The The Influence of Tax Simplicity, Knowledge, and Awareness on Tax Compliance, With Compliance Cost Acting as A Mediator

The Influence of Tax Simplicity, Knowledge, and Awareness on Tax Compliance, With Compliance Cost Acting as A Mediator

Abstract

Abstract

The purpose of this study is to investigate the indirect effects of compliance costs while examining the relationship between Tax simplicity, knowledge, and awareness of tax compliance in Pakistan. The study has obtained cross-sectional data from listed companies in Pakistan through a questionnaire survey. A Partial least square structural equation modeling (PLS-SEM) approach has been employed to address the research question. The findings reveal that there is no meaningful correlation, between compliance expenses and tax knowledge. When attempting to communicate the internal costs of compliance, knowledge needs to be more focused than the external cost. Although our findings showed that taxpayers need to acquire tax knowledge for compliance, however, the taxpayers have to bear the cost. The cost of compliance increases with the complexity of the tax system. This paper demonstrates that for taxpayers' regular analytical deliberations of knowledge and awareness in influencing tax compliance, there is also an indirect effect of compliance costs in laying the groundwork to comprehend taxpayers' compliance. This paper provides practical implications for taxpayers and taxation authorities.

Keywords: Tax Simplicity, Knowledge, Awareness of Tax Compliance, Compliance Cost, Cross-sectional, PLS-SEM