Tax Compliance in Bangladesh – A Structural Equation Modelling Approach

Rashedul Hasan, Niaz Mohammad and Mohammad Faridul Alam
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Rashedul Hasan: Senior Lecturer, Department of Accounting and Finance, Nilai University, MALAYSIA
Niaz Mohammad: Assistant Professor, Department of Accounting, American International University Bangladesh, Dhaka, BANGLADESH
Mohammad Faridul Alam: Assistant Professor, Department of Accounting, American International University Bangladesh, Dhaka, BANGLADESH

American Journal of Trade and Policy, 2017, vol. 4, issue 3, 87-94

Abstract: Tax compliance behavior has been researched at different times in various parts of the world using multiple theories. This research has focused on the psychological aspects of tax compliance behavior by applying the theory of planned behavior (TPB) proposed by Ajzen. 300 taxpayers were studied using a questionnaire based on a Likert scale, and the results were analyzed using structural equation modeling. Results from the SEM approach indicate that subjective norm significantly influences tax compliance behavior while intention mediates it and moderates it by religion. Attitude and perceived behavioral control were found to substantially impact choice. Individual taxpayers are selected from the capital, and thus findings derived from the sample might not be generalizable for all individual taxpayers in Bangladesh. The results of this study might provide some insight into the tax non-compliance problem in Bangladesh and help authorities design strategies to motivate taxpayers to comply with existing fiscal policies. Tax compliance issues have been explored from various perspectives in Bangladesh. The lack of significant influence on subjective norm toward taxpayer intention indicates that social and peer is yet to make a substantial contribution to improving tax compliance. This study has introduced a structural equation modeling technique to explore the moderating influence of religion on individual taxpayers in the context of Bangladesh.

Keywords: Theory of planned behavior; Tax compliance; Structural Equation Modeling (search for similar items in EconPapers)
JEL-codes: H26 (search for similar items in EconPapers)
Date: 2017
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