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


  • Muhammad Shaukat Malik Dean Faculty of Law, Commerce and Business Administration, Director Institute of Banking and Finance, Bahauddin Zakariya University, Multan, Pakistan
  • Sabah Younus PhD Scholar, Institute of Banking and Finance, Bahauddin Zakariya University, Multan, Pakistan




Voluntary Tax-Compliance Behaviour, Trust in Authorities, Legitimate Power and Coercive Power Exercised by Authorities, Subjective Norms, Moral Obligation, Perceived Behavioural Control, Attitude, Small and Medium Enterprises


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


Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2),179–211.

Akram, M. S., Malik, A., Shareef, M. A., & Goraya, M. A. S. (2019). Exploring the interrelationships between technological predictors and behavioral mediators in online tax filing: The moderating role of perceived risk. Government Information Quarterly, 36(2), 237-251

Alasfour, F. (2019). Costs of distrust: The virtuous cycle of tax compliance in Jordan. Journal of Business Ethics, 155(1), 243-258.

Ali, M., Fjeldstad, O.H. and Sjursen, I. H. (2014). To pay or not to pay? Citizens’ attitudes towards taxation in Kenya, Tanzania, Uganda, and South Africa. World Development 64, 828-842.

Al-Ttaffi, L. H. A., Bin-Nashwan, S. A., & Amrah, M. R. (2020). The Influence of Tax Knowledge on Tax Compliance Behaviour: A Case of Yemeni Individual Taxpayers. Journal of Business Management and Accounting, 10(2), 15-30.

Baron R.M. et Kenny D.A. (1986), Moderator-mediator variables distinction in social psychological research: conceptual, strategic, and statistical considerations, Journal of Personality and Social Psychology, 51, 6, 1173-1182.

Batrancea, L., Nichita, A., Olsen, J., Kogler, C., Kirchler, E., Hoelzl, E., ... & Schaffner, M. (2019). Trust and power as determinants of tax compliance across 44 nations. Journal of Economic Psychology, 74, 102191.

Bobek, D. D., & Hatfield, R. C. (2003). An investigation of the theory of planned behavior and the role of moral obligation in tax compliance. Behavioral Research in Human Behavior, 28 (2), 187-209.

Bornman, M. & Ramutumbu, P., (2019). A tax compliance risk profile of guesthouse owners in Soweto, South Africa. Southern African Journal of Entrepreneurship and Small Business Management, 11(1), a-181. https://doi.org/ 10.4102/sajesbm. v11i1.181

Damayanti, T. W., Sutrisno, Subekti, Imamdan Baridwan, Zaki. (2015). Trust and Uncertainty Orientation: An Efforts to Create Tax Compliance in Social Psychology Framework. Procedia-Social and Behavioral Sciences, 11, 938-944.

Field, A. (2009) Discovering Statistics Using SPSS. 3rd Edition, Sage Publications Ltd., London.

Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with nobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50.

Gangl, K., Hofmann, E. and Kirchler, E. (2015). Tax authorities’ interaction with taxpayers: A conception of compliance in social dilemmas by power and trust. New Ideas in Psychology, 37, 13-23.

Hair, J. F., Jr., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). Sage.

Hair, J. F., Jr., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage.

Haider, S., Jabeen, S., & Ahmad, J. (2018). Moderated mediation between work life balance and employee job performance: The role of psychological wellbeing and satisfaction with coworkers. Journal of Work and Organizational Psychology, 34(1), 29–37.

Halim, H. A., Ahmad, N. L., Katmun, N., & Jaafar, H. (2015). Understanding and attitudes towards self-assessment taxation system: The case of Malaysian Non-Accounting undergraduates? students. Global Review of Accounting and Finance, 6(2), 110-122.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135.

Horodnic, I. A. (2018). Tax morale and institutional theory: a systematic review. International Journal of Sociology and Social Policy, 38(9/10), 868-886.

Hwang, E., Baloglu, S., & Tanford, S. (2019). Building loyalty through reward programs: The influence of perceptions of fairness and brand attachment. International Journal of Hospitality Management, 76, 19-28.

Inasius, F. (2019). Factors Influencing SME Tax Compliance: Evidence from Indonesia. International Journal of Public Administration, 42(5), 367-379. doi:10.1080/01900692.2018.1464578

Iqbal, S., & Sholihin, M. (2019). The role of cognitive moral development in tax compliance decision making: An analysis of the synergistic and antagonistic tax climates. International Journal of Ethics and Systems, 35(2), 227-241.

Jarvis, C. B., MacKenzie, S. B., & Podsakoff, P. M. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. Journal of Consumer Research, 30(2), 199–218.

Ju, D., Xu, M., Qin, X., & Spector, P. (2019). A Multilevel Study of Abusive Supervision, Norms, and Personal Control on Counterproductive Work Behavior: A Theory of Planned Behavior Approach. Journal of Leadership & Organizational Studies, 26(2), 163-178.

