Zknamcx

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
Molino Campus
COLLEGE OF ACCOUNTANCY
ASSESSMENT OF FACTORS AFFECTING TAX COMPLIANCE BY

SELECTED SMALL AND MEDIUM ENTERPRISES IN MOLINO,
BACOOR CITY
A Thesis
Presented to the Faculty of College of Accountancy
UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA-MOLINO
CAMPUS
Molino 3, Bacoor, 4102, Cavite
In Partial Fulfillment of the Requirements for the Degree

BACHELOR OF SCIENCE IN ACCOUNTANCY
By:
AMBONA, DOMINIC JASPER C.

CAPARAS, LORAINE RIA .
LACSON FREDGIELYN .
REALCE, VIVIANNE .
DECEMBER 2016
1

Molino Campus
Recommendation Sheet
Researchers: Dominic Jasper C. Ambona
Ria Lorraine Caparas
Fredgielyn Lacson
Vivianne Realce
College:
Accountancy
Title:
ASSESSMENT OF FACTORS AFFECTING TAX

COMPLIANCE BY SELECTED SMALL AND MEDIUM
ENTERPRISES IN MOLINO, BACOOR CITY
Recommending Approval:
Adviser
Date
Chairperson
Date
Member
Date
Member
Date
Approved by:

Molino Campus
APPROVAL SHEET
This thesis entitled ASSESSMENT OF FACTORS AFFECTING TAX
COMPLIANCE BY SELECTED SMALL AND MEDIUM
ENTERPRISES IN MOLINO, BACOOR CITY. Prepared and
submitted by DOMINIC JASPER C. AMONA, RIA
LORRAINE CAPARAS, FREDGIELYN LACSON and
VIVIANNE REALCE in partial fulfillment of the requirements
for the degree of BACHELOR OF SCIENCE IN
ACCOUNTANCY have been examined and is recommended for
acceptance and approval for PRE - ORAL EXAMINATION.
_______________________
Adviser
PANEL OF EXAMINERS
Approved by the COMMITTEE ON PRE-ORAL EXAMINATION with a
grade of ____ on December , 2016
____________________
Chairperson
____________________
___________________
Member
Member
Accepted and approved as partial fulfillment of the requirements for the

degree of BACHELOR OF SCIENCE in ACCOUNTANCY
________________
_______
Dean, College of
Accountancy

Molino Campus
ACKNOWLEDGEMENT
With profound gratitude, we would like to extend our outmost

appreciation to the following:
To our family for giving us moral support throughout this research
To, for giving us additional knowledge about our research topic
To our Professor, , for sharing your knowledge to us about research
To our thesis adviser, , thank you for your support and guidance
throughout this research.
And last, we would like to thank Almighty God for giving us strength,
wisdom and courage while completing this study
Dominic Jasper C. Ambona

Ria Lorraine Caparas
Fredgielyn Lacson
Vivianne Realce
December 2016
4

Molino Campus
ABSTRACT
TITLE
: ASSESSMENT OF FACTORS AFFECTING

TAX COMPLIANCE BY SELECTED SMALL
AND MEDIUM ENTERPRISES IN MOLINO,
BACOOR CITY
RESEARCHERS
: DOMINIC JASPER C. AMBONA

RIA LORRAINE CAPARAS
FREDGIELYN LACSON
VIVIANNE REALCE
ADVISER
SCHOOL
: University of Perpetual Help System Dalta-
Molino Campus
DEGREE CONFERRED
: Bachelor of Science in Accountancy

Molino Campus
TABLE OF CONTENTS
TITLE PAGE.............................................................................................................
1
RECOMMENDATION SHEET................................................................................
2
APPROVAL SHEET..................................................................................................
3
ACKNOWLEDGMENT............................................................................................
4
ABSTRACT...............................................................................................................
5
TABLE OF CONTENTS...........................................................................................
6
LIST OF FIGURES...................................................................................................
8
LIST OF TABLES.....................................................................................................
8
LIST OF APPENDICES............................................................................................
9
CHAPTER
1
The Problem and a Review of Related Literature

Introduction........................................................................................
10
Review of Related Literature.............................................................
11
6

Molino Campus
Theoretical Framework......................................................................
24
Conceptual Framework......................................................................
27
Statement of the Problem...................................................................
28
Hypotheses.........................................................................................
29
Significance of the Study...................................................................
29
Scope and Delimitations of the Study................................................
30
Definition of Terms............................................................................
31
2
Research Methodology
Research Design.................................................................................
34
Respondents of the Study...................................................................
34
Research Instruments.........................................................................
34
Data and Gathering Procedure...........................................................
35
Sampling Techniques.........................................................................
36
Statistical Treatment of Data..............................................................
37
7

Molino Campus
3. Results and Discussion............................................................................

42
4. Summary, Conclusions and Recommendations
Summary of Findings.........................................................................
58
Conclusion.........................................................................................
61
Recommendations..............................................................................
62
REFERENCES..........................................................................................................
65
APPENDICES...........................................................................................................
67

Molino Campus
LIST OF FIGURES
Fig. 1 Conceptual Paradigm(IPO)
..26
Fig. 2 Frequency Distribution of Respondents by Type of Business......................
42
Fig. 3 Frequency Distribution of Respondents by Capital......................................
44
Fig. 4 Frequency Distribution of Respondents by Years of Operation.....................
46
Fig. 5 Frequency Distribution of Respondents Number of Employees..................
48
LIST OF TABLES
Table 1Scaling for the factors affecting tax compliance cost by small medium
enterprises operating in City.....................................................................................
39
Table 2Scaling for the factors affecting tax compliance level of agreement by
small medium enterprises operating in City............................................................
40
Table 3 Distribution of Respondents by Type of Business......................................
42

Molino Campus
Table 4 Distribution of Respondents by Capital......................................................
44
Table 5 Distribution of Respondents by Years of Operation...................................
46
Table 6 Distribution of Respondents by Number of Employees.............................
48
Table 7 Assessed Compliance Cost of the Respondents..........................................
50
Table 8 Assessed Fines and Penalties of the Respondents.......................................
51
Table 9Assessed Tax Knowledge and Education.....................................................
52
Table 10 Assessed Perceived Opportunity for Tax Evasion of the Respondents.....
54
Table 11Differences in Mean of Type of Business and the Perceived Tax
Compliance...............................................................................................................
55
Table 12 Differences in Mean of Capital and the Perceived Tax Compliance........
56
Table 13Relationship Between years of Operation and the Perceived Tax
Compliance...............................................................................................................
56
Table 14Relationship Between years of Operation and the Perceived Tax
Compliance...............................................................................................................
57
10

Molino Campus
APPENDICES
Appendix ADescriptive Statistics for Perceived Tax Compliance..........................
68
Appendix BProfile of the Respondents as to Type of Business...............................
71
Appendix CProfile of the Respondents as to Capital..............................................
72
Appendix DYears of Operation of Respondents.......................................................
73
Appendix ENumber of Employees of Respondents.................................................
74
Appendix FANOVA for Perceived Tax Compliance and Type of Business.............
76
Appendix GANOVA for Perceived Tax Compliance and Capital............................
77
Appendix HPearson r for Perceived Tax Compliance and Years of Operation.....
78
Appendix I Pearson r for Perceived Tax Compliance and Number of
Employees..................................................................................................................
79
Appendix J Sample Questionnaire...........................................................................
80
Appendix K Letter of Request..................................................................................
82
11

Molino Campus
Chapter 1
THE PROBLEM AND REVIEW OF RELATED LITERATURE
AND STUDIES
Introduction
Most large companies have their roots in Small and Medium
Enterprises suggesting that the future large corporations are the Small
and Medium Enterprises of today that must be nurtured to ensure their
growth.SMEs are generally perceived to be the nursing for indigenous
entrepreneurship which will result into growth of small investments. It
is a well-known fact that the revenue generated from the taxation of
individuals and businesses is an important source of income for
government. In an economy such as ours, that is struggling to remain
afloat, it is even more important. Tax revenue is the source of funds
used for developmental projects such as provision of infrastructural
facilities such as good roads, stable power supply, stable water supply
etc. All of which combine to create an enabling environment for
12

Molino Campus
businesses to thrive - and in turn the economy at large- to grow. Small
and Medium Enterprises being profit generating establishments are also
expected to pay their dues. The important question however is how
much tax should they pay? Small and medium scale enterprises are
volatile establishments that need special treatment. Putting their nature
into consideration, every little resource at their disposal can make a
world of difference. For this reason, a number of SMEs in Bacoor City
choose to remain in the informal sector because they feel that the cost of
compliance is too high. And a considerable number of those who pay,
only do so because they are coerced by the relevant authorities.
The above brings to bear reasons why the issue of taxation of
SMEs is really important in our economy. Tax provides revenue for the
government to create an environment that will ease the running of all
businesses SMEs inclusive. At the same time if an SME is faced with
high compliance costs, it has a very high tendency to avoid paying
taxes. Hence, the revenue that would have been generated and used to
create this environment is lost thereby reducing the SMEs chances of
survival.
In developing countries, tax noncompliance is a serious issue
facing income tax administration and hindering tax revenue
performance. Despite the various tax reforms undertaken by
governments to increase tax revenue over the years, prior statistical
evidence has proven that the contribution of income taxes to the
government's total revenue remained consistently low and is relatively
shrinking (Alabede et al., 2011). Compliance costs involved in taxation
are major hindrances to draw out compliance behavior of taxpayers.
Sometimes the administration of income tax creates problems for
business taxpayers when it imposes onerous reporting and record
keeping requirements resulting to increased costs of tax for those who
try to comply with the tax law. For providing voluntary compliance with
taxation, social scientists are also charged with important roles for
providing into data of revenue administration with research activities, as
much as the revenue administration that represents the taxation facet of
finance
organization
is
charged
with
significant
roles.Tax
13

