Tax Compliance Analysis: The Effect of Knowledge, Administration, and Law as Mediated by Awareness

Abstract

Taxes are a vital instrument for the government to finance governance and development. Therefore, taxpayer compliance is crucial for optimizing state revenue. Considering that the level of compliance in Indonesia still needs improvement, this study aims to uncover and measure the impact of various factors on individuals' willingness to pay taxes for their dependents. This study uses taxpayer awareness as a mediating variable and tax center activity as a moderating variable. The study sample consisted of 285 respondents selected through purposive sampling, with the criteria being individual taxpayers who have used tax center services and are registered with the Tax Service Office (KPP) in the Greater Jakarta area. This research model involves three exogenous variables (tax knowledge, ease of administration, and law enforcement), one mediating variable (taxpayer awareness), one moderating variable (tax center activity), and one endogenous variable (individual taxpayer compliance). Primary data were collected using a structured questionnaire and analyzed using descriptive statistics and structural equation modeling (SEM-PLS). The results indicate that this research contributes to providing a specific understanding of the role of Tax Centers at universities in the tax compliance ecosystem in Indonesia. Tax knowledge, ease of administration, and law enforcement have a positive influence on taxpayer awareness and compliance. Taxpayer awareness has been shown to mediate the relationship between these three factors and compliance. Moderation by tax center activity is limited to the relationship between tax knowledge and awareness. A similar interaction was not found when testing the effect of ease of administration and law enforcement on tax awareness.