THE INFLUENCE OF SERVICE QUALITY AND TAX KNOWLEDGE ON TAX COMPLIANCE BEHAVIOR OF SMALL AND MEDIUM ENTERPRISES (SMES) IN NAN PROVINCE

Abstract

This research article aims to analyze the influence of the Revenue Department’s service quality on tax payment behavior through the tax knowledge of Small and Medium Enterprises (SMEs) entrepreneurs in Nan Province. The research was conducted using a quantitative research methodology. The population and sample consisted of 300 legally registered small and medium enterprise (SME) entrepreneurs in Nan Province, selected through a combination of purposive and convenience sampling methods. The research instrument used was a questionnaire with high reliability. The statistic used for data analysis was structural equation modeling (SEM). The research results revealed that the model demonstrated a good fit with the empirical data ( /df = 1.964, GFI = 0.949, RMSEA = 0.059). Regarding the hypothesis testing results, it was found that: 1) service quality had a statistically significant direct positive influence on the tax knowledge of entrepreneurs; 2) tax knowledge had a statistically significant direct positive influence on tax payment behavior; and 3) the mediation analysis revealed that the Revenue Department’s service quality had no significant direct influence on the tax payment behavior of entrepreneurs, but exerted an indirect influence through tax knowledge as a full mediator. The research findings indicate that elevating the service quality of the Revenue Department to effectively develop and transform the tax compliance behavior of entrepreneurs essentially requires operating through a process of establishing accurate, clear, and comprehensive tax knowledge for local taxpayers. Government agencies and relevant stakeholders can utilize these research findings as policy guidelines for future tax collection.