Understanding Tax Morale of Micro, Small, and Medium Enterprises in Jabodetabek

This study aims to identify the factors determining the tax morale of Micro, Small, and Medium Enterprises (MSME). The study is pertinent because MSME account for 60% of Indonesia’s GDP yet they contribute only 0.67% to tax revenue. One reason for this low level of tax revenue is low tax morale. Tax morale refers to the intrinsic motivation of taxpayers with regard to paying taxes. The population in the research is MSME in Jakarta, Bogor, Depok, Tangerang, and Bekasi (Jabodetabek). Multistage sampling is used as the sampling technique. A total of 217 nonagricultural-sector MSME participated in this study. The results of the Structural Equation Modeling (SEM) analysis, which incorporated the SmartPLS program, show that sentiments toward tax, trust in the tax authority, perception of public goods, and attitude toward punishment positively affect the tax morale of MSME in Jabodetabek and will play a role in influencing the willingness of taxpayers to pay.