Molino Campus
noncompliance is a substantive universal phenomenon that exceeds
cultural and political limitations and takes place in all societies and
economic systems. There are many studies that explain the behavior of
tax compliance in a more realistic situation. They focus on the
determinants of tax compliance, respectively on economic and noneconomic factors (Nicoleta, 2011). Tax non-compliance is an area of
concern for all government and tax authorities, and it continues to be an
important issue that must be addressed. Regardless of time and place,
the main issue faced by all tax authorities is that it has never been easy
to persuade all taxpayers to comply with the regulations of a tax system.
The pervasiveness of tax noncompliance remains of serious
concern to the majority of tax administrators around the world. Tax
noncompliance not only poses a serious threat to effective tax and
voluntary compliance; it also has a negative impact on the economy. In
2008/2009, Her Majesty's Revenue and Customs (HMRC) estimated the
United Kingdom tax gap to be around 42 billion, and of this, 15
billion was due to tax fraud, evasion and some criminal activities
(HMRC, 2010). Whilst the Inland Revenue Board of Malaysia (IRBM)
reported that the additional taxes and penalties of 2010 amounted to
about RM1, 013.63 million of the finalized audited corporate tax cases
Inland Revenue Board of Malaysia, (IRBM, 2010). The rising tax
noncompliance has urged the government and tax administrators to
examine the factors that cause tax noncompliance.
This research therefore aims to evaluate the factors that
encourage non-compliance with tax obligation by Small and Medium
Enterprises and consequently determine if government tax policies tops
these factors. In doing this, a study will be conducted using Small and
Medium Enterprises in Bacoor City, Cavite.
14

Molino Campus
Review of Related Literature and Studies
Local Literature
Small and Medium Enterprises
According to Department of Trade and Industry, there are
941,174 establishments in the Philippines as of 2013 provided by the
Philippine Statistics Office. 99.6% (or 937,327) of these are Micro,
Small, and Medium Enterprises (MSMEs). Of the total number of
MSMEs, 90.3% are Micro, 9.3% are small, and the remaining 0.4% are
medium enterprises. MSMEs produced jobs a total of 4,770,445
compare to 2,719,166 for the large enterprises. This shows that Micro,
Small, and Medium enterprises contributed almost 63.7% of the total
jobs produced by all types of business establishment in the Philippines
According to the Magna Carta for Micro, Small and Medium
Enterprises (RA No. 6977, as amended by RA 8289, and further
amended by RA 9501) Sec.3 Small and Medium Enterprise shall be
defined as any business activity or enterprise engaged
agribusiness
and/or
services,
whether
single
in industry,
proprietorship,
cooperative, partnership or corporation whose total assets, inclusive of

those arising from loans but exclusive of the land on which the
particular business entitys office, plant and equipment are situated,
must have value falling under the following categories:
Micro
less than
P 3,000,000
Small
P3,000,001
P15,000,000
Medium
P15,000,001
P350,000,000
Small and medium enterprises (SMEs) are seen as crucial for a
countrys economic growth, employment creation and innovation. The
contributions SMEs usually make to tax revenue are lower than its
contributions to output and employment. That fact notwithstanding,
SMEs have not become competitive enough to increase their share of
output even though they form three-fifths of the number of
manufacturing firms where larger manufacturing companies rely on
SMEs for their supplies.
Characteristics of Small and Medium Enterprises
15

Molino Campus
SMEs are featured by uncertainty, innovation and evolution, thus
making its concept relative and dynamic. An adequate knowledge of
SMEs characteristics is essential for its strong understanding.As noted
by Mendoza and Melchor (2014), many Philippine SMEs remain too
small, only meagerly augment household incomes, and are not able to
take advantage of opportunities brought about by ASEAN integration.
Overall, SMEs face numerous constraints to further growth and
productivity, including credit constraints, cumbersome registration
procedures and strict regulatory environments, and other challenges
related to an economic playing field that is not level between large and
small firms. SMEs, especially start-ups, have lower probabilities of
survival than larger firms, leading to high rates of market entry and exit
across nearly all economic sectors.
Small and medium-sized enterprises (SMEs) account for more
than 90% of all enterprises, employ 50-99% of the domestic workforce
and contribute around 32-77% of total domestic output in their
respective countries in ASEAN. The number of SMEs grew by 66%
from 492,510 in 1995 to 816,759 in 2011 in the Philippines. Similarly,
the numbers of those employed by these firms have grown by 45.7%
from 2.7 million in 1995 to 3.9 million in 2011.These growth figures
mask a wide array of challenges faced by these firms, notably with the
onset of economic integration in ASEAN.
Generally, numerous inhibitions were faced by the SMEs for its
further
growth
and
productivity,
including
credit
constraints,
burdensome registration procedures and strict regulatory environments,

and other challenges related to an economic playing field that is not
level between large and small firms. SMEs, especially start-ups, have
lower probabilities of survival than larger firms, leading to high rates of
market entry and exit across nearly all economic sectors.
There is a need to undergo a successful business transformation
in different aspects of their operations to go beyond not just surviving
but also to actually compete such those are spanning enhanced
entrepreneurial skill, innovation in process and product development,
16

Molino Campus
more successful collaboration across SMEs and with larger firms, and
improved crisis resilience among other factors.
Taxation of Small and Medium Enterprises
According to ASEAN Organizations, Policy Incentives Granted
to Local SMEs in the Philippines are:
1. Direct Tax
Tax incentive for importers and exporters
-
Tax credits are available for taxes and duties paid on purchases
of raw materials of products for export, domestic capital
equipment, domestic breeding stock, and genetic materials.

A tax credit of 25% of the duties paid on raw materials and
capital equipment and/or spare parts.

Tax incentives also available to enterprises registered with the
Philippine Economic Zone Authority (PEZA). These incentives
are shown below:
- 4 to 8 years income tax holiday. A 5% tax on the modified gross
-
income is imposed after the end of the income tax holiday.

Tax and duty exemption on imported capital equipment and raw
materials.
National and local tax exemption.
Tax rebate for the purchase of domestic capital good.
2. Indirect Tax
Under the Investment Priority Plan (IPP), SME owners shall be eligible
for the following incentives.
-
An exemption from wharfage dues and export tax, duty import
and fees.
Additional deduction for labor expense (ADLE).
Additional deduction for necessary and major infrastructure works.

Excise tax on exported goods produced or manufactured locally can be
credited or refunded upon submission of the proof of actual exportation
and upon receipt of the corresponding.
Republic Act No. 10644: Go Negosyo Act
17

Molino Campus
This is the full text of Republic Act No. 10644: An Act
Promoting Job Generation and Inclusive Growth through the
Development of Micro, Small and Medium Enterprises, otherwise
known as the Go Negosyo Act. It was enacted into law on 15 July
2014 by thelatepresidentBenignoSimeonAquinoIII.
The following are the salient features of the Act:
Establishment of Negosyo Centers in all provinces, cities and
municipalities nationwide
Establishment of a Start-up Fund for MSMEs to be sourced from
the MSME Development Fund and BMBE Fund

Technology Transfer, Production and Management Training, and
Marketing Assistance for SMEs

Recomposition of the MSME Development Council and its
additional functions
The DTI Department Administrative Order No. 14-5 Series of
2014: Implementing Rules and Regulations for Republic Act No.

10644, An Act Promoting Job Generation and Inclusive Growth through
the Development of Micro, Small and Medium Enterprises, otherwise
Known as the Go Negosyo Act was published on 29 December 2014.
Foreign Literature
Tax compliance is a persons act of filing their tax returns,
declaring all taxable income accurately, and disbursing all payable taxes
within the stipulated period without having to wait for follow-up actions
from the authority. Tax Compliance in pure administrational terms
therefore includes registering or informing tax authorities of status as a
taxpayer, submitting a tax return every year (if required) and following
the required payment time frames. In contrast, the wider perspective of
tax compliance requires a degree of honesty, adequate tax knowledge
and capability to use this knowledge, timeliness, accuracy, and adequate
records in order to complete the tax returns and associated tax
documentation (Mohd et al, .2011). The wider perspective of
compliance becomes a major issue in a self-assessment system since the
total amount of tax payable is highly dependent on the levels of tax
18

Molino Campus
compliance this perspective reveals, although it is inevitable that tax
authorities will seek to influence the areas taxpayers have influence
over determining to reduce the risks of non-compliant behavior they
face otherwise e.g. through continuously conducting tax audits of
different sorts and other means such as various compliance influencing
activities including tax education.
While tax non-compliance is defined as failure to comply with
tax laws and/or report incorrect income, the act of claiming incorrect
deductions, relief and rebates and/or paying the incorrect amount of tax
beyond the stipulated time frame. The other classification of actions is
tax evasion which consists of illegal and intentional actions taken by
individuals to reduce their legally due tax obligations. Individuals and
firms can evade taxes by underreporting incomes, sales, or wealth, by
overstating deductions or by failing to file appropriate tax returns. In
every jurisdiction, tax authorities are empowered to collect revenue
from taxpayers. Although there are a number of taxpayers who have
reported their income and paid their tax liabilities properly, there are a
few taxpayers who have not done so (Peter, 2013).
Since the individual SSE pays a very small amount of tax
compared with what the larger establishment would pay, tax authorities
tend to give the larger corporations more attention. This suggests that a
good number of SSEs evade taxes that would have otherwise been
invested in development projects that would have benefitted them. Tax
compliance is currently a topical issue, especially in developing
countries as governments at various levels are seeking ways to improve
efficiency in tax revenue collection to finance their budgets. Small scale
enterprises (SSEs) are the majority business taxpayers in most
developing countries and as such their compliance levels directly impact
on government tax revenue collections (Daniel, Akowe & Awaje, 2016).
Tax compliance level which is internal factor affecting tax revenue not
only undermines tax administration infrastructure but also makes the tax
base narrow and inequitable. When the level of compliance is low,
government revenue collections always fall behind targets (Peter, 2013).
19

