THE ROLE OF INCOME TAX SYSTEM STRUCTURE IN TAX NON-COMPLIANCE BEHAVIOUR AMONG SMEs IN YEMEN

  • Lutfi Hassen Al-Ttaffi College of Administrative Science, Seiyun University, Yemen
  • Hijattulah Abdul-Jabbar Tunku Puteri Intan Safinaz School of Accountancy, Universiti Utara Malaysia
  • Saeed Awadh Bin-Nashwan Islamic Business School, Universiti Utara Malaysia

Abstract

Tax is the main source of government revenue. However, a number of countries worldwide are increasingly besieged by challenges regarding compliance levels with the rules of tax systems. Thus, this paper aims to enhance an understanding of tax non-compliance behaviour by investigating the effect of the income tax system structure on Yemeni taxpayers’ behaviour. The study focuses on income tax compliance behaviour of owner-managers of small and medium enterprises (SMEs), as the Yemeni economy relies heavily on this sector. The SME sector represents 99.6 percent of business in Yemen. Based on a quantitative approach using a self-administered survey instrument, a total of 330 valid questionnaires were collected and the feedback provided analyzed. The results demonstrate that SME taxpayers exhibited a high level of tax non-compliance. Furthermore, the multiple regression analysis shows that the tax rate had a positive and significant influence on tax non-compliance behaviour, but the tax penalties rate did not. These results can be especially relevant to policymakers and practitioners of tax systems structures, particularly in a developing country such as Yemen.

Published
2021-06-15
How to Cite
AL-TTAFFI, Lutfi Hassen; ABDUL-JABBAR, Hijattulah; BIN-NASHWAN, Saeed Awadh. THE ROLE OF INCOME TAX SYSTEM STRUCTURE IN TAX NON-COMPLIANCE BEHAVIOUR AMONG SMEs IN YEMEN. International Journal of Banking and Finance, [S.l.], v. 16, n. 2, p. 23-49, june 2021. ISSN 1675-722X. Available at: <http://e-journal.uum.edu.my/index.php/ijbf/article/view/ijbf2021.16.2.2>. Date accessed: 20 sep. 2021. doi: https://doi.org/10.32890/ijbf2021.16.2.2.