) An analysis of norm processes in tax compliance Journal of Economic Psychology, 25(2), 213-228 26 Gomez, E T., Franco, C M., & Navarro, A E (2019) The influence of corporate social responsibility on tax compliance: The mediating role of reputation Journal of Business Ethics, 157(1), 129-146 27 Hanlon, M., Heitzman, S., & Slemrod, J (2019) The influence of public firms' environmental and social disclosures on tax avoidance The Accounting Review, 94(2), 115-141 28 Hallmann, K., Hass, C A., & Werner, A (2020) Corporate reputation and tax aggressiveness: The role of organizational visibility and stakeholder influence Journal of Business Ethics, 161(3), 651-671 29 Kirchler, E., Hoelzl, E and Wahl, I (2008) Enforced versus voluntary tax compliance: The “slippery slope” framework Journal of Economic Psychology, 29(2), 210-225 30 Webley Paul (2004) Tax compliance by businesses New perspectives on economic crime, p 95-126 69 APPENDIX 1: QUESTIONNAIRE SURVEY ANALYSIS OF THE IMPACT OF FACTORS ON TAX COMPLIANCE BEHAVIOR Dear Sir/Madam, I am Nguyen Tran Nhu Phuong, currently a student majoring in Accounting Auditing at the ho Chi Minh City University of Banking The purpose of this survey is to assess the level of influence of various factors on the tax compliance behavior of enterprises operating within the Ho Chi Minh City area All answers and personal information provided by you will be strictly confidential and used solely for research purposes Thank you very much for your participation in this survey! Best regards PART - PARTICIPANT INFORMATION Full name Gender Occupation Tax advisory field Economic field Management field Others Year of work experience Less than year to years to 10 years More than 10 years 70 Business sectors of the enterprise's operations Manufacturing Commerce/ Trade Service Others Types of business entities Sole proprietorship Limited liability company Joint Stock company Others Business operation period Less than year to years to 10 years More than 10 years PART - ASSESSING THE IMPACT OF FACTORS ON TAX COMPLIANCE BEHAVIOR Next, please designate your level of agreement with the following statements using the conventions listed below: (1) Completely Disagree, (2) Disagree, (3) Neutral, (4) Agree, and (5) Completely Agree Economic factor Mitigating the negative impact of interest rates and inflation on the State's economy will help increase tax compliance behavior Tax compliance costs (travel to pay taxes, buy digital signatures, bank fees, Etc.) will improve compliance behavior 71 The Tax Authority's efficient utilization of tax revenue will boost tax compliance perceptions Businesses with strong financial standing will comply with tax laws more effectively Tax policy factor 5 The greater the clarity of tax law, the greater the possibility of tax compliance by businesses The higher the tax rate, the lower taxpayer compliance The simplification and clarity of tax administration procedures increases tax compliance Tax administrative factor Periodic tax audits increase tax compliance conduct Penalties for noncompliance will encourage improved tax compliance conduct Enterprises will increase their tax compliance behavior if they are commended for adhering to tax laws properly Supportive propaganda for taxpayers to facilitate greater tax compliance Social factor More excellent public perception of tax liability increases tax compliance behavior Stability in the economy will increase tax compliance 72 The positive effect on tax compliance behavior is proportional to a company's social standing and reputation Psychologiacl behavior factor 5 The tax system's impartiality will increase tax compliance Correctly rewarding and sanctioning taxpayers increases tax satisfaction and compliance If fraud cannot be concealed, corporations will increase their tax compliance Tax compliance behavior factor Enterprises submit timely tax declarations in accordance with the provisions of the Tax Law Enterprises pay the complete amount of tax required by the Tax Law on time Your company generally conforms with tax regulations Source: Author’s research 73 APPENDIX 2: DESCRIPTIVE STATICTICS Descriptive