K. Devos., (2014). Factors Influencing Individual Taxpayer Compliance Behaviour, Springer Science and Business Media Dordrecht, DOI 10.1007/978-94-007-7476-6_2,

Kastlunger, B., Lozza, E., Kirchler, E., & Schabmann, A. (2013). Powerful authorities and trusting citizens: The slippery slope framework and tax compliance in Italy. Journal of Economic Psychology, 34, 36–45.

Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The “slippery slope” framework. Journal of Economic Psychology, 29(2), 210-225. doi:https://doi.org/10.1016/j.joep.2007.05.004

Malik, M. S., & Younus, S. (2019). Determinants of Tax-Compliance Behaviour Explored by Slippery Slope Framework and Theory of Planned Behaviour: An Evidence from Small Business Owner, Journal of Management Sciences, 6 (2), 33-47.

Musimenta, D., Naigaga, S., Bananuka, J., & Najjuma, M. S. (2019). Tax compliance of financial services firms: a developing economy perspective. Journal of Money Laundering Control, 22(1), 14-31.

OECD (2010). Citizen-state relations: Improving governance through tax reform. OECD, Paris.

Olsen, N., (2015), Procedural justice for all: A taxpayer rights analysis of IRS earned income credit compliance strategy’, Advances in Taxation 22, 1–35. https://doi. org/10.1108/S1058-749720150000022014

Onu, D. (2016). Measuring tax compliance attitudes: What surveys can tell us about tax compliance behaviour. In Advances in taxation (pp. 173-190). Emerald Group Publishing Limited

Ringle, C., Sarstedt, M., Mitchell, R., & Gudergan, S. (2018). Partial least squares structural equation modeling in HRM research. The International Journal of Human Resource Management, 31, 1-27. doi:10.1080/09585192.2017.1416655

Sadress, N., Bananuka, J., Orobia, L., & Opiso, J. (2019). Antecedents of Tax Compliance of Small Business Enterprises: a developing country perspective. International Journal of Law and Management, 61(1), 24-44.

Sarstedt, M., Ringle, C., & Hair, J. (2017). Partial Least Squares Structural Equation Modeling.

Taing, H. B., & Chang, Y. (2020). Determinants of Tax Compliance Intention: Focus on the Theory of Planned Behavior. International Journal of Public Administration, 1-12.

Tang, J., Repetti, T., & Raab, C. (2019). Perceived fairness of revenue management practices in casual and fine-dining restaurants. Journal of Hospitality and Tourism Insights, 2(1), 92-108.

Tjondro, E., Setiabudi, J., & Joyo, A. C. (2019). Intergenerational Perceptions of Coercive and Legitimate Power. Jurnal Economia, 15(1), 96-113.

Van Dijke, M., & Verboon, P. (2010). Trust in authorities as a boundary condition to procedural fairness effects on tax compliance. Journal of Economic Psychology, 31(1), 80–91. https://doi.org/10.1016/j.joep.2009.10.005

Wahl, I., Kastlunger, B., & Kirchler, E. (2010). Trust in authorities and power to enforce tax compliance: An empirical analysis of the “slippery slope framework”. Law & Policy, 32(4), 383-406.

Waris, A. (2013). Growing tax evasion a serious threat: Only 1.2m Pakistanis file tax returns, which is even less than 1%. Daily Times Pakistan, December 29, 2013. http://www.dailytimes.com.pk/business/29-Dec-2013/growing-tax-evasion-a-seriousthreat-only-1-2m-pakistanis-file-tax-returns-which-is-even-less (accessed May 08, 2014).

Waris, A., & Abdul Latif, L. (2014). The effect of tax amnesty on anti-money laundering in Bangladesh. Journal of Money Laundering Control, 17(2), 243-255.017745114.

Slemrod, J., Rehman, O. U., & Waseem, M. (2020). How Do Taxpayers Respond to Public Disclosure and Social Recognition Programs? Evidence from Pakistan. Review of Economics and Statistics, 1-44.

Wu, I., Chen, J., (2005). An extension of Trust and TAM model with TPB in the initial adoption of on-line tax: An empirical study. Human-Computer Studies, 62(6), 784-808.

Zainol, B., Kamil, M.I., and Faridahwati, M.S. (2009). Predicting Compliance Intention on Zakah on Employment Income in Malaysia: An Application of Reasoned Action Theory, Jurnal Pengurusan, 28(Julai), 85-102.




How to Cite

Malik, M. S. ., & Younus, S. . (2020). Voluntary Tax-compliance Behavior in SMEs; Evidence from Pakistan and Turkey. Review of Economics and Development Studies, 6(4), 905-918. https://doi.org/10.47067/reads.v6i4.289