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Data and preliminary findings from the quantitative phase (as the core method)
• 397 survey responses comprising 196 self-
employed and 201 employed taxpayers were
analysed using IBM SPSS Amos v.21.
• 12 structural models has been proposed to
scrutinise the impact of five types of
perceptions of corruption (refer to Figure A).
• So far, the data suggest while intention to
underreport (ITC) is a good predictor of
underreporting behaviour (TCB), attitudes
(ATB) and situation towards underreporting
(PBC) appear influential to intention to
underreport (see Table C).
• Perceptions of corruption generally affect
both attitudes and views on underreporting
tax, but with mixed results. As shown in
Figure D, while perceived grand corruption
(GCO) tends to affect attitude towards
underreporting (ATB), perceived petty
corruption (PCO) seems more influential to
views on underreporting (SNO).
Do perceptions of corruption influence personal income taxpayer
reporting behaviour? An empirical study of Indonesia
Arifin Rosid │School of Taxation and Business Law
Why is it important?
No country is immune from corruption and any tax system inevitably
suffers tax evasion. While there is no single tax compliance theory that
has been widely accepted, it is becoming increasingly difficult to ignore
the role of social and psychological factors in dealing with tax
(non)compliance issues.
High level of perceived corruption appears to
negatively influence taxpayers’ attitudes and
views on paying tax.
Primary research questions:
• To what extent do the perceptions of corruption affect taxpayers'
intentional tax underreporting behaviour?
• In what ways do the perceptions of corruption affect taxpayers'
intentional tax underreporting behaviour?
Acknowledgements: The author owes great debt of gratitude to his supervisors, Professor Chris Evans and Professor Binh Tran-Nam, for their constant support and invaluable assistance. He would also like to thank Ministry of
Finance of the Republic of Indonesia and the World Bank for providing SPIRIT Scholarship.
Introduction
Many studies have identified a wide range of behavioural
factors, but very little analytic attention has been paid to the
impact of perceptions of corruption. Specifically, what is not yet
clear is the impact of perceptions of corruption upon intentional
non-compliance behaviour.
Why Indonesia?
Indonesia is considered appropriate for this study for two
reasons. First, Indonesia is a major developing countries with
continual tax compliance issues. Second, Indonesia has been
classified as one of the most corrupt of major countries in Asia-
Pacific.
Research design
A sequential mixed-methods of “qualQUANT” has been adopted.
Phase 1 : In-depth interviews with 3 tax agents, 3 taxpayers and 3 tax officers
Phase 2 : Mixed-modes survey questionnaire to collect 397 respondents
Data and preliminary findings from qualitative phase
• A total of 432 minutes of interview data was converted into a verbatim format and
analysed with CDC EZ-Text 4.0 by using deductive thematic analysis.
• 28 categories and 272 assigned codes were identified from the data.
• Diagrammatic interpretation of the findings and hypothetical relationships among
variables were then developed (see Figures A and B below).
A. Diagrammatic interpretation of qualitative findings
Motivational factor
High level of perceived corruption
Negative attitudes towards
compliance
Negativesubjective
norms
Intention to underreport
tax
High level of perceived
behaviouralcontrol for non-
compliance
Level of tax under-
reporting
A
B
C
D
E F
Situational factor
B. Hypothetical relationships of qualitative findings
Locations of the survey
The survey was conducted in 12 tax offices across four regions in Indonesia
and took almost four months to complete. It was conducted with assistance
from two research intermediaries from Tax Center Faculty of Administrative
Science University of Brawijaya, Indonesia
Total effects Intervening
variables
Endogenous
variables
ATB SNO ITC TCB
Exogenous
variables
GCO .317** .036 -.131 -.073
PCO -.041 .331** -.027 -.015
PBC -.165** .011
Intervening
variables
ATB -.400** -.223
SNO -.130* -.073
ITC .559**
D. One of theoretical-based structural models in the study
C. SEM Output: Path coefficients
** significant at p = .05* *significant at p = .10
GCO = Perceptions of grand corruption
PCO = Perceptions of petty corruption
ATB = Attitudes toward tax underreporting
SNO = Views on tax underreporting
PBC = Situations toward tax underreporting
ITC = Intention to underreport
TCB = level of underreported tax
(+)
(+)
(+)
(+)
(+)
(+) = influential
1
2
3
4
5
6
7
Malang (100 taxpayers)
Yogyakarta (100 taxpayers)Surabaya (97 taxpayers)
Bali (100 taxpayers)
INDONESIA
6 participants
3 participants
90 87 8577 74
63 6156 55
49
40 39 37 36 36 34 33 32
Ne
w Z
ea
land
Sin
gap
ore
Au
str
alia
Ho
ng
Ko
ng
Ja
pan
Bh
uta
n
Ta
iwa
n
Ko
rea
(S
ou
th)
Bru
ne
i
Ma
laysia
Sri L
an
ka
Ch
ina
Th
aila
nd
Ind
ia
Mo
ng
olia
Ph
ilip
pin
es
Tim
or-
Le
ste
Ind
on
esia
Corruption Perceptions Index 2012 among major selected Asia-Pacific countries
Source: Transparency International, 2013
On a 0-100 scale, 0 means a country is
perceived as very corrupt and 100 means it is
perceived as very clean.
Indonesia
y = 0.1264x + 10.334
0
10
20
30
40
50
60
0 20 40 60 80 100
TAX
REV
ENU
E TO
GD
P R
ATI
O (
20
08
-20
12
)
CORRUPTION PERCEPTION INDEX 2012
Correlation between share of tax revenue in GDP and perceived level of corruption
Source: Author’s calculation on 119 countries data of the CPI 2012 data (Transparency International, 2013a) and the World Bank data of tax revenue as percentage of GDP (World Bank, 2013d).