Molino Campus
According to Nkwe (2013), small businesses are key players in
the economy of developing countries as they generate significant
employment and output. Due to the importance of this sector in the
countrys economy, it is important that the strategies of tax
administration that are implemented enhance the SME taxpayers
attitude and compliance towards paying taxes. The results of the survey
carried out in the capital city of Kyrgyzstan among 500 tax payers
showed that the most important factors affecting the tax culture are;
trust in the government, quality of public services and availability of
informal economy (Abdieva et al. 2011). The perception that the
government is not accountable to taxpayer has been identified as a
major challenge facing the tax authority (Onuba 2011).
Facilitating compliance involves such elements as improving
services to taxpayers by providing clear instructions, easy to fill forms
and assisting and educating them on their duties and obligations.
Monitoring compliance requires establishing and maintaining current
accounts of taxpayers and management information systems covering
both ultimate taxpayers and third party agents such as banks involved in
the tax system as well as appropriate and prompt procedures to detect
and follow up on non-filers, nil filers and delayed payments. Deterring
noncompliance requires establishing both a reasonable risk of detection
as well as applying penalties effectively. The ideal approach is to
combine these measures so as to maximize their effect on compliance as
it were, to move a country from a low compliance to a high compliance
environment (Masinde and Makau 2010). Taxation knowledge is
necessary to increase public awareness especially in areas concerning
taxation laws, the role of tax in national development, and especially to
explain how and where the money collected is spent by the government
(Mohd, 2010). Attitude towards tax compliance can be improved
through the enhancement of taxation knowledge. When a taxpayer has a
positive attitude towards tax, this will reduce his or her inclination to
evade tax payment (Eriksen&Fallan, 1996). Taxpayers who have
attended a tax course would be expected to have better tax knowledge
and tax compliance attitude in comparison with taxpayers who have
never attended a tax course (Mohd, 2010).
20

Molino Campus
Tax Compliance of Small and Medium Enterprises
According to Marti (2010), tax compliance is a complex term to
define. In other words, tax compliance refers to fulfilling all tax
obligations as specified by the law freely and completely. It has been
found that regulatory burdens fall disproportionately on small and
medium enterprises, as noted by Pope and Abdul-Jabbar (2008). Tax
compliance is one of a particular importance to the SMEs size and
nature, especially since most of them have access to limited resources
and inadequate expertise to comply with diverse and complicated
regulation. He also believes that high compliance costs can result in tax
avoidance, tax fraud, and restrain investment by way of decreasing
competitiveness of the country in terms of taxation attractiveness.
Tax compliance is a major problem for many tax authorities and
it is not easy task to persuade taxpayers to comply with tax requirements
even though tax laws are not always precise. The definition of tax
compliance in its most simple form is usually cast in terms of the degree
to which taxpayers comply with the tax law. However, like many such
concepts, the meaning of compliance can be seen as a continuum of
definitions. One suggestion is that the degree of non-compliance may be
measured in terms of the tax gap. Tax gap represents the difference
between the actual revenue collected and the amount that would be
collected if there was a full compliance. Tax non-compliance may be in
one of many forms; it could either be failure to submit a tax return
within the stipulated period or non-submission, understatement of
income, overstatement of deductions, failure to pay assessed taxes by
due date and in some cases non-compliance may mean an outright
failure to pay levied taxes. (Kasipillai & Abdul Jabbar, 2006).
A study of Loo and Ho (2010) examined that high compliance
can be realized from small business when taxpayers liability including
compliance cost are correctly accounted for. The authors note that
taxpayers must be invariably competent to understand the income tax
laws and the administrative procedures. This said, individuals who are
less inclined to tax systems may either be under-paying or over-paying
21

Molino Campus
taxes. As well, the revenue authority has to provide adequate resources
to meet the functional literacy elements of the taxpayers in terms of
skills and knowledge required to deal with tax issues.
The concept of tax compliance denotes how the taxpayers
accommodate rules and regulations bordering the tax system in a
country. Although, the concept of tax compliance connotes different
viewpoints, prior studies postulates that tax compliance involves the
willingness of taxable entities to act in line with tax laws and
administration without coercion (James and Alley 2004; Palil and
Mustapha 2011). The results of the survey carried out in the capital city
of Kyrgyzstan among 500 tax payers showed that the most important
factors affecting the tax culture are; trust in the government, quality of
public services and availability of informal economy (Abdieva et al.
2011). In another study conducted by Saad (2012) it was noted that
taxpayers are aware and compliant with their respective responsibilities.
In contrast, the argument by Loo et al (2010) argued that when the tax
laws are complex and tedious the taxpayers may find it difficult to
comprehend. This is compounded more when the taxpayers have no
knowledge on tax related issues. In the other argument by Isa (2012)
which pointed out that tax computation, record keeping and ambiguity
are complicated to the taxpayers also seem logical. Even though,
Massarrat-Mashhadi and Sielaff (2012) stressed that taxpayers
understand the tax complexity. Because they have to understand the
process before they would be able to do the tax computation as well as
record keeping. If both arguments are critically analysed, it all lies on
tax knowledge because both tax law and computation of tax and others
cannot be feasible without tax knowledge.
Lignier and Evans (2012) using cross-country data through a
web-based questionnaire in 2010 revealed that the average cost of
compliance during the income tax year was around $28,000,
representing a significant increase in real dollar terms, and in relative
terms. However, their findings revealed that respondents seemed to be
unaware of the eligibility rules for the various concessions, which could
explain the low take-up rates. This apparent indifference was
22

Molino Campus
compounded by a perception that most small business tax concessions
were too complex and not worth the effort. While on the other
hand,using a baseline approach through electronic survey, Smulders et
al (2012) evaluated and compared the tax compliance costs affecting
small business sector in South Africa. Their findings revealed that tax
compliance costs as well as core accounting costs are regressive with
respect to business size, with the compliance burden being heavier for
smaller businesses. However, the study concluded that small business
tax concessions were perceived as being more complex than useful.
Simon (2012) examined the riskiness for tax non-compliance.
Using theoretical approach revealed that deviations from the standard
model including the endowment effect, framing of decisions, limited
attention, loss aversion and mental accounting have influenced the
operation of tax system in most developing economies. In exploring the
factors that influence business tax payers decision on whether to report
income and deductions, JoAnne et al, (2012) used the theory of planned
behaviour based on Ajzen and Fishbeins model of reasoned action
approach. Their findings reveal that intention to comply is not always a
strong predictor of compliance behaviour. The majority of taxpayers
who wanted to comply failed. As complexity and difficulty in
performance increases, additional factors are required to predict
compliance, such as awareness of the rules. Complexity also reduces the
predictability of behaviour. Behaviour prediction can be enhanced by
quantifying environmental complexity, providing performance support,
and eliminating potential obstacles. Intention can only be leveraged for
compliance strategies when the tax system creates the optimal
environment for taxpayers to successfully comply.
An individual psychological variables, such as moral beliefs and
attitudes are non-economic influences on tax compliance that also have
to be focused on. Meanwhile, some economists have tried to control the
influence of social norms in models of tax compliance behaviour
(Bobek et al 2012). Randlane (2012) indicated that one should not
ignore the biologically inherited and socially acquired norms that shape
moral values, and tax morale affecting tax compliance is a socio23

Molino Campus
psychological factor which is connected to the internal motivation of a
person to pay tax. The tax compliance is also affected by social norms
as well as public services, confidence in public institutions, subjective &
cultural characteristics of the person, the fairness of the tax, persons
own conception about moral principles, perception of others, awareness
of how tax revenues have been used, his/her trust in the country and
administrative and tax policy.
The study was conducted using SMEs in Zaria, North-Central
Nigeria to evaluate and rank the factors that encourage noncompliance
with tax obligation by SMEs (Atawodi & Ojeka 2012). The authors
found that high tax rates and complex filing procedures are the most
crucial factors causing non-compliance of SMEs. Other factors like
multiple taxation and lack of proper enlightenment affect tax
compliance among the SMEs surveyed only to a lesser extent. They
recommended that SMEs should be levied lower percentage of taxes to
allow enough funds for business development and better chances of
survival in a competitive market. Moreover, they suggested that
government should also consider increasing tax incentives such as
exemptions and tax holidays as these will not only encourage voluntary
compliance but also attract investors who are potential viable tax payers
in the future.
Ojochogwu & Stephen (2012) assessed factors that affect tax
compliance among small and medium enterprises (SMEs) in North West
Nigeria. The study was conducted using SMEs in Zaria, North- West
Nigeria. It was found that high tax rates and complex filing procedures
were the most crucial factors causing non-compliance of SMEs. Other
factors like multiple taxation and lack of proper enlightenment were
noted as variables affecting tax compliance among the SMEs surveyed
only to a lesser extent. Therefore, they recommended that SMEs should
be levied lower percentage of taxes to allow enough funds for business
development and better chances of survival in a competitive market.
The government should also consider increasing tax incentives such as
exemptions and tax holidays as these will not only encourage voluntary
24

Molino Campus
compliance but also attract investors who are potential viable taxpayers
in the future.
Tax Policy and Level of Voluntary Compliance among Small
and Medium Enterprises
Since the compliance requirements, small taxpayers under the
regular system of taxation are discriminated against cost of compliance
and tax rate are the same for both small and large enterprises, according
to Vasak (2008). An increase in the small enterprises profit margin is
possible when the compliance costs and tax rate are reduced. The
simplified provisions for small and medium enterprises reduce the size
of the informal economy and the number of non-complying registered
taxpayers thus increasing the Governments tax revenue.
Additionally, SMEs usually have to operate in an overbearing
regulatory environment with the adequacy of regulatory agencies,
multiple taxes, cumbersome importation procedure and high port
charges that constantly exert serious burden on their operations. The tax
compliance was unduly burdensome and often have a distortional effect
on the development of SMEs as they are tempted to morph into forms
that offer a lower tax burden or no tax burden at all (Masato, 2009)
which are caused by an overly-complex regulatory system and tax
regime or one opaque in its administration and enforcement, and the
earlier results in a tax system that imposes high expenses on the society.
A poorly executed tax system also leads to low efficiency, high
collection charges, waste of time for taxpayers and the staff, and the low
amounts of received taxes and the deviation of optimum allocation of
resources (Farzbod, 2000). An indication from the existing empirical
evidence clearly states that small and medium sized businesses are
affected disproportionately by these costs: when scaled by sales or
assets, the compliance costs of SMEs are higher than for large
businesses (Weichenrieder, 2007).
Tax Policy that will Encourage Voluntary Compliance by
Small and Medium Enterprises
25

