Journal of Taxation Insights Policy Practice

Evaluating the Impact of Tax Incentives on Small and Medium Enterprises (SMEs): Policy Effectiveness and Compliance Behavior

Pegi Sugiartini — 2025-03-11

Tax incentives have been widely used to promote small and medium enterprises' (SMEs) growth. However, little is known about the impact of tax incentives on SMEs. This study aims to provide a nuanced understanding of how tax incentives affect SMEs' compliance behavior in response to tax incentives. The study uses a mixed-methods approach, combining both qualitative and quantitative data, to assess the effectiveness of tax incentive policies on the growth and compliance behavior of SMEs in Indonesia. The data collected from 300 SMEs across manufacturing, retail, and service sectors in Indonesia show that tax incentives can be effective tools for fostering SME growth and improving compliance, provided they are easily understandable and accessible. The research demonstrates that SMEs aware of and utilizing tax incentives show higher compliance rates and greater investment growth, particularly in capital-intensive sectors like manufacturing. This research contributes to the existing body of literature by suggesting that accessibility and clarity of information are as crucial as financial incentives in influencing compliance behavior. In addition, the research will serve as a reference for tax authorities in developing countries seeking to create more efficient and SME-friendly tax regimes.

Digital Economy and Tax Evasion: Analyzing the Role of Tax Authorities in Regulating E-Commerce Transactions

Abdurokhim Abdurokhim — 2025-03-11

Tax evasion is a major problem in the e-commerce sector. The digital economy has emerged as a promising alternative to the traditional tax system. This study aims to evaluate the effectiveness of tax authorities in regulating ecommerce transactions within the digital economy. The study employs a mixed-methods approach to provide a comprehensive understanding of tax compliance. The data was gathered from 500 participants, including 300 representatives from businesses of various sizes and 200 tax officials from local and national tax agencies across Southeast Asia. The results from regression analysis demonstrated that the presence of a digital tax compliance system was a significant predictor of reduced tax evadesion, accounting for approximately 40% of the variance in compliance behavior among eecommerce businesses. The research highlights that businesses with a higher awareness of tax obligations tend to exhibit better compliance behavior, while the implementation of digital monitoring tools significantly reduces tax aversion cases. The findings also suggest that tax authorities should prioritize outreach programs and invest in data analytics capabilities to keep up with the evolving digital landscape. Tax authorities in developing countries seeking to improve their monitoring capabilities and adapt to the challenges posed by digital commerce will benefit from the use of advanced digital technologies.

The Influence of Corporate Tax Rate Reductions on Foreign Direct Investment (FDI): Evidence from Emerging Markets

Diana Magfiroh — 2025-03-11

This study investigates the impact of corporate tax rate reductions on foreign direct investment (FDI) inflows in emerging markets. The study employs a quantitative approach, using both cross-sectional and panel data analysis, to assess whether lower corporate tax rates significantly increase FDI and to identify other factors that may moderate this relationship. Data from 25 emerging markets are analyzed using purposive sampling. Regression analysis using the Ordinary Least Squares (OLS) method showed a statistically significant relationship between corporate tax reductions and increased FD I inflow (p 0.05). The study identifies several challenges in implementing effective tax reduction policies. The findings highlight the need for a comprehensive approach that goes beyond simple tax cuts.

Tax Policy Reforms for Sustainable Development: Assessing Carbon Taxes and Environmental Compliance

Agus Rohmat Hidayat — 2025-03-11

Carbon taxes are one of the most effective tools for promoting sustainable development. This study aims to assess the effectiveness of carbon tax policies in promoting environmental compliance and sustainable development across diverse contexts. The study employs a mixed-methods research design, combining both quantitative and qualitative approaches. Data was gathered from 20 countries that have implemented carbon taxes, focusing on emission reductions, carbon tax rates, and economic indicators. The results show that countries with higher carbon taxes see greater reductions in emissions without significant negative impacts on economic growth. The findings provide a blueprint for designing effective carbon taxes that align with sustainable development goals, encouraging governments to implement carbon taxes as a catalyst for green growth.

Tax Compliance Behavior among Self-Employed Professionals: A Behavioral Economics Perspective

Anisa Ayu Dwi Lestari — 2025-03-11

Tax compliance among self-employed professionals is a critical issue for policymakers. This study employs a mixed-methods research design, combining both quantitative and qualitative approaches to investigate the behavioral factors influencing tax compliance behavior. The study identifies the key drivers of non-compliance, including psychological biases, perceptions of fairness, and trust in tax authorities. Factor analysis confirms that perceived fairness and tax morale are the primary drivers of tax compliance. Social norm campaigns and behavioral nudges are cost-effective strategies to influence compliance behavior, reducing the need for costly enforcement measures. These findings contribute to the existing literature on tax compliance by integrating behavioral economics with traditional compliance models. This research demonstrates that enhancing trust and ensuring transparency in tax administration can significantly improve voluntary compliance, particularly in a demographic that often operates outside conventional tax structures.