Cultural Certainty and Tax Compliance: An Analysis of Uncertainty Avoidance and Trust in Tax Authorities Among SME Taxpayers

Abstract

This study aims to examine the influence of uncertainty avoidance on the tax compliance of small and medium-sized enterprise (SME) taxpayers in Indonesia, with trust in tax authorities serving as a mediating variable. Tax compliance is not only understood as a response to legal obligations but also as a behavior influenced by cultural orientation and taxpayers’ perceptions of tax authorities. This research employs a quantitative approach using a survey method involving 283 SME taxpayers in Makassar City. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test both direct and indirect relationships among the variables. The results indicate that uncertainty avoidance has a positive and significant effect on taxpayer compliance. Furthermore, uncertainty avoidance positively influences trust in tax authorities. Trust in tax authorities is also found to have a positive effect on taxpayer compliance and partially mediates the relationship between uncertainty avoidance and taxpayer compliance. These findings suggest that taxpayers’ need for certainty, procedural clarity, and rule predictability can enhance compliance, particularly when tax authorities are perceived as fair, transparent, consistent, and trustworthy. This study contributes to the tax compliance literature by proposing a cultural-institutional model to explain the compliance behavior of SME taxpayers.

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