Molino Campus
SMEs set up unexploited revenue potential and an uneven
playing field in many countries (International Tax Dialogue, 2007) as
such they need to be captured by the tax net. Legislations may restrict
compliance and the growth of business through additional expenditures
and administrative obstacles, though they are essential regulator for
protection of the business environment and security of the economic
agents, for establishment of the necessary social security regulations.
Thus Shahroodi (2010), stated that the tax policy needs to be designed
such that the tax rates are appropriate and rational, the exemptions are
lower in amount, the tax collection organization are more efficient, the
tax burden of the indigent people should be lighter and the fight against
corruption and tax evasion should be much more intense, for a tax
system to be efficient. The design of tax policies could be in a way that
they do not only directly affect SMEs but also indirectly push for
voluntary compliance and their growth. Special tax regimes for SMEs
may be appropriate policy instruments for minimizing the cost of
collection, an emphasis by Yaobin (2007). Government intervention
should help maintain balance while ensuring that countries exploit the
social benefits from greater competition and entrepreneurship because
awareness of the dangers of inadequate taxation of SMEs has grown
because of the potential of uneven tax enforcement to cause distortions
of competition, voluntary compliance by larger enterprises and by wage
earners (International Tax Dialogue, 2007). A simple, consistent and
predictable Pro-business and Pro-SME Tax regimes and enforcement
should be established to lower compliance and administrative costs, and
hence reduce uncertainty faced by taxpayers as well as improve the
levels of voluntary compliance (Kasipillai, 2005).
Theoretical Framework
There are no completely developed economic theories tending to
the issue of tax compliance, however there are different models which
have been produced to address the issue. These models of tax
compliance depend on deterrence theory. Deterrence theory is a theory
under criminology and was created by Becker (1968). This theory
depends on the idea that, if the consequence of carrying out a crime
26

Molino Campus
exceeds the benefit of the crime itself, the individual will be deterred
from committing the wrongdoing. This is established in the idea that all
people are aware about the contrast between right and wrong and the
consequences connected with wrong or criminal practices. Advocates of
deterrence theory believe that individuals obey or disregard the law
subsequent to calculating the gains and consequence of their activities.
Economic Deterrence model, one of the economic-based models
was developed by Allingham and Sandom (1972), who expanded the
normal utility model of criminal activity started by Becker (1968) to the
tax field. This model consolidates the idea of an economically rational
taxpayer who will dodge taxation as long as the result from evading is
greater than the normal cost of being caught. Allingham and Sandmo
(1972) proposed an original economic model based on the normal utility
capacity of the taxpayer who evades. This model includes various
aspects. First, the taxpayer has some level of risk avoidance, the more
risk averse the taxpayer is, the less likely he is to evade charges. Also,
the taxpayer needs information with regards to the taxation framework
in order to assess the likelihood of being distinguished, and the extent of
penalties that might be brought about upon detection. Under A-S model
the taxpayer decides on the amount of taxes to answer to the taxing
organization. At the point when making this decision the taxpayer tries
to expand expected utility which is characterized to be the total of the
utility value of every result weighted by the likelihood that the specific
result happens. The A-S model demonstrates that the higher
probabilities of audit deter under reporting and that a higher rate for the
proportional tax prompts lower levels of reported income. The general
conclusion of this theory is that compliance depends largely on tax audit
and penalty. The suggestion of the theory is that citizens will pay taxes
because of the apprehension of sanctions.
Conceptual Framework
The research will adopt a conceptual framework where factors
affecting tax compliance will be taken as an independent variable while
27

Molino Campus
tax compliance will be itemized as dependent variable as illustrated in
the Conceptual figure.
Figure 1: Conceptual Framework: Factors affecting tax compliance

The figure shows the relationship between the independent
variable and dependent variable used to study the assessment of factors
affecting tax compliance by selected Small and Medium Enterprises
(SMEs) in Bacoor City, Cavite. The independent variables are tax
compliance cost,fines and penalties, taxpayers attitude and perception,
tax knowledge, and perceived opportunity for tax evasion.The
dependent variable for the study is tax compliance by SMEs.
Tax compliance cost is characterized by the time it takes and the
cost of compliance by SMEs.Sandford (1989) defined Tax compliance
costs as the costs acknowledging the fact that high compliance costs
diminish competitiveness of the country in terms of taxation
attractiveness.Fines and penalties as an independent variable influencing
tax compliance is indicated by the complex nature of the tax system and
high tax rate. Higher fines simply make evading taxes more hazardous
for taxpayers and should deter them from evasion.
Taxpayers attitude is indicated by the attitude the taxpayers
peers have with regards to tax compliance as well as the motivation tax
compliance holds for the SMEs. While taxpayers are influenced by the
system of tax structure either to comply or not, evidence suggest that
attitude and perceptions of the taxpayer also play an important role in
their compliance decisions. These involve perceptions of government
28

Molino Campus
spending, perceptions on the fairness of the system, poor social
influence and the ethics and attitudes towards compliance. Tax
knowledge and education is characterized by the taxpayers capacity to
comprehend taxation laws, and their willingness to comply. From the
tax administration viewpoint, researchers have concluded that
compliance could be influenced by educating taxpayers of their social
responsibilities to pay and thus their intention would be to comply.
Taxation information is important to expand awareness particularly in
areas concerning tax laws, the role of tax in national development, and
particularly to clarify how and where the money gathered is spent by the
administration (Mohd, 2010).
Perceived opportunity for tax evasion is indicated by the
intended or non-intended noncompliance on tax. Opportunity has
regularly been reported as a major explanatory variable in noncompliance (Webley, 2004). Opportunities often come about when tax
filings are not automated. In general, genuine opportunities can increase
both intentional and accidental evasion.
Objectives of the Study
This study aims to assess the factors affecting tax compliance by
selected SMEs in Bacoor City, Cavite. Specifically, it aims to determine
the following:
1. What is the profile of the selected Small and Medium
Enterprises (SMEs)?
2. In what level do the following factors affect the respondents in
tax compliance?
a) Compliance cost;
b) Fines and penalties;
c) Attitude and perception of traders;
d) Tax knowledge and education; and
e) Perceived opportunity for tax evasion
3. Is there a significant difference in the factors identified affecting
tax compliance in terms of profile?
Hypothesis
Alternative Hypothesis (Ha)
29

Molino Campus
There is a significant difference on the assessment of factors
affecting Tax Compliance by selected Small and Medium
Enterprises (SMEs) operating inBacoor City, Cavite when the
profile of the respondents is considered.
Significance of the Study
The study intended to assess the factors affecting tax compliance
by selected Small and Medium enterprises in Bacoor City, Cavite. In
general, the study is of importance to the public by providing
knowledge about the moral obligations behind tax payments.
Government. This study would be able to help the government
agencies, specifically the Bureau of Internal Revenue, increase
the number of voluntary compliance of taxpayers which could
result to greater tax revenue.
Business Owners. This study would be able to help the business
owners to increase his/her voluntary compliance about tax
policies, declare the true profit and avoid the unnecessary
penalties and compromise.
Accountants. This study would be able to help the accountants
to prepare financial statements accurately, declare the true profit
and avoid the unnecessary penalties and compromise.
Future Researchers. Through this study they can be more
inquisitive about many factors that may serve as a basis for the
improvement of the tax compliance of SMEs. They can also
evaluate the tax compliance by selected Small and Medium
Enterprises (SMEs) operating in Bacoor City, Cavite. Moreover,
they can use this as a basis and source for their future studies.
Scope and Delimitation of the Study
The research study shall cover Small and Medium Enterprises
operating in Molino 3, Bacoor City, Cavite. The target population shall
comprise of small and medium business enterprise operators because the
problem of tax compliance is rampant as evidenced by the absence of
electronic tax register (ETR Machine) among others. The study area was
30

Molino Campus
most suitable because it has the relevant, adequate and diverse target
population to enable the researcher pick the sample size required, from
which to obtain desired data.
Definition of Terms
Compromise.It is a deal between different parties that each party gives
up something what is demand.
Constraint. It is something that controls the limits or restricts actions.
Fines and Penalties.A fine or penalty is money paid usually to a
government authority, as a punishment for a crime or other offence.
Medium Enterprises.An enterprise with 100-199 Employees
Policy. It is a method and principles that guide and determine the
present and future outcomes or decisions.
Regulations.A general concept and official rule of the authority that
how should be done.
Small Enterprises.An enterprise with 10-99 Employees
Small and Medium Enterprises.Those entities with full-time
employees not exceeding 199 or asset size not exceeding Php 100
million.
Tax.A compulsory financial contribution imposed by a government to
raise revenue, levied on the income or property of persons or
organizations, on the production costs or sales prices of goods and
services, etc.
Tax Administration.It refers to the procedures attached to tax
compliance including registration and filling of returns.
Tax Attitude.The way of thinking or feeling about taxes.
Tax Avoidance.Refers to the legal reduction in tax liabilities by
practices that take the full advantage of the tax code, such as income
splitting and postponement of taxes.
31

Molino Campus
Tax Compliance.The Degree to which a taxpayer complies (or fails to
comply) with the tax rules of his country, for example by declaring
income, filing a return, and paying the tax due in a timely manner.
Tax Compliance cost.It refers to the expenditure of time or money in
conforming with government requirements such as legislation or
regulation.
Tax Evasion.It refers to the conscious or unconscious action and
behavior of a person who is liable to pay tax but who fails to fulfill this
duty by either under reporting his tax liability or failing to account for
his income generating activities altogether. Tax evasion also refers to the
reduction or minimization of tax liability by illegal methods.
Tax Obligation.Responsibilities pertaining to tax payment and
declaring of tax returns which a person duly registered is required to
observe.
Tax Rate. The tax rate is the tax imposed by the federal government
based on an individual's taxable income or a corporation's earnings. It
can also be defined as the percent of income paid as tax.
Chapter 2
METHODOLOGY
This chapter discusses the methodology of the study on the Assessment
of Factors Affecting Tax Compliance bySelected Small and Medium
Enterprises in Molino 3, Bacoor City, Cavite. It aims to define and discuss in
detail the methods of gathering and analyzing data of the study. Specifically, it
includes research design, data-gathering procedure and statistical treatment of
data.
Research Design
32

