Determinants of Tax Compliance with Implications for Digital Accounting and Fintech Sustainability

Abstract:

This research examines the predictors of tax compliance and their implications for the sustainability of digital accounting and FinTech. Using survey data from MSMEs and the application of PLS-SEM in Smart-PLS-4, the study investigated the impact of compliance costs, tax rates, and the complexity of the tax system on tax compliance behaviour. The measurement model demonstrated robust reliability and validity, and the structural models explained 29.3% of the variance in personal tax compliance. The findings suggest that the costs of compliance and the complexity of the tax system have a statistically significant and positive effect on tax compliance, while tax rates do not. The results show that sustainable compliance is more effectively achieved by reducing administrative burdens and simplifying the tax system, rather than through rate changes. Key findings of the research emphasize the role of digital accounting technology and the innovations of FinTech in establishing the foundation for transparency, efficiency, and trust among taxpayers. A priori, this research extends the compliance literature by adopting a combination of administrative, behavioural, and technological perspectives in the study. Feit provides direction and digital infrastructure to reduce bureaucracy, supporting the tax system that supports the economy.