Ethical Perception of Tax Evasion in Indonesia: Determinants and Consequences on Voluntary Tax Compliance

This study investigates the factors of ethical perception of tax evasion. We also
investigate the effect of ethical perception on tax compliance. Surveys are conducted with 291 participants consist of students, lecturers, professionals, and business owners from various backgrounds and majors in Indonesia. The data is then processed with the PLS-SEM method. Our analysis shows a negative and significant effect of idealism, tax knowledge toward the ethical perception of tax evasion, a positive and significant impact of relativism toward the ethics perception of tax evasion, and no significant effect of religiosity and educational level toward the ethics perception of tax evasion. We find that ethical perception
is a significant predictor of voluntary tax compliance. Those findings can help tax authorities to increase voluntary tax compliance by shaping tax evasion perceptions and considering what factor affects them.