Molino Campus
This study will employ qualitative and quantitative research design that
shall enable collection of requisite information about the factors that affect the
tax compliance among Small and Medium Enterprises.This type of research is
conclusive in nature which gathers information that can be used for statistical
inference on your desired respondents through data analysis (Fluid Survey
University). For this mixed qualitative and quantitative form of research, the
researchers will make use of a descriptive survey for the data and informationgathering of the research to answer the questions that will be used to analyze
the factors that affect tax compliance.
Population Sampling
The target population will be derived from the small scale business
operators deemed knowledgeable of basic tax laws and policies. To ensure fair
representation of the target population, the selection of Small and Medium
Enterprises, from which to pick samples, will be done using both purposive
sampling and simple random sampling. Minimum sample size of thirteen (13)
respondents will be proportionately selected from the target population to
participate in the study.
Respondents of the Study
Participation in this study shall be voluntary and each of the enterprises
must give consent in order to facilitate the procedures of the survey and
interview. The population of the study are the selected fifteen (15) registered
SMEs in Molino, Bacoor City, Cavite. The researchers will be using the
sampling technique of the Slovins formula.The sample size calculated from the
said formula is thirteen (13). The respondents of this study are the restaurant
owners, small scale professional practitioners such as Lawyers, Accountants,
Debt collectors, Property agents, and Telecommunication shop owners because
they possess professional competence to give answers enough to impact and
influence to represent the whole population.
Research Instruments
To obtain effective and well-organized data for the study from the
respondents, valid questionnaires will be given to them to be answered. A
questionnaire is a set of systematically structured questions used by a researcher
to get need information from the respondents (Dr. Ododa and Onganya). The
33

Molino Campus
questionnaire that will be used in this study shall be adapted from a foreign
study which has the same concept. The first part of the survey questionnaire is
composed of the company profile name of business, capital, type of business,
number of years the company has been operating, and number of employees
working in the establishment. The second part is the adapted questionnaire from
the foreign study entitled, An Analysis of Factors Affecting Tax Compliance in
the Real Estate Sector in Kenya: A Case Study of Real Estate Owners in
Nakuru Town. The study discusses the factors that affect tax compliance in
Kenya.
Another instrument this study will be using along with the survey
questionnaire is interview. A semi-structured personal interview with some key
personnel of the respondents will be conducted. A semi-structured interview
includes a number of planned questions, but the interviewer has more freedom
to modify the wording and order of questions.
Data-Gathering Procedure
Primary data will be collected at source by the researcher through direct
communication with the respondents using questionnaires. The major sources
of this data are extracts from the Small and Medium Enterprises records,
research reports and abstracts. A comprehensive questionnaire with structured
questions shall be administered to the respondents sampled. The total answers
for each of the categories of cost of tax compliance of the respondents will be
tabulated and analyzed, which will form a conclusion to this research, as well as
a recommendation for the benefit of the individuals, private companies, and
also government agencies.
Sampling Techniques
To identify the respondents of the study, the researchers will make use
of the Slovins formula which is used to calculate the sample size (n) given the
population size (N) and a margin of error (e). It is a random sampling technique
formula to estimate sampling size.
9.
34

Molino Campus
where:
n = no. of samples
N = total population
e = error margin / margin of error
n=
15
2
1+(15 0.1 )
Using the Slovins formula, the number of the sample size is computed.
The margin of error is the amount that is allowed for in case of miscalculation
or change of circumstances. Substituting the variables with the actual numbers,
the sample size is thirteen point zero-four (13.04) which is estimated to thirteen
(13) registered SMEs.
The smallest margin of error is 1% while the largest is 10%. In this
study, the margin of error of 10% will be used that made the sample size
relatively small. This is because the research locale Molino 3, Bacoor City,
Cavite is huge that conducting a survey to a larger sample size would not be
feasible and would be tedious enough for the conduct and completion of the
study.
Statistical Treatment of Data
Raw data collection will be gathered from the questionnaires given. The
answers given will be tabulated and interpreted to answer the particular
statements of the problem. In this study, the researchers will make use of the
Likert Scale. It is the most widely-used research method to analyze the
responses in the survey questionnaire. The scale was a 5-7-point scale which
was developed by Likert in 1932 to measure the attitude by asking respondents
a series of statements about a topic, in terms of the magnitude of the
respondents agreement with the given. The scale measures levels of
agreement/disagreement (Bowling, 1997). In this study, the answers that would
be gathered in the questionnaires measure the level of significance of each of
the factors that affect tax compliance of the selected SMEs.
In the first part SMEs profile the researchers will calculate the
percentage of each information of the SME. The second part Factors that
affect tax compliance the researchers will be using the Mean and Standard
Deviation. The third part significant difference of tax compliance in terms of
35

Molino Campus
respondents profile the researchers will be using the T-test to determine if the
sets of data are significantly different from each other.
Percentage Formula:
x
p= x 100
n
Where:
x= given quantity
n= total amount
p= percentage quantity compared to the total
Mean and Standard Deviation:

s=
( X X )
N
Where:
S= standard deviation of a sample.
means sum of
X= each value in the data set,

X
= mean of all values in the data set,
N= number of values in the data set
When determining the overall trend of a data set or providing a rapid

snapshot of data the arithmetic mean or the average is will be used. However
when measuring a spread of data around the mean the statistical analysis
technique standard deviation will be used. A high standard deviation signifies
that the data is spread more widely from the mean, where a low standard
deviation signals that more data align with the mean. In a portfolio of data
36

Molino Campus
analysis methods, the standard deviation is useful for quickly determining
dispersion of data points.
Multiple Correlation Formula:
2
R =c R xx c
T
Where c
1
is the transpose of c, and R xx is the inverse of the matrix
The coefficient of multiple correlation is a measure of how well a given

variable can be predicted using a linear function of a set of other variables.
Table 1
Scaling for the factors affecting tax compliance cost by small medium
enterprises operating in Molino 3, Bacoor City
Range
Descriptive Rating
Verbal Interpretation
This means that the
4. 21 5.00
Very High
respondents perceived level

of tax compliance cost is
very high
This means that the
3.41 4.20
High

high
This means that the
2.61 3.40
Neutral

neutral
This means that the
1.81 2.60
1.0 1.80
Low
Very Low

low
This means that the
very low
37

Molino Campus
Table 2
Scaling for the factors affecting tax compliance level of agreement by small
medium enterprises operating in Molino 3, Bacoor City
Range
Descriptive Rating
Verbal Interpretation
This means that the
4. 21 5.00
Strongly Agree
of agreement of the tax

compliance is strongly
agree
This means that the
3.41 4.20
Agree

compliance is agree
This means that the
2.61 3.40
Neutral

compliance is neutral
This means that the
1.81 2.60
Disagree

compliance is disagree
This means that the
1.0 1.80
Strongly Disagree

compliance is strongly
disagree
38

Molino Campus
CHAPTER 3
RESULTS AND DISCUSSION
This chapter of the research study provides the researchers analysis of
the data and its corresponding interpretations. Results in this chapter are made
available using table and texts presentations.
1. Profile of the respondents
1.1Type of Business
Table 3
Distribution of Respondents by Type of Business
Type of Business
Frequency
Percentage
Manufacturing
3
23.08
Metalcraft
2
15.38
Refilling Station
1
7.69
Bakeshop
3
23.08
General Merchandise
4
30.77
Total
13
100.0
Table 3 shows the distribution of respondents as to type of business.
There were 3 under manufacturing (23.08%), 2 were under metalcraft
(15.38%), 1 were under refilling station (7.69%), 3 were under bakeshop
(23.08%) and 4 under general merchandise (30.77%).
39

Molino Campus
Type of Business
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Frequency
Type of Business
Figure 3. Frequency Distribution of Respondents by Type of Business

Figure 3 shows the frequency distribution of respondents as to type of
business.
1.2 Capital
Table 4
Distribution of Respondents by Capital
Capital
Frequency
Percentage
1 Million - 3 Million
3
23.08
3.1 Million - 6 Million
4
30.77
4
30.77
8.1 Million and above
2
15.38
Total
13
100.0
Table 4 shows the distribution of respondents as to Capital. There were
3 respondents working with a capital amounting to 1 Million - 3 Million
(23.08%), 4 respondents with a capital of 3.1 Million - 6 Million (30.77%), 4
respondents with a capital of 6.1 Million - 8 Million (30.77%), and 2 with 8.1
Million and above capital (15.38%) of the entire 13respondents.
40

Molino Campus
Capital
Frequency
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Amount of Capital
Figure 4. Frequency Distribution of Respondents by Capital

Figure 4 shows the frequency distribution of respondents as to capital.
1.3 Years of Service
Table 5
Distribution of Respondents by Years of Operation
Years of Operation
Frequency
Percent
1
1
7.69
3
1
7.69
4
3
23.09
6
2
15.39
7
1
7.69
8
1
7.69
9
1
7.69
10
1
7.69
11
1
7.69
12
1
7.69
Total
13
100.0
Table 5 shows the distribution of respondents as to years of operation in
their company. Four (4) years of operation has the most number of frequency (f
= 3), followed by six (6) years of operation (f = 2), only one respondent is
operating for a (1) year, three (3) years, seven (7) years, eight (8) years, nine (9)
41

Molino Campus
years, ten (10) years, eleven (11) years and twelve (12) years (f = 1) for the
entire 13 company respondents.
Years of service
3.5
3
2.5
2
Frequency
1.5
1
0.5
0
Years of service
Figure 5. Frequency Distribution of Respondents by Years of Operation.

Figure 5 shows the frequency distribution of respondents as to years of
operation of their company. Furthermore, the average years of operation is M =
6.54 with a standard deviation of Sd = 3.20.
1.4 Number of Employees
Table 6
Distribution of Respondents by Number of Employees
Number of
Employees
4
5
6
10
12
13
15
18
Total
Frequency
Percent
3
2
2
1
1
1
2
1
13
23.07
15.39
15.39
7.69
7.69
7.69
15.39
7.69
100.0
42

Molino Campus
Table 6 shows the distribution of respondents as to number of
employees. 3 companies hired4 employees (23.07%), 2 companies hired5,6 and
15 employees (15.39%), 1 company were hiring the 10, 12, 13, 18 employees
(7.69%) of the entire 13 company respondents.
Number of Employees
Frequency
3.5
3
2.5
2
1.5
1
0.5
0
Axis Title
Figure 6. Frequency Distribution of Respondents Number of Employees.