Statistics N Minimum Maximum Mean Std Deviation EF1 186 4.25 717 EF2 186 4.18 712 EF3 186 4.06 761 EF4 186 4.17 699 TP1 186 4.15 712 TP2 186 4.23 670 TP3 186 4.27 745 TA1 186 4.16 732 TA2 186 4.20 711 TA3 186 4.14 699 TA4 186 4.18 673 SF1 186 4.18 689 SF2 186 4.11 700 SF3 186 4.13 791 PBF1 186 4.17 712 PBF2 186 4.16 744 PBF3 186 4.16 699 TC1 186 4.10 898 TC2 186 4.15 879 TC3 186 4.08 894 Valid N (listwise) 186 74 APPENDIX 3: CRONBACH’S ANPHA Economic factor scale Reliability Statistics Cronbach's N of Items Alpha 807 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted EF1 12.42 3.239 596 770 EF2 12.49 3.127 658 741 EF3 12.61 2.942 678 730 EF4 12.50 3.365 560 786 Tax policy factor scale Reliability Statistics Cronbach's N of Items Alpha 824 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted TP1 8.50 1.516 758 677 TP2 8.42 1.769 637 800 TP3 8.38 1.578 653 788 75 Tax administrative factor scale Reliability Statistics Cronbach's N of Items Alpha 960 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted TA1 12.52 3.894 922 942 TA2 12.48 4.067 878 955 TA3 12.54 4.044 911 945 TA4 12.50 4.165 901 949 Social factor scale Reliability Statistics Cronbach's N of Items Alpha 808 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted SF1 8.25 1.766 659 737 SF2 8.32 1.764 642 753 SF3 8.30 1.507 677 720 Psychological behavior factor scale Reliability Statistics Cronbach's N of Items Alpha 835 76 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted PBF1 8.31 1.708 687 778 PBF2 8.32 1.603 709 757 PBF3 8.32 1.733 691 776 Tax compliance behavior factor scale Reliability Statistics Cronbach's N of Items Alpha 922 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted TC1 8.23 2.911 800 920 TC2 8.18 2.745 909 831 TC3 8.25 2.890 816 907 77 APPENDIX 4: EFA Independent variables KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity 763 2330.165 df 136 Sig .000 Total Variance Explained Component Initial Eigenvalues Total % of Cumulative Variance % Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Total % of Cumulative Variance % Total % of Cumulative Variance % 6.181 36.357 36.357 6.181 36.357 36.357 3.639 21.409 21.409 3.059 17.996 54.354 3.059 17.996 54.354 2.512 14.777 36.186 1.478 8.694 63.048 1.478 8.694 63.048 2.426 14.269 50.455 1.336 7.857 70.905 1.336 7.857 70.905 2.288 13.459 63.913 1.048 6.163 77.068 1.048 6.163 77.068 2.236 13.155 77.068 540 3.178 80.246 512 3.012 83.258 469 2.761 86.019 427 2.513 88.532 10 382 2.245 90.776 11 363 2.134 92.910 12 325 1.910 94.820 13 311 1.829 96.649 14 239 1.403 98.053 15 204 1.201 99.254 16 114 671 99.925 17 013 075 100.000 Extraction Method: Principal Component Analysis 78 Rotated Component Matrix a Component TA1 942 TA3 927 TA4 920 TA2 920 EF4 819 EF3 772 EF2 759 EF1 580 377 PBF2 846 PBF1 842 PBF3 720 TP2 820 TP1 336 785 TP3 772 SF2 816 SF3 792 SF1 769 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Dependent variable KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity 701 450.602 df Sig .000 Total Variance Explained Component Initial Eigenvalues Total % of Variance Extraction Sums of Squared Loadings Cumulative % 2.596 86.547 86.547 290 9.674 96.221 113 3.779 100.000 Extraction Method: Principal Component Analysis Total 2.596 % of Variance 86.547 Cumulative % 86.547 79 Component Matrix a Component TC2 963 TC3 918 TC1 909 Extraction Method: Principal Component Analysis a components extracted 80 APPENDIX 5: REGRESSION STATISTICS Multivariate regression model b Model Summary Model R 778 R Square a Adjusted R Std Error of the Square Estimate 605 595 Durbin-Watson 52714 1.902 a Predictors: (Constant), PBF, TA, EF, SF, TP b Dependent Variable: TC a ANOVA Model Sum of Squares df Mean Square Regression 76.759 15.352 Residual 50.018 180 278 126.777 185 Total F Sig 55.247 000 t Sig b a Dependent Variable: TC b Predictors: (Constant), PBF, TA, EF, SF, TP Coefficients Model Unstandardized Coefficients a Standardized Coefficients B (Constant) Std Error -2.102 382 EF 173 074 TP 233 TA Beta -5.496 000 126 2.329 021 080 172 2.900 004 388 064 312 6.087 000 SF 368 075 275 4.910 000 PBF 328 076 247 4.294 000 a Dependent Variable: TC 81 Correlations