The Influence of Financial Literacy and Tax Literacy on Income Tax Payment Compliance among MSMEs in Sidoarjo Regency (PENG Jurnal Ekonomi dan Manajemen)

Summary

• The target population comprised 84,241 MSME taxpayers, with a minimum sample of 398 respondents calculated using Slovin's formula at a 5% margin of error.p.1
• Indonesia has more than 64 million MSME units, about 99% of all business units, contributing more than 60% of GDP.p.2
• Financial literacy has a positive and significant effect on PPh compliance (β of 0.322, t of 7.895).p.10
• Tax literacy has a positive and significant effect on PPh compliance (β of 0.375, t of 8.827).p.10
• Business turnover is the only significant control variable, with β of 0.085 and p of 0.047.p.11
• The model explains 31.5% of the variation in PPh payment compliance, leaving 68.5% to other factors.p.11

Key insights

1. The final PPh rate of 0.5% continues to apply to eligible taxpayers under the amended government regulation.p.2
2. In 2024, tax revenue reached only 97.12% of the target.p.2
3. All outer loadings lie between 0.754 and 0.830, above the 0.70 threshold.p.8
4. Cronbach's alpha and composite reliability range from 0.920 to 0.942, and AVE from 0.610 to 0.643.p.9
5. Financial literacy and tax literacy both have positive and significant relationships with PPh payment compliance.p.1
6. Business age (p of 0.265) and education (p of 0.891) are not statistically significant.p.11
7. The tax literacy path coefficient of 0.375 is numerically larger than that of financial literacy at 0.322, but the difference was not tested statistically.p.11