Figure 4 shows the distribution of respondents number of employees.
Furthermore, the average hired employees is M = 9 with a standard deviation of
Sd = 25.92.
2. Respondents Assessment on Tax Compliance
a. Assessed Tax Compliance Level

Table 7
Assessed Tax Compliance Level of the Respondents
Indicators
Mean
On time filing of tax return
3.92
On time payment of taxes with right 4.15
Sd
0.729
0.662
Z
0.109
-0.232
Percentile
54.364
40.807
amount
Total
0.115
-0.304
38.056
3.73
Table 7 shows the respondents assessed tax compliance level in terms of

the following indicators. Overall, 38.0564 percent of the respondents who
43
%Rank
1
2

Molino Campus
assessed the tax compliance level falls below the -3.04 standard deviation
below the standard/benchmark (4 = Agree). The highest percent rank item is
On time filing of tax return with 54.364 percent of respondents who answered
this
item
falls
below
the
0.109
standard
deviation
above
the
standard/benchmark (4 = Agree). The least percent rank item is On time

payment of taxes with right amount with a 40.807 percent of the respondents
who answered this item falls below the -0.232 standard deviation below the
standard/benchmark (4 = Agree).
3. Respondents
Assessment
on
Factors
Affecting
Tax
Percentil
%Rank
3
1
2
Compliance
a. Assessed Compliance Cost
Table 8
Assessed Compliance Cost of Respondents
Indicators
Mean
Sd
Hiring a tax agent of accountant

Travelling in order to file tax return
3.38
3.31
0.923
0.910
0.672
0.758
e
74.912
77.585
Filing of tax return
3.53
0.634
0.741
77.075
Total
3.41
0.092
6.413
100
Table 8 shows the respondents assessed compliance cost in terms of the

following indicators. Overall, 100 percent of the respondents who assessed the
compliance cost falls below the 6.413 standard deviation above the
standard/benchmark (4 = High). The highest percent rank item is Travelling in
order to file tax return with 77.585 percent of respondents who answered this
item falls below the 0.758 standard deviation above the standard/benchmark (4
= High). The least percent rank item is Hiring a tax agent of accountant with
a 74.912 percent of the respondents who answered this item falls below the
0.672 standard deviation above the standard/benchmark (4 = High).
b. Assessed Fines and Penalties
44

Molino Campus
Table 9
Assessed Fines and Penalties of Respondents
Indicators
Penalty rates are very low
Enforcement is very weak
Mean
2.62
2.77
Sd
1.077
0.890
Z
1.281
1.382
Percentile
89.996
91.652
%Rank
3
2
Penalties (Surcharge, Interest,
2.54
1.009
1.447
92.605
2.64
0.095
14.316
100
and Compromise) is lower than

tax
savings
due
to
complying with tax laws

Total
not
Table 9 shows the respondents assessed fines and penalties in terms of the
following indicators. Overall, 100 percent of the respondents who assessed the
fines and penalties falls below the 14.316 standard deviation above the
standard/benchmark (4 = Agree). The highest percent rank item is Penalties
(Surcharge, Interest, and Compromise) is lower than tax savings due to not
complying with tax laws with 92.605 percent of the respondents who
answered this item falls below the 1.447 standard deviation above the
standard/benchmark (4 = Agree). The least percent rank item is Penalty rates
are very low with a 89.996 percent of the respondents who answered this item
falls below the -1.281 standard deviation above the standard/benchmark (4 =
Agree).
c. Assessed Tax Knowledge and Education
Table 10
Assessed Tax Knowledge and Education
Indicators
As taxpayer, the SME possess the
Mean
3.69
Sd
0.991
Z
0.313
Percentile
62.279
knowledge to declare actual income

45
%Rank
3

Molino Campus
received from all sources to the tax
authority
As taxpayer, the SME knows how to
3.54
0.634
0.726
76.594
4.15
0.948
-0.158
43.713
4.08
1.269
-0.630
47.487
3.69
0.821
0.378
64.713
3.83
0.240
0.708
76.063
keep/ record documents pertaining to

income and expenditure for a period of
seven years after submission of the Tax
Return
As taxpayer, the SME understand well
that it should pay taxes due within the
prescribed period from the date of issue
of the Notice of Assessment or within
the stipulated period
As taxpayer, the SME knows how to
obtain a tax payer identification pin
number
As taxpayer, the SME knows which
income should be included or excluded
in determining taxable income
Total
Table 10 shows the respondents assessed tax knowledge and education in terms
of the following indicators. Overall, 76.063 percent of the respondents who
assessed the tax knowledge and education falls below the 0.708 standard
deviation above the standard/benchmark (4 = Agree). The highest percent rank
item is As taxpayer, the SME knows how to keep/ record documents
pertaining to income and expenditure for a period of seven years after
submission of the Tax Return with 76.594 percent of the respondents who
46

Molino Campus
standard/benchmark (4 = Agree). The least percent rank item is As taxpayer,
the SME understand well that it should pay taxes due within the prescribed
period from the date of issue of the Notice of Assessment or within the
stipulated period with a 43.713 percent of the respondents who answered this
item falls below the -0.158 standard deviation below the standard/benchmark (4
= Agree).
d. Assessed Attitudes and Perception of Traders
Table 11
Assessed Attitudes and Perception of Traders of the Respondents
Indicators
Mean
Sd
Percentil
%Rank
The tax liability is high

The idea of protesting against the
3.69
2.77
0.910
1.049
0.341
1.173
e
63.332
87.951
2
1
SMEs tax assessment

Total
3.23
0.46
1.674
95.292
Table 11 shows the respondents assessed attitudes and perceptions of traders in

terms of the following indicators. Overall, 95.292 percent of the respondents
who assessed the attitudes and perceptions of traders falls below the 1.674
standard deviation above the standard/benchmark (4 = Agree). The highest
percent rank item is The idea of protesting against the SMEs tax assessment
with 87.951 percent of the respondents who answered this item falls below the
1.173 standard deviation above the standard/benchmark (4 = Agree). The least
percent rank item is The tax liability is high with a 63.332 percent of the
47

Molino Campus
respondents who answered this item falls below the 0.341 standard deviation
above the standard/benchmark (4 = Agree).
e. Assessed Perceived Opportunity for Tax Evasion
Table 12
Assessed Perceived Opportunity for Tax Evasion of the Respondents
Indicators
The figures in the tax return is easily
Mean
2.54
Sd
0.929
Z
1.572
Percentile
94.198
%Rank
1
manipulated
The tax authority is tolerant towards tax
2.77
0.890
1.382
91.652
offenses
The tax authority has limited capability
2.46
1.151
1.338
90.955
3.23
1.309
0.588
72.181
2.75
0.2996
4.172
99.999
to investigate all income reported

The probability of being detected by
tax authority for not declaring the exact
income received is low
Total
Table 12 shows the respondents assessed perceived opportunity for tax evasion
in terms of the following indicators. Overall, 99.999 percent of the respondents
who assessed the tax knowledge and education falls below the 4.172 standard
deviation above the standard/benchmark 4 = Agree). The highest percent rank
item is The figures in the tax return is easily manipulated with 94.198 percent
of the respondents who answered this item falls below the 1.572 standard
deviation above the standard/benchmark (4 = Agree). The least percent rank
item is The probability of being detected by tax authority for not declaring the
exact income received is low with a 72.181 percent of the respondents who
standard/benchmark (4 = Agree).
48

Molino Campus
4. Significant Relationship between Tax Compliance and
its Factors affecting it.
4.1 Summary of Statistics.
Table 13
Summary statistics:
Observati
ons
Obs. with
missing
data
13
Cost
13
Fines
Knowled
ge
Attitude
s
Perceiv
ed Opp
Variable
Complia
nce
Obs.
without
missing
data
Minim
um
Maxim
um
13
3.000
5.000
13
2.333
5.000
13
13
1.667
4.000
13
13
2.400
4.800
13
13
2.000
4.500
13
13
2.000
3.750
Std.
Me deviati
an
on
4.0
38 0.691
3.4
10 0.818
2.6
41 0.822
3.8
46 0.722
3.2
31 0.971
2.7
50 0.530
4.2 Correlation Matrix.
Table 14
Correlation matrix (Pearson):
Variables
Attitudes
0.731
-0.910
-0.569
-0.915
0.920
0.617
-0.739
0.768
0.510
Knowledge
0.731
-0.569
1
-0.861
Attitudes
-0.915
0.617
-0.861
1
Perceived
Opp
-0.739 0.768
0.510
-0.620
0.850
Values in bold are different from 0 with a significance level alpha=0.05
-0.620
0.850
1
-0.816
-0.561
Cost
0.816
1
0.678
0.910
0.920
Fines
Perceived
Opp
Knowledge
Compliance
Cost
Fines
Compliance
-0.561
0.678
1
To determine significant relationship on perceived tax compliance and its

factors affecting it a multiple correlation analysis was performed. Table 13
shows that there were significant relationship between groups as determined by
multiple correlation analysis.
4.3 p-values.
49

Molino Campus
Table 15
p-values:
Variables
Compliance
Cost
Fines
Knowledge Attitudes
Compliance
0
0.001
0.046
0.005
0.000
Cost
0.001
0
0.011
< 0.0001 < 0.0001
Fines
0.046
0.011
0
0.042
0.025
Knowledge
0.005 < 0.0001
0.042
0
0.000
Attitudes
< 0.0001 < 0.0001
0.025
0.000
0
Perceived
Opp
0.004
0.002
0.075
0.024
0.000
Perceived
Opp
0.004
0.002
0.075
0.024
0.000
0
CHAPTER 4:
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter represents the summary of findings, conclusions based on
the results of the research study, and its corresponding recommendations.
Summary of Findings
From the results of the foregoing analysis and interpretation of data, the
following findings were drawn and presented:
1. The profile of the respondents as to:

a. Type of Business. Among the thirteen (13) respondents, the General
Merchandise type of business bore the highest frequency of four (4)
and a percentage of thirty-point seventy seven (30.77%), while
refilling station bore the least with a frequency of one (1) and a
percentage of seven point sixty nine (7.69%).
b. Capital. Among the thirteen (13) respondents, a majority of four (4)
SMEs, for different capitals, which is equivalent to thirty point
50

