Voluntary Tax-compliance Behavior in SMEs; Evidence from Pakistan and Turkey

Abstract

This research article aims at exploring the Voluntary Tax-compliance behaviour of the small and medium-size business enterprises for two countries, Pakistan and Turkey. Voluntary tax-compliance from SME’s is considered as major risk area by the tax-collection authorities of both developing and developed countries, authorities from both desire to bring individuals belonging to SME’s to pay taxes on a voluntary basis, in order to generate higher revenues for their governments. Thus, data was collected from the owners of SME’s of both countries through a questionnaire, data thus collected was analysed using SPSS and PLS-Smart. The results suggested that voluntary tax-compliance can be achieved by building a mutual trust relation and by exercising legitimate use of power by the tax authorities, results also signify that subjective norms, perceived behavioural control, attitude towards taxes and moral obligation are also key factors in determining the voluntary tax-compliance behaviour as suggested by Kirchler,  Hoelzl and Wahl,  (2008). Also, this article tests the mediating role of the intention of building positive voluntary tax-compliance behaviour as suggested by Ajzen (1991). This study is an important contribution in literature as it incorporates data from two countries, Pakistan (a developing nation) and Turkey (that is making its mark in the list of developed countries). This research work can be further extended by incorporating comparative analysis among the business owners belonging to developed, semi-developed and developing countries.