Molino Campus
seventy seven percent (30.77%), has been operating with a capital
amounting 3.1 million to 6 million and 6.1 million to 8 million,
while the minority of two (2) SMEs, equivalent to fifteen point
thirty eight percent (15.38%), operates with a capital of 8.1 million
and above.
c. Years of operation. Among the thirteen (13) respondents, a majority
of three (3) SMEs with a twenty-three point zero nine percent
(23.09%), has been operating for four years, while a minority of one
(1) for different years of operation, which is equivalent to seven
point sixty nine percent (7.69), has been operating for a year, one (1)
year, three (3) years, seven (7) years, eight (8) years, nine (9) years,
ten (10) years, eleven (11) years and twelve (12) years.
d. Number of employees. Among the thirteen (13) respondents, a
majority of three (3) SMEs, which is equivalent to twenty three
point zero seven percent (23.07%), have four (4) employees, while a
minority of one (1) for different number of employees, which is
equivalent to seven point sixty nine percent (7.69%), have ten (10)
employees, twelve (12) employees, thirteen (13) employees and
eighteen (18) employees.
2. Respondents Assessment on Tax Compliance
a. Assessed Tax Compliance Level
Survey results of the respondents per se construes that tax
compliance level are fair or neutral (mean = 3.73). Tax compliance
is fair which also confirms that the respondents files tax return on
time (mean = 3.92) and pays taxes with right amount on time (4.15).
3. Respondents Assessment on Factors affecting Tax Compliance
a. Assessed Compliance Cost.
Survey results of the respondents per se construes that compliance

cost are high (mean = 3.41). According to Peter (2014), tax
51

Molino Campus
compliance is fair which also confirms that the respondents agreed
that cost of hiring a tax agent of accountant (mean = 3.38), travelling
in order to file tax return (mean = 3.31), filing of tax return (mean =
3.53) are fair.
b. Assessed Fines and Penalties.
Table 9 denotes, survey results of the respondents per se, that fines
and penalties are fair or neutral (mean = 2.64). To expound, penalty
rates are disagreed to be low (mean = 2.62), enforcement is fair
(mean = 2.77), and penalties (surcharge, interest, and compromise)
are disagreed to be lower than tax savings (mean = 2.54). This is
also true with Peters (2014) study.
c. Assessed Tax Knowledge and Education.
Table 10 showed, survey results of the respondents per se, that the
SMEs possess the knowledge and education about tax compliance
(mean = 3.83). To detail, SMEs knows how to keep/record
documents pertaining to income and expenditure for a period of
seven years (mean = 3.54), they understand taxes due is to be paid
within the prescribed period (mean = 4.15), they know how to
obtain a tax payer identification pin number (mean = 4.08), and that
they know which income should be included or excluded in
determining the taxable income (mean = 3.69).
d. Assessed Attitudes and Perceptions of Traders.
Table 11 showed, survey results of the respondents per se, that the
SMEs attitude and perception against traders is bad (mean = 3.23).
To detail, SMEs think that tax liability is high (mean = 3.39), the
idea of protesting against tax assessment is low (mean = 2.77).
e. Assessed Perceived Opportunity for Tax Evasion.
Table 12 exhibited, survey results of the respondents per se, that the
perceived opportunity for tax evasion is highly agreed to be low
52

Molino Campus
(mean = 2.75), the risk of detecting fraudulent tax return is highly
agreed to be low (mean = 3.23), the figures in the tax return is not
easily manipulated (mean = 2.54), disagreed that the tax authorithy
has limitied capability to investigate all income reported (mean =
2.46) and is agreed that the tax authority does not tolerate tax
offenses and gives heavy punishments (mean = 2.77).
4. The significant relationship between tax compliance and the factors
affecting it.
As stated in the Hypothesis there is a significant relationship between
the tax compliance of Small and Medium Enterprises operating in
Molino 3, Bacoor city, Cavite and the factors affecting it. The research
findings shows that this is a consistent statement for there is a
significant relationship between groups as determined by the multiple
correlation analysis. The result shows that only Knowledge and
Education has positive relationship towards tax compliance while other
factors shows negative relationship towards tax compliance. Knowledge
shows a positive zero point seven hundred thirty one (0.731)
relationship towards tax compliance meaning that as knowledge goes up
the tax compliance by respondents goes up or vice versa. The other
factors showing negative relationship means that as the factors is low
the tax compliance level goes up or vice versa.
Conclusion
These research study findings provide direct evidence that tax knowledge and
education is one of the most contributory factors in tax compliance, and an
indication of its large impact. From the research study findings, there is
sufficient evidence to conclude that tax knowledge and education is associated
with high levels of tax compliance. The research study also provides some
53

Molino Campus
initial evidence that tax compliance cost play an important role in enhancing tax
compliance. Most of the taxpayers are burdened by their tax paid. The research
study also shows that fines and penalties play a significant factor in tax
compliance. In particular, for a tax methodology with fair tax rates of fines and
penalties, tax compliance is likely to enhance. The tax payers are forced to pay
taxes on time to avoid fines and penalties. The research study result also
concludes that perceived opportunity for tax evasion has a significant effect on
tax compliance. This is because through opportunity, fraudulent tax returns
increased non-compliance nevertheless of what the participants actually
intended to be non-compliant or not. Finally, the research study also concludes
that attitude and perceptions against traders has a significant effect on tax
compliance because most of the tax payers show that tax is a burden.
Recommendations
From the research study findings, it was concluded that tax compliance
cost has a significant effect on tax compliance. The study findings
recommended that those taxpayers with low compliance costs are the ones who
are most likely to comply. Therefore, high compliance costs do not encourage
taxpayers to file their tax returns accordingly. The research study found strong
support for the argument that fines and penalties impacts highly on tax
compliance, thus there would be moderate levels of fines and taxes to employ.
This way, taxpayers would be encouraged to comply since they would keep
accurate records for taxation purposes in order to avoid fines and penalties.
Also, tax knowledge and education has a significant effect on tax compliance.
Thus, the tax system should not only provide a clear and simple guideline on
how to file tax returns, but also improve taxpayer education services to enable
the taxpayers understand their rights and obligations as taxpayers. This would
result to a high level of tax compliance. Finally, perceived opportunity for tax
54

Molino Campus
evasion has a significant effect on tax compliance, therefore the tax system
should aim at individual taxpayers at all levels of income to prevent gaps and
avoid tax evasion. Tax systems should also strengthen surveillance and
monitoring to ensure that all the taxpayers returns are complied properly.
Specifically, for tax payers, tax mapping should be done to ensure that they are
recruited into the tax net.
Filing tax returns to the government might be easier said than done.
From the findings of the research to its conclusion, the following are the
researchers recommendations for its significance of the study:
Government
We commend the government for the findings construed that penalties
are perceived as low and that its implementation of its regulations are effective
and strong, but the researchers would like to ask you to conduct seminars with
regard to tax compliance and the BIRs rules and regulations in tax filing. This
is to aid the SMEs especially those who do not possess or arent knowledgeable
or educated enough to file their tax returns correctly.
Business Owners
As SMEs, most of the respondents were the owners themselves who
know little and/or have only been in their business for just a few years. They
certainly are not knowledgeable enough to do tax returns properly. If hiring a
tax agent or an accountant would exceed costs of filing, then the researchers
would recommend you to attend seminars or ask people who are knowledgeable
enough in complying tax returns.
Accountants
SMEs would hire accountants if the owners themselves do not know
how to file tax returns. But despite hiring these employees, more often than not,
55

Molino Campus
they, too, are not knowledgeable enough to file tax returns. Tax has always been
a hard subject to tackle among accountants of the country. And though the rules
and regulations of the BIR are set out to the public already, only a few
understands and actually complies with these. The researchers would like to
recommend that you be equipped with competence and due care enough to
complete and accomplish your clients tax returns.
Future Researchers
To future researchers, this is only an adopted thesis from Peter (2014).
And as far as the researchers have looked through, this is the first time that this
kind of study has been conducted in the country. The researchers would surely
be open for your further research on this topic. This surely is relevant to our
field of science. Researchers should replicate or even improve this study to help
assess the whole country itself. A study on the self-assessment system could
also be carried out to determine its effectiveness on enhancing tax compliance
levels. Further, the study should also put into consideration the influence
ofEconomic conditions on tax compliance.
56

Molino Campus
REFERENCES
Aldaba, R. M. (2012). Small and Medium Enterprises' (SMEs) Access to
Finance: Philippines (Philippine Institute for Development Studies). Retrieved
from http://dirp4.pids.gov.ph/ris/dps/pidsdps1205.pdf
Abrugar, V. (2011) Small Businesses in the Philippines. Retrieved from
http://businesstips.ph/small-businesses-in-the-philippines/
Chan Robles Virtual Library Philippines Laws, statutes and codes. Republic
Act no. 8289 Magna Carta for Small Enterprises. Retrieved from
http://www.chanrobles.com/republicactno8289.htm#.V2Ijrrt97IW
Pagaspas, G.S. (2016) 8 ways to Learn BIR Tax Compliance. Retrieved from
http://taxacctgcenter.org/ways-to-learn-bir-tax-compliance/
Mendoza, R.U and Melchor, M. (2014) SMEs in the Philippines: Going
beyond Survival. Retrieved from: http://www.rappler.com/thoughtleaders/74674-smes-philippines-asian-institute-management
Asean Tax Philippines- Tax incentives in the Philippines. Retrieved from:
http://www.rd.go.th/publish/fileadmin/user_upload/AEC/AseanTaxPhilippines.pdf
Asean Tax Philippines- Policy Incentives Granted to Local SMEs in the
Philippines. Retrieved from:
http://www.asean.org/storage/images/archive/pdf/sme_7.pdf
Adebisi, J.F Ph.D ., et al.(2013) Effect of Multiple Taxation on the
Performance of Small and Medium Scale Business Enterprises. (A Study of
West African Ceremics Ajeokuta, Kogi State). Retrieved from:
http://www.mcser.org/journal/index.php/mjss/article/download/310/326.
57

Molino Campus
Ameyaw, B., et al. (2015) Tax Policy, SMES, Compliance, Perception and
Growth Relationship in Ghana: An Empirical Analysis. Retrieved from:
http://sciencedomain.org/download/MTIxMTBAQHBm.
Moeinadin, M., et al. (2014) Identifying the Effective Factors for the
Improvement of Tax Compliance. Retrieved from:
http://hrmars.com/hrmars_papers/Article_23_Identifying_the_Effective_Factor
s_for_the_Improvement.pdf
Atawodi, O.W. (2012) Factors That Affect Tax Compliance among Small and
Medium Enterprises (SMEs) in North Central Nigeria. Retrieved from:
http://www.ccsenet.org/journal/index.php/ijbm/article/download/15251/12028O
jochogwu.
Semikolenova, Y. (1999) Taxation of Small and Medium Enterprises.
Retrieved from:
http://www.kse.org.ua/uploads/file/library/1999/Semikolenova.pdf
Department of Trade and Industry (2014) SMEs Statistics. Retrieved from:
http://www.dti.gov.ph/dti/index.php/resources/sme-resources/sme-statistics
Devos, K. (2007) Measuring and Analysing Deterrence in Taxpayer
Compliance Research. Retrieved from:
http://www.austlii.edu.au/au/journals/JlATax/2007/5.html#Heading63
Fluid Surveys Team (2014) Descriptive Research: Defining Your Respondents
and Drawing Conclusions. Retrieved from:
http://fluidsurveys.com/university/descriptive-research-defining-respondentsdrawing-conclusions/
Stephenson, T. (2006) the gap between what taxpayers want and what tax
professionals think they want: a reexamination of client expectations and tax
professional aggressiveness. Retrieved from:
http://uknowledge.uky.edu/cgi/viewcontent.cgi?
article=1281&context=gradschool_diss
Nzioki , P.M (2014)Analysis of Factors Affecting Tax Compliance in Real
Estate Sector: A Case of Real Estate Owners in Nakuru Town, Kenya
Retrieved from:
http://webcache.googleusercontent.com/search?
q=cache:lBUvXkoDyxAJ:www.iiste.org/Journals/index.php/RJFA/article/down
load/13523/14240+&cd=1&hl=en&ct=clnk&gl=ph
58

Molino Campus
Appendix A
Descriptive Statistics for Perceived Tax Compliance
Statistics
On time filing
On time
of tax return
payment of tax
Valid
13
13
Mean
3.92
4.15
Std. Deviation
.923
.662
Missing
Statistics
Cost_Mean
Fines_Mean
Knowledge_
Perception_Mean
Mean
13
13
13
13
13
Mean
3.41
2.64
3.83
3.23
2.75
Std. Deviation
.092
.095
.24
.46
.2996
Valid
Opportunity_Mea
Missing
59

Molino Campus
Statistics
Hiring a
Travellin
Filing of
tax agent
g in
tax
of
order to
return
accounta
file tax
nt
return
Valid
N
13
13
13
3.38
3.31
3.53
.923
.91
.634
Missi
ng
Mean
Std.
Deviation
Statistics
Penalty rates are
Enforcement is
Penalties
low
weak
(Surcharge,
Interest, and
Compromise) are
lower than tax
Valid
Missing
Mean
Std. Deviation
Statistics
13 the
13
As taxpayer,
As taxpayer, the
0 the SME knows
0 how
SME possess
savings
13 the
As taxpayer,
As taxpayer, the
0
SME understand
SME knows how to SME knows which
2.54
well that it should obtain a tax payer income should be
1.009
pay taxes due
identification pin
included or
2.62
knowledge to
1.077
declare actual
2.77
to keep/
record
.89
documents
income
income and
within the
expenditure
prescribed period
pertaining to
As taxpayer, the
number
excluded in
determining taxable
income
13
13
13
13
13
Mean
3.69
3.54
4.15
4.08
3.69
Std. Deviation
.991
.634
.948
1.269
.821
Valid
Missing
Statistics
The tax liability is
The idea of protesting against tax assessment
high
N
Valid
Missing
Mean
Std. Deviation
13
13
3.69
2.77
.91
1.049
60

Molino Campus
Statistics
The figures is
The tax authority
The tax authority
The probability of
easily
is tolerant towards
has limited
being detected for
manipulated
tax offenses
capability
fraudulent tax
income is low
13
13
13
13
Mean
2.54
2.77
2.46
3.23
Std. Deviation
.929
.89
1.151
1.309
Valid
Missing
Appendix B
Profile of the Respondents as to Type of Business
Type of Business
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
Manufacturing
23.08
23.08
23.08
Metalcraft
15.38
15.38
38.46
Refilling Station
7.69
7.69
46.15
Bakeshop
23.08
23.08
69.23
General Merchandise
30.77
30.77
100.0
13
100.0
100.0
Total
61

Molino Campus
Type of Business
4.5
4
3.5
3
2.5
2
1.5
Frequency
1
0.5
0
Type of Business
Appendix C
Profile of the Respondents as to Capital
Capital
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
1 Million - 2 Million
23.08
23.08
23.08
30.77
30.77
54.57
30.77
30.77
85.34
8.1 Million and above
15.38
15.38
100.0
13
100.0
100.0
Total
62

Molino Campus
Capital
4.5
4
3.5
3
2.5
2
1.5
Frequency
1
0.5
0
Amount of Capital
Appendix D
Years of Operation of Respondents
63

Molino Campus
Years of Operation
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
7.69
7.69
7.69
7.69
7.69
15.38
23.09
23.09
38.47
15.39
15.39
53.86
7.69
7.69
61.55
7.69
7.69
69.24
7.69
7.69
76.93
10
7.69
7.69
84.62
11
7.69
7.69
92.31
12
7.69
7.69
100.0
13
100.0
100.0
Total
Years of service
3.5
3
2.5
2
Frequency
1.5
1
0.5
0
Years of service
Appendix E
64

Molino Campus
Number of Employees of Respondents
Number of Employees
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
23.07
23.07
23.07
15.39
15.39
38.46
15.39
15.39
53.85
10
7.69
7.69
61.54
12
7.69
7.69
69.23
13
7.69
7.69
76.92
15
15.39
15.39
92.31
18
7.69
7.69
100.0
13
100.0
100.0
Total
Number of Employees
3.5
2.5
Frequency
1.5
0.5
Axis Title
Appendix F
65

Molino Campus
Significant Relationship between Tax Compliance and
its Factors affecting it.
Summary statistics:
Observation
s
Obs. with
missing
data
13
Cost
13
Fines
Knowledg
e
Attitudes
Perceived
Opp
Variable
Complianc
e
Obs.
without
missing
data
Minimu
m
Maximu
m
13
3.000
5.000
13
2.333
5.000
13
13
1.667
4.000
13
13
2.400
4.800
13
13
2.000
4.500
13
13
2.000
3.750
Mea
n
4.03
8
3.41
0
2.64
1
3.84
6
3.23
1
2.75
0
Std.
deviatio
n
0.691
0.818
0.822
0.722
0.971
0.530
Correlation matrix (Pearson):

Variables
Compliance
Cost
Fines
Knowledge Attitudes
0.81
Compliance
1
6
-0.561
0.731
-0.915
Cost
-0.816
1
0.678
-0.910
0.920
0.67
Fines
-0.561
8
1
-0.569
0.617
0.91
Knowledge
0.731
0
-0.569
1
-0.861
0.92
Attitudes
-0.915
0
0.617
-0.861
1
Perceived
0.76
Opp
-0.739
8
0.510
-0.620
0.850
Perceived Opp
-0.739
0.768
0.510
-0.620
0.850
1
p-values:
Complianc
e
0
0.001
0.046
0.005
< 0.0001
Variables
Cost
Fines
Knowledge Attitudes
Compliance
0.001
0.046
0.005
0.000
Cost
0
0.011
< 0.0001 < 0.0001
Fines
0.011
0
0.042
0.025
Knowledge
< 0.0001
0.042
0
0.000
Attitudes
< 0.0001
0.025
0.000
0
Perceived
Opp
0.004
0.002
0.075
0.024
0.000
Perceived
Opp
0.004
0.002
0.075
0.024
0.000
0
66

Molino Campus
Appendix G
Sample Questionnaire
67

Molino Campus
Appendix K
Letter of Request
68

Zknamcx

Uploaded by

Copyright:

Available Formats

Zknamcx

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Zknamcx

Uploaded by

Copyright:

Available Formats

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

ASSESSMENT OF FACTORS AFFECTING TAX COMPLIANCE BY

In Partial Fulfillment of the Requirements for the Degree

AMBONA, DOMINIC JASPER C.

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

ASSESSMENT OF FACTORS AFFECTING TAX

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Accepted and approved as partial fulfillment of the requirements for the

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

With profound gratitude, we would like to extend our outmost

Dominic Jasper C. Ambona

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

: ASSESSMENT OF FACTORS AFFECTING

: DOMINIC JASPER C. AMBONA

: University of Perpetual Help System Dalta-

: Bachelor of Science in Accountancy

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

The Problem and a Review of Related Literature

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

3. Results and Discussion............................................................................

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

cooperative, partnership or corporation whose total assets, inclusive of

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

burdensome registration procedures and strict regulatory environments,

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

equipment, domestic breeding stock, and genetic materials.

capital equipment and/or spare parts.

income is imposed after the end of the income tax holiday.

An exemption from wharfage dues and export tax, duty import

Additional deduction for necessary and major infrastructure works.

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Establishment of Negosyo Centers in all provinces, cities and

the MSME Development Fund and BMBE Fund

Marketing Assistance for SMEs

2014: Implementing Rules and Regulations for Republic Act No.

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

Figure 1: Conceptual Framework: Factors affecting tax compliance

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA