Economics & Business Solutions Journal

Volume 1, Number 1, 2017, 1-19

EFFECT OF TAX KNOWLEDGE ON

INDIVIDUAL TAXPAYERS COMPLIANCE

Anita Damajanti1
Abdul Karim,SE.MSi.Akt2
Economics Faculty, Semarang University

ABSTRACT
Indonesia uses self-assessment system in income tax collection. This system requires the
taxpayer to understand the method of calculating payments and tax reporting in accordance
with applicable regulations. The problem faced by many taxpayers who do not understand
the tax laws. Taxpayers who do not understand tax law become an obstacle for the
implementation of self-assessment system in the collection of income tax. This study will
examine empirically the influence of tax knowledge on tax compliance of individuals enrolled
in the Tax Office (KPP) Central Java Region I. This study develops previous studies that have
been carried out in Indonesia by separating variable tax knowledge into 3 (three) variables
i.e. knowledge of tax reporting, tax calculation knowledge, and knowledge of tax payments.
Data were collected using a questionnaire that is sent directly to the taxpayer.
Questionnaires were sent as many as 200 copies. A total of 196 copies of the completed and
can be processed. The test results indicate that the instruments used in this study are valid
and reliable. Results of hypothesis testing using regression provides empirical evidence that
knowledge of tax reporting, tax calculation and knowledge of tax payments significant effect
on tax compliance.
Keywords: tax knowledge, tax compliance, individual taxpayers

INTRODUCTION
Tax is a compulsory levy to be paid by people to the state, forced by law, and does not get
reward directly. The revenue from the tax is used to finance the state's needs for the welfare
of the people. The statement is written in Act No. 28 year 2007 on General Provisions and
Tax Procedures (KUP). Indonesia's state revenue from taxes continues to increase. As written
by Manurung (2013) that the growth of tax revenues in 2009-2012 reached 17 percent,
however, the adherence rates percentage is still low, not different from previous years. The
article also stated that individuals who had income exceeding the limit of taxable income
(PTKP) were 60 million people, while who registered as taxpayer wereonly 20 million people
and who submitted the annual notification letter(SPT) income taxes were only 8.8 million
people with a ratio of SPT about 14 percent. Muniriyanto (2014) stated that tax revenue
from 2008-2011 did not increase significantly compared to the increase of registered
taxpayers who experienced an average growth of 29 percent annually. Although the number
of registered taxpayers increased almost three-fold from 2008 to 2011, but tax revenue

1
[email protected]
2
[email protected]

P-ISSN: 2580-6084; E-ISSN: 2580-8079 1

2 Economics & Business Solutions Journal April

increased by less than 50 percent in 2011. The ratio of taxpayers’ compliance in 2013 was 52
percent. Former Director General of Taxation Fuad Rahmany (Kompas, 2014 / March / 7)
stated that there were 40 million citizens who had been able to pay tax but they had not
paid it yet. The potential was estimated at least Rp. 150 trillion. The great individual tax
potential could provide income for the state to support the income distribution.
Income tax collection in Indonesia uses self-assessment system. Self-assessment system
requires competence, honesty, capability and readiness of taxpayers to take into account
the tax burden payable. With this system, individual taxpayers who have income exceeding
the limit of taxable income (PTKP) are required to register to obtain Taxpayer Identification
Number (NPWP) without having to wait the assessment from the Government. Then, after
having NPWP the taxpayers have other obligations such as paying income tax according to
tax laws, and reporting by using the annual notification letter(SPT) form. The amount of
PTKP is determined under the Act and regulations of the finance minister.
The problem faced is there are many taxpayers who have not understood the tax laws. Tarjo
and Kusumawati research results (2006) in Bangkalan showed 69.9 percent of individual
taxpayers did not know the applicable tax rate, and 78.6 percent did not know the changes
in income tax laws, and 57.1 percent did not have the ability to calculate taxes. Unfamiliarity
of the society becomes an obstacle for the implementation of self-assessment system in the
collection of income tax. In Indonesia self-assessment system has been implemented since
1984, but the index of taxpayer compliance is still low that is 2.53 (two point fifty three)
lower than Malaysia which has just implemented self-assessment system since 2001, that is
4.34 (four point thirty four) (Palil, 2010). The spirit of self-assessment system according to
Palil (2010) is to educate taxpayers and to make them care about their tax obligations.
Therefore, the taxpayer must have the knowledge to understand the tax laws. Palil (2010)
conducted study on the effect of tax knowledge on tax compliance in Malaysia. Palil (2010)
used the variables of knowledge of the rights and the obligations of the taxpayer in reporting
tax, the knowledge of the type of income counted as taxable income and the knowledge of
tax allowances on tax compliance. The results showed the three variables significantly
influence tax compliance.
The research on the knowledge of the tax and its effects on tax compliance had been
conducted in Indonesia by Adiasa, (2013), Nasir (2010), Witono, (2008). The research results
expressed the tax knowledge significantly affected tax compliance. These studies used one
(1) construct to describe the variable of tax knowledge so that it could not be recognized
which tax knowledge significantly affected tax compliance. Based on the characteristics of
self-assessment system the taxpayers are given the authority to calculate, to deposit / to
pay, and to report the taxes owed. (Resmi, 2014; Mardiasmo, 2011; Siahaan, 2010a).
This study will examine empirically the knowledge of the tax calculation, the knowledge of
tax payments, and the knowledge of tax reporting on tax compliance of individual taxpayers
registered in work areas of the Directorate General of Taxation, Central Java I. The working
area of the Directorate General of Taxation in Central Java is divided into two, namely
Central Java Region I in the northern part of Central Java and Central Java Region II in the
2017 Damajanti & Karim 3

southern part of Central Java. The study is limited to individual taxpayers who have business
activities. Individual taxpayers who have business activities each month calculate, pay and
submit employment owed tax, while taxpayers who do not have business do not calculate
and pay their taxes themselves but deducted and paid by the employer. This research is
expected to provide input whether the knowledge of tax reporting, the knowledge of tax
calculation, or the knowledge of tax payments significantly effect on tax compliance. This
research is expected to provide input for the government to improve tax compliance.

REVIEW OF RELATED LITERATURE

Self-Assessment System
Income tax collection in Indonesia uses self-assessment system. The statement is contained
in the general explanations of the Act on General Provisions and Tax Procedures (KUP). Self-
assessment system is a tax collection system that gives credence to the taxpayer in
determining the amount of tax. Issue on tax assessment plays an important role in the tax
law because without being set by the party determined by the law then there is no owed tax
to be paid by the taxpayers (Siahaan, 2010).
Siahaan (2010) stated that in self-assessment tax system, taxpayers are given the authority
to calculate and pay taxes themselves according to the calculation of taxpayers, without
government interference. The authority to calculate owed tax themselves indicated the
presence of authority granted by tax law to set its owed tax to be paid by the taxpayer
themselves. Having established their own tax returns, then the taxpayer must pay the tax to
pay off tax debts. Taxpayers must take account for the determination and the payment of
the tax by submitting according to the appropriate period of time determined by using a
specific means that is the annual notification letter(SPT). After the report came in the tax
authorities will conduct the examination to ascertain whether the tax payers have done their
authority according to the appropriate legislation. Although the taxpayers are given the
authority to calculate, to pay and to submit tax returns according to the version of the
taxpayers but there is no guarantee that the calculation and the payment of taxes have been
in accordance with the provisions of the law. Based on the results of the assessment the tax
authorities will make the determination of the tax by issuing tax assessments letter of less /
overpayments which can mean underpayments of tax calculation, overpayments of tax
calculation, or compliance of tax calculation and nil tax assessments letter is issued.
Tax Compliance
The definition of tax compliance according to Simon James et.al in Utami, et.al (2012) is the
taxpayer has a willingness to meet their tax obligations in accordance with the applicable
rules without the need for the holding of the examination, thorough investigations,
warnings, or even threats and sanctions implementation either legal or administrative.
According to Pangestu and Rusmana, (2012) compliance in terms of taxation means the state
of taxpayers who conduct the rights and particularly obligations in discipline manner in
accordance with the regulations and ordinances of applicable tax. Tax compliance is
4 Economics & Business Solutions Journal April

interpreted freely as the adherence in conducting all tax regulations. Pangestu and Rusmana
(2012) stated that there are two kinds of tax compliance, namely:
1. Formal compliance that is a condition in which the taxpayers meet their tax obligations
formally in accordance with the provisions of the Tax Act.
2. Material compliance, that is a condition in which the taxpayers substantively or essence
fulfill all terms of taxation material, i.e.in accordance with the contents and spirit of Tax
Law.
Furthermore, Pangestu and Rusmana (2012) stated that if the taxpayers submit SPT and pay
the owed tax on time, it can be said that the taxpayers have met the formal compliance. If
the taxpayers fill SPT honestly, properly and correctly in accordance with the provisions of
the Tax Act, the taxpayers have fulfilled the material compliance (pay on time). Pangestu and
Rusmana (2012) conducted research on tax compliance in the delivery of SPT of future PPN.
The instruments used by Pangestu and Rusmana (2012) were to measure the formal and
material compliances that are the delivery of SPT of future PPN on time, the payment of
owed PPN on time and payment of PPN on time.
Formal and material compliances are contained in the KUP Act article 3 (three) paragraph 1
(one) and the explanation which states that every taxpayers is required to fill The annual
notification letter (SPT) correctly, completely, clearly and deliver it to the office of the
Directorate General of Taxation where the taxpayers are registered. Correct according to
these provisions is correct in the calculation, correct in the application of the provisions of
the tax legislation, correct in writing and match the actual situation. Complete means it
contains all the elements related to taxes and other elements that must be reported in SPT.
It is clearly means reporting the origin or source of taxes and other elements that must be
reported in SPT.
The annual notification letter(SPT)must be submitted not later than 20 (twenty) days after
the end of the tax period. The annual notification letter(SPT)of Income Tax of Individual
Taxpayer must be submitted not later than 3 (three) months after the end of the tax year.
The late submission of the annual SPT of individual taxpayers got administrative sanctions
Rp100,000.00.
In addition to the provisions, there are specific provisions governing tax compliance criteria
that are eligible for introduction refund. The regulation of the Minister of Finance of the
Republic of Indonesia No. 192 / PMK.03 / 2007 article 1 (one) and article 2 (two) state the
taxpayers are declared compliant if they meet the criteria, namely: delivering annual SPT on
time, SPT period which is late is delivered not more than three ( three) tax period for each
type of tax, the late submission of SPT period does not occur in sequence, and it does not
exceed the time limits of the next month report, and it does not have tax arrears. Taxpayers
who meet these criteria are expressed as tax compliance and have the right to apply for an
introduction refund on tax overpayment.
Tax Knowledge
Self-assessment system can work well if the people have appropriate knowledge of tax
regulations. The taxpayer’s knowledge shows the understanding of the taxpayer in applying
2017 Damajanti & Karim 5

the tax rules particularly on income tax. Knowledge is the information known or recognized
by someone (Utami, et.al.2012). In another sense, knowledge is a variety of symptoms
encountered and obtained by human through sense observation. Knowledge arises when
one uses his intellect to recognize certain objects or events that have never been seen or felt
before. Knowledge is something that is known to be associated with the learning process.
This learning process is influenced by various factors from within such as motivation and
external factors such as the means of information available as well as socio-cultural
circumstances. (Utami, et.al.2012).
Tax knowledge and the complexity of tax collection are seen as a contributing factor to the
behavior of non-compliance of taxpayers. Saad research (2013) in Malaysia showed that the
respondents did not have enough technical knowledge on taxes and perceived the
complexity of the tax system. This contributes to non-compliance of taxpayers in Malaysia.
The research conducted by Eriksen and Fallan (1996), quoted by Palil (2010) stated that tax
knowledge related to attitude towards the application of tax laws and the taxpayer's
behavior can be improved by a better understanding of tax law. According to Palil (2010)
there are many factors that influence taxpayer’s compliance, but knowledge is the main
affecting factor particularly the self-assessment system.
Witono (2008) conducted research on the effect of knowledge on taxpayer’s compliance
with tax justice intervening variables. The study was conducted on individual taxpayers and
corporate taxpayers listed in KPP Surakarta. The results showed tax knowledge had
significant effect directly on tax compliance, tax fairness had significant effect on tax
compliance, but tax knowledge did not have significant effect on tax justice as an intervening
variable. Based on these results it can be concluded that the better the knowledge of the
taxpayer on tax laws, the higher the level of tax compliance. Nasir (2010) conducted
research on the effect of tax knowledge and tax administration system on taxpayers’
compliance. The research was conducted on the taxpayer of land and buildings tax in KPP
Pratama Jakarta Pasar Rebo. His research result stated that tax knowledge and the
effectiveness of tax administration system had positive and significant effect on the level of
taxpayers’ compliance. Adiasa (2013) conducted a research on the effect of the
understanding of tax rules on taxpayers’ compliance with risk preferences as moderating
variable. The research was carried out on individual tax payers in West Semarang. His
research results showed that an understanding on tax laws affected the taxpayers’
compliance. Risk preferences as moderating variable did not have effect on tax compliance.
Risk preferences could not moderate the effects between tax rules understanding and tax
compliance. Saad (2013) examined the level of tax knowledge and perception of the tax
payers on the complexity of income tax collection system, as well as the underlying reasons
for taxpayers’ noncompliance. The results showed that taxpayers did not have sufficient
technical knowledge and considered tax system was complicated. Palil (2010) conducted a
study on individual taxpayers in Malaysia. Palil (2010) used the knowledge independent
variables of rights and obligations in tax reporting, the knowledge on the type of income
6 Economics & Business Solutions Journal April

counted as taxable income and the knowledge on tax allowances. The results showed these
variables affected significantly on tax compliance.
The Effect of Tax Reporting Knowledge on Tax Compliance
Every taxpayer who has been registered and hasNPWP has obligations and rights set out in
Act. Related to tax reporting activities, each individual taxpayers is required to report their
income earned for 1 (one) year and report the taxes having been paid and / or cut by using a
form called the annual notification letter(SPT). The forms can be obtained free of charge at
the tax services offices (KPP) or by online sistem. On the form, the taxpayers are asked to fill
in the data about the identity, family status, sources of income received and taxes having
been paid and / cut. The annual SPT of individual taxpayers must be submitted not later than
3 (three) months after the tax year ends. If the time limit is not met, the taxpayer has the
right to apply for extension of SPT submission not longer than 3 (three) months. If the
taxpayer does not understand the procedure, then it is likely there will be a delay in
reporting SPT and will be subjected to sanctions. Taxpayers’ negligence caused by the
incomprehension will be indicated as tax noncompliance.
Tarjo and Kusumawati (2006) conducted a study on the implementation of self-assessment
system in Bangkalan. The results showed 62.5 percent of taxpayers could fill out SPT, 83.9
percent of taxpayers reported SPT on their own consciousness not because of fine and as
much as 57.1 percent of taxpayers reported SPT exceeding the specified time limit. Palil
(2010) in Malaysia stated that the knowledge on the rights and obligations of taxpayers in
the tax reporting had significant effect on tax compliance. Based on the theoretical study,
hypothesis is formulated as follows:
H1: The knowledge on tax reporting has significant effect on tax compliance
The Effect of Tax Calculating Knowledge on Tax Compliance
The function calculation is a function that entitles taxpayers to determine their owed tax
themselves according to the rules of taxation, (Tarjo and Kusumawati, 2006). On the basis of
the function, the taxpayer is obliged to pay the owed tax due to the Bank's perception or the
post office. Then, the taxpayers reported the payments and how much the tax which had
been paid to the Tax Service Office (KPP). To carry out this function the taxpayers must know
the applicable tax laws as a basis to determine the amount of taxable income. The basis to
determine the income to be taxed, among others related to the tax rate, the limit of non-
taxable income (PTKP), a reducer of taxable income, as well as the types of income that are
subject to and not to be taxed. The tax rate for individual taxpayers is set out in article 17,
paragraph 1 (one) of Act No. 36 year 2008. The limit of non-taxable income PTKP) is set out
in article 7 (seven) paragraph 1 (one) of Act No. 36 year 2008, while the changes are
regulated by the Regulation of the Minister of Finance. The amount of PTKP experiences
adjustment from time to time, therefore, the taxpayer is required to keep up to date
regarding the amount of the applicablePTKP.
Error in determining the amount of PTKP, an error in applying the tax rate, and
incomprehension in determining the type and the source of income subject to and not
2017 Damajanti & Karim 7

subject to tax will cause an error in the payment of the taxes, incurred a fine or tax arrears
and this may indicate the presence of tax noncompliance.
Tarjoand Kusumawati research results (2006) showed 69.6 percent of taxpayers did not
know the amount of the applicable tax rate. A total of 53.6 percent of taxpayers had made a
mistake in calculating the owed tax. A total of 42.9 percent of taxpayers were able to make
financial records to calculate the owed tax, and 57.1 percent of taxpayers were not able to
make financial records and used the services of authorities or consultant to calculate the
owed tax. This is not in accordance with the purpose of self-assessment system. Palil (2010)
in Malaysia stated that the knowledge on the type of income that could be counted as
taxable income affected tax compliance significantly. Based on the theoretical study, the
hypothesis is formulated as follows:
H2: The tax calculating knowledge affected tax compliance significantly.
The Effect of Tax Payment Knowledge on Tax Compliance
After taking into account the owed income tax then taxpayers must carry out a function to
pay. The payment of income tax is done by using the form of Tax Payment Letter (SPP). Self-
assessment system requires taxpayers to understand the procedure of tax payment.
Individual taxpayers, particularly those with business activities are required to pay tax within
the specified time limits. The taxpayer is required to know the places of tax payments,
understand the magnitude of the fine if late in paying taxes. In addition to having the
obligation to pay, taxpayers will also have the right to demand the return (restitution) if
there is tax payments excess, and they also have the right to compensate for the loss of
business that experienced in the previous year. The ignorance on the rules regarding the
payment of taxes can result in late payment and fined. This will be indicated as tax
noncompliance. Tarjo and Kusumawati research results (2006) showed that 51.8 percent of
taxpayers were able to pay tax by using Tax Payment Letter (SPP). A total of 37.5 percent of
taxpayer undertook the payment themselves, while 62.5 percent used the services of other
people to pay their owed tax. A total of 57.1 percent of taxpayers paid through post office,
16.1 percent of taxpayers paid through perception bank, and 26, 8 percent of taxpayers paid
their owed tax at Tax Service Office (TSO).
Based on the theoretical study, hypothesis is formulated as follows:
H3: The knowledge of tax payments affected on tax compliance significantly.

RESEARCH METHOD
Population and Sample
The population in this study was the individual taxpayers who had business activities and
registered at the Tax Service Office (KPP) Central Java I Region. Central Java I Region covered
the northern part of Central Java (northern coast of Central Java). The number of samples
was determined based on quota that was 200. A total of 80 copies of questionnaires were
sent to taxpayers in Semarang, 20 copies in Demak, 20 copies in Pati, 20 copies in Cepu and
Rembang, 20 copies in Kaliwungu, 20 copies in Batangand 20 copies in Pekalongan, Samples
were selected based on the willingness of respondents to fill out questionnaires. The data
8 Economics & Business Solutions Journal April

used for this research were the respondents' answers obtained through questionnaires. The
distribution of questionnaires was conducted using convenience sampling method, by
coming directly into taxpayers who had business activities in the Northern Coast Region of
Central Java and who were willing to become respondents.
The Definition of Operational and Measurement of Variables
Independent Variables
Tax reporting knowledge variable is defined as the understanding of taxpayers regarding
their rights and obligations in reporting the calculation and payment of owed income tax.
These variables were measured with 6 (six) questions. Respondents were given a
questionnaire containing statements regarding the deadline for submittingSPT, penalties for
reporting SPT late, the right of taxpayers to extend the reporting period, the presence of the
way of submitting SPT directly at tax office, through the corner of tax, and by mail.
Respondents were given a choice of answers on the statements by putting a cross in number
1 (one) to 5 (five). Number 1 (one) = 'definitely wrong' indicates a very low level of
understanding on the correctness of the statement given, number two (2) = 'probably
wrong' indicates a low level of understanding on the correctness of the statement given;
number 3 (three) = 'doubt' indicates the medium level of understanding (not high and not
low) on the correctness of the statement given; number 4 (four) = 'probably true' indicates a
high level of understanding on the correctness of the statement given; number 5 (five) =
'must be true' indicates a very high level of understanding on the correctness of the
statements given.
The variable of tax payment knowledge is defined as the understanding of taxpayers
regarding their rights and obligations in implementing tax payments. These variables are
measured by 4 (four) questions about the tax payment deadline, penalties if the payment
exceeds the prescribed time limit, the rights of taxpayers on compensation for the lost, and
this right of taxpayers to file restitution. The variable of tax calculation knowledge is defined
as the understanding the taxpayers in the calculation of the income to be taxed. The variable
of tax calculation knowledge is measured by 8 (eight) questions about the type of income
that is subject to and which is not taxed, the limit value of nominal income which is not
taxed (NTI), the increase in NTI because of marital status and the number of dependents in
the family. The variable measurement of tax payment knowledge and tax calculation
knowledge is done in the same manner with the variable of tax reporting knowledge. This
variable measurement scale adopts Palil (2010), by using instruments adjusted to the
prevailing tax regulations in Indonesia.
Dependent Variables
The definition of tax compliance is that taxpayer has a willingness to meet their tax
obligations in accordance with the applicable rules without the need for the holding of the
examination, thorough investigations, warnings, or even the threat and application of legal
or administrative sanctions. (Utami, et.al, 2012). Tax compliance is the adherence of the
taxpayer in calculating, reporting and paying taxes in accordance with applicable regulations.
Tax compliance is the compliance in filling out SPT correctly, completely, clearly, paying taxes
2017 Damajanti & Karim 9

on time and report SPT within the limits prescribed time without holding the examination, a
warning, or a legal or administrative sanctions. Correct means correct in calculation, correct
in the application of tax laws, correct in writing and matching the actual situation. Complete
means contains all the elements associated with the object of tax to be reported in SPT.
Clear means reporting the origin or source of tax that should be reported inSPT.
Based on the operational definition then indicator of tax compliance variableis prepared
which consists of 6 (six) indicatorsnamely reporting all income received, does not have tax
arrears, reporting SPT not exceed the specified time limit, attaching SPT with the required
documentations, the data in SPT are stated correct by the tax authorities, the calculation of
the tax already paid is stated correct by the tax authorities. Respondents were asked to
provide feedback on the activities stated in the proposed instruments. Indicators of variables
are measured with scale 1 (one) to 5 (five). Scale 1 (one) is to state "never" does the
activities stated on the instruments and scale 5 (five) is to state "always" does the activities
stated in the proposed instrument. The higher the respondentsanswer scoreindicates a high
level of the respondents’ compliance to perform their obligations.
Analysis tools used to test the hypothesis in this study was multiple regressions with
equation formulated as follows:
Y = α + βX1 + βX2 + βX3 + e.
Notes:
α = constant; Y = Tax Compliance; X1 = Knowledge of tax reporting;
X2 = Knowledge of tax calculation; X3 = Knowledge of tax payments

RESEARCH RESULT
Descriptive of Respondents Answers Data
From 200 copies of questionnaires distributed, there were 196 questionnaires which could
be processed and 4 (four) questionnaire could not be processed due to incomplete filling
data. The distribution of data obtained are: 80 copies in Semarang, 20 copies in Demak, 18
copies in Pati, 18 copies in Cepu and Rembang, 20 copies in Kendal and Kaliwungu, 20 copies
inBatang, 20 copies in Pekalongan.
Based on the respondents' answers, data tabulation was compiled and they were analyzed
descriptively on the basis of respondents' answers. X1 variable used 6 (six) indicators with
scale 1 (one) - 5 (five) then theoretically the minimum score of respondents answers number
for X1 variable was 6 (six) and the maximum score was 30. X2 variable used 8 (eight)
indicators with scale 1 (one) - 5 (five) then theoretically the minimum score of respondents
answers number for X2 variable was 8 (eight) and the maximum score was 40. X3 variable
used 4 (four) indicators with scale 1 (one) - 5 (five) then theoretically the minimum score of
respondents answers number for X3 variable was 4 (four) and the maximum score was 20. Y
variable used 6 (six) indicators with scale 1 (one) - 5 (five) then theoretically the minimum
score of respondents answers number for Y variable was 6 (six) and the maximum score was
30. The descriptive data analysis using SPSS obtained a total score of respondents answers
for X1 had minimum score of 13 and maximum score of 30, and the average score was
10 Economics & Business Solutions Journal April

23.34. From X2 variable minimum score of 18 and maximum score of 40 were obtained, with
an average score of 30.49. From X3 variable minimum score of 9 and maximum score of 20
were obtained and the average score was 15.44. From Y variable minimum score of 15,
maximum score of 30 and the average score of 25 were obtained. Descriptive of
respondents’answers data can be seen on Table 1 and Table 2 in appendix 2.
====================== Table 1 ====================
Validity Test
Validity test is used to measure the ability of a questionnaire to reveal a construct. The
measurement of validity used in this research is by performing bivariate correlations among
respective indicator scores with total score of the construct. If the correlation among each
indicator on the total score of the construct showed significant results, it can be concluded
that each question indicator was valid. The results of validity test using Pearson correlation
demonstrated X1.1 to X1.6 indicators significantly correlated with the total score of X1
construct at the level of 0.01, the indicator of X2.1 up to X2.8variables significantly
correlated with the total construct of X2 at the 0.01 level , indicator of X3.1 to X3.4 variables
correlated with the total score of X3 construct at the level of 0.01 and indicator of Y1 to Y6
variables significantly correlated with the total score of Y construct at the level of 0.01.
Therefore, it can be concluded that the indicators of variables were valid to be used as a
measure of the construct of each variable. The results of validity test can be seen on table 3
appendix 2.
Reliability Test
Reliability test is used to measure the consistency of response to a question from time to
time (Ghozali, 2013). The measurement used in this study was Cronbach’s Alpha statistics
test using SPSS. According to Nunnally (Ghozali, 2013), a construct is said to be reliable /
good if the Cronbach’s Alpha value is greater than 0.7. Reliability test for the variable of tax
reporting knowledge (X1) produces a value of Cronbach Alfa amounted to 0.714, reliability
test for variable of ax calculation knowledge (X2) produces a value of Cronbach’s Alpha
amounted to 0.744, reliability test for variable of tax payments knowledge (X3) produces a
value of Cronbach Alfa amounted to 0,711, and reliability test of tax compliance variable (Y)
produces Cronbach Alfa value of 0.761. All the independent and dependent variables were
declared reliable because they produce Cronbach’s Alpha values> 0.7. The results of
reliability test of independent and dependent variables can be seen on table 4, table 5, table
6 and table 7 appendix 2.
Normality Test
Normality Test aims to test whether the residual regression model has normal distribution.
The statistics test used was Kolmogorov-Smirnov nonparametric statistics test. The test
results demonstrated the value of the Kolmogorov Smirnov 0.799 with a probability of 0.546
means receiving H0 stating that the residual data was normally distributed. The results of
normality test can be seen on table 8 appendix 2.
2017 Damajanti & Karim 11

Multicollinearity Test
Multicollinearity test aims to test whether in the regression model found a correlation
among the independent variables. A good regression model should not happen correlation
among independent variables. Multicollinearity detection was seen from the value of
tolerance and variance inflation factor (VIF). Cutoff values used to indicate the presence of
multicollinearity was tolerance ≤ 0.1 or equal to VIF value ≥ 10. Test results using SPSS
showed there was no independent variable which has a value of tolerance ≤ 0.1 and none
has the VIF value ≥ 10. So it can be concluded multicollinearity did not happen in the
regression model. The complete test results can be seen on table 11 appendix 2.
Heteroscedasticity Test
Heteroscedasticity test aims to test whether in the regression equal model shows the
inequality varianceof residual from one observation to another. A good regression model is
homoscedasticity or heteroscedasticity does not happen. Test was conducted with Glejser’s
test by regressing the absolute value of the residuals on independent variables. The test
results using SPSS showed there was no independent variable that significantly affected the
dependent variable that was the absolute value of residuals. This showed that in regression
model, heteroscedasticity did not happen. The complete test results can be seen on table 9
appendix 2.
Autocorrelation Test
Autocorrelation test aims to test whether in the linear regression model there was
correlation among residuals in t period with residual in t-1 period. On cross-sectional data,
autocorrelation problem was relatively rare because residual on different observations came
from different individual/ groups. Autocorrelation detection was performed by Run-Test. The
test results of autocorrelation using SPSS showed the test value-0.01725 with probability of
0.252 so that it can be concluded receiving H0 stating that residual was random.
Hypothesis Test
Hypothesis testing was done by t statistics test. The t statistics test basically showed how far
the effect of one independent variable individually in explaining the dependent variable. The
results of regression test can be seen on table 12:

=================== TABLE 12 ======================

Based on regression test on Table 12, equationwas obtained as follows:

Y = 0.331X1 + 0.361X2 + 0,112X3.
Table 12 shows the significance probability of X1 and X2 variables of 0000 each while the
significance probability of X3 was 0.007 which means that all independent variables
significantly affected the dependent variable at level 0.01. The equation showed the positive
coefficient direction for the three independent variables. This means that the increase in the
value of X1, X2, and X3 variable will be followed by the increase in the value of Y variable.
12 Economics & Business Solutions Journal April

The three independent variables significantly affected the dependent variable with positive
coefficient direction. So H1 which stated that tax reporting knowledge significantly affected
tax compliance was acceptable, H2 stating tax calculation significantly affected tax
compliance was acceptable, and H3 stating tax payments knowledge significantly affected
tax compliance was acceptable. Further this testing was also equipped with simultaneous
significance test (F-Test) and determination coefficient test. On table 14, appendix 2 it can
be seen that F test has significance level of 0.000 <0.05. This means that simultaneously X1,
X2, and X3 variables affected Y. Table 13 appendix 2 showed the value of the determination
coefficient of 48.8% means that the dependent variable could be explained by the
independent variable of 48.8% and the rest of 51.2% was explained by other variables
outside the model.

DISCUSSION
The research results showed that taxpayers had a high level of understanding regarding the
deadline for submitting their annual SPT of individual taxpayer, the fine for late submission
of the annual SPT of individual taxpayer, the rights of taxpayers to extend the deadline for
submission of their annual SPT, as well as the presence of the way of delivering their annual
SPT directly in the tax office, through the corner of tax, and by mail. Overall the taxpayers
had a high level of understanding of the rights and obligations in reporting the calculation
and the payment of owed tax. The results validity and reliability test showed that the
statements could be used as a construct measure of tax reporting knowledge variable well
and had high internal consistency in measuring these variables.
The results of tax calculating knowledge research showed the taxpayers had a high level of
understanding on the types of taxable income derived from work and reward, the income
limit that was not taxed, and the addition to the marital status and the number of burden in
the family, and the tax consolidation of husband and wife. Meanwhile, in the statement
regarding income from inheritance and zakat, the level of understanding was only at
moderate level. Overall the taxpayers had a high level of understanding in the calculating the
income to be taxed. The results of validity and reliability test showed that the statements
could be used as a construct measure of tax calculations knowledge variable well and had a
high consistency in measuring the variables.
The research results on tax payment knowledge showed that most respondents had a high
level of understanding on deadline for end year tax payment, the rights of taxpayers to
propose tax returns, the rights of the taxpayers to compensate losses gained in the previous
year, and the penalties for late payment of tax. Overall the taxpayers had a high level of
understanding on the rights and obligations in implementing tax payments. The results of
validity and reliability test showed that the statements could be used as a construct measure
of tax payments knowledge variable well and had a high consistency in measuring the
variables.
The results of tax compliance research overall showed that taxpayers had a high level of
compliance on their rights and obligations in reporting the calculation and the payment of
2017 Damajanti & Karim 13

owed income tax. The validity and reliability testing of tax compliance variable showed that
the statements proposed to the respondents could be used as a construct measure of tax
compliance variable well and had high consistency in measuring the variables.
The results of hypothesis testing showed that tax reporting knowledge, tax calculating
knowledge and tax payment knowledge significantly affected tax compliance. The higher the
understanding level of taxpayers on tax reporting knowledge, tax calculating knowledge, and
tax payment knowledge would be followed by the increase on taxpayers compliance level.
Overall it could be concluded if taxpayers understood tax reporting procedure, understood
tax calculating technique, and understood tax payment procedure well could increase their
compliance in performing their tax obligations. This result could support the research
conducted by Palil (2010).

CONCLUSION
This research provides empirical evidence that taxpayer’s knowledge on their rights and
obligations in tax reporting, income that can be considered as taxable income and
knowledge on the rights and obligations in paying tax affect taxpayers’ compliance. These
findings are expected to give input particularly for tax officers in the area of Central Java I
that taxpayers who understand tax reporting, calculation, and payment will be more
compliance. Taxpayers’ compliance will increase if they have sufficient understanding on tax
regulations. The calculation of owed tax conducted independently will be used to determine
the amount of owed tax by taxpayers according to self-assessment system. These findings
provide input for the government to intensify the activities to increase taxpayers
understanding e.g. by providing training for taxpayers, or by socializing continuously by
government /tax officers.
The limitation of this study is using closed questionnaires so that it cannot cover deep
information completely on the cause of the people in understanding on tax regulations and
the things that cause taxpayers’ noncompliance. The next study is expected to be completed
with opened interviewed to taxpayers, and it is expected to extend the term of references
not only individual taxpayers but also institution taxpayers.

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16 Economics & Business Solutions Journal April

Appendix: SPSS Outputs

Table 1:
Variables’ Descriptive Statistics
Mean Median Mode Std. Deviation Variance Min Max
X1 23.34 24.00 26 4.340 18.840 13 30
X2 30.49 30.00 32 3.981 15.851 18 40
X3 15.44 15.00 13 3.010 9.058 9 20
Y 25.41 25.00 30 3.503 12.274 15 30

Table2:
Items’ Descriptives
Mean Median Mode Std. Deviation Variance
X1 23.34 24.00 26 4.340 18.840
X1.1 4.0714 4.0000 5.00 1.09778 1.205
X1.2 3.7398 4.0000 5.00 1.18046 1.393
X1.3 3.6429 4.0000 3.00 1.14354 1.308
X1.4 4.1939 4.0000 5.00 .85525 .731
X1.5 3.9337 4.0000 5.00 1.10972 1.231
X1.6 3.7959 4.0000 4.00 1.21916 1.486
X2 30.49 30.00 32 3.981 15.851
X2.1 4.6429 5.0000 5.00 .58617 .344
X2.2 3.8316 4.0000 5.00 1.24745 1.556
X2.3 3.0459 3.0000 3.00 1.34085 1.798
X2.4 3.4031 3.0000 5.00 1.33043 1.770
X2.5 4.0102 4.0000 5.00 .98183 .964
X2.6 4.0612 4.0000 5.00 .91502 .837
X2.7 3.7500 4.0000 3.00 1.06879 1.142
X2.8 3.7449 4.0000 5.00 1.16629 1.360
X3 15.44 15.00 13 3.010 9.058
X3.1 3.9031 4.0000 5.00 1.02070 1.042
X3.2 3.9133 4.0000 5.00 1.07543 1.157
X3.3 3.6735 3.0000 3.00 .98476 .970
X3.4 3.9490 4.0000 5.00 1.07056 1.146
Y 25.41 25.00 30 3.503 12.274
Y1 4.55 5.00 5 .930 .865
Y2 3.49 4.00 5 1.584 2.508
Y3 4.70 5.00 5 .637 .406
Y4 4.41 5.00 5 .881 .776
Y5 3.70 5.00 5 1.534 2.353
Y6 4.56 5.00 5 .848 .719

Table3:
Validity Results
Indikator Pearson’s Correlations Conclusion
X1.1 0,767** Valid
**
X1.2 0,572 Valid
X1.3 0,644** Valid
X1.4 0,395** Valid
**
X1.5 0,752 Valid
X1.6 0,711** Valid
**
X2.1 0.606 Valid
X2.2 0.650** Valid
X2.3 0.567** Valid
**
X2.4 0.570 Valid
2017 Damajanti & Karim 17

X2.5 0.687** Valid

X2.6 0.797** Valid
X2.7 0.525** Valid
X2.8 0.558** Valid
X3.1 0.819** Valid
X3.2 0.563** Valid
X3.3 0.761** Valid
X3.4 0.765** Valid
Y1 0.573** Valid
Y2 0.713** Valid
Y3 0.549** Valid
Y4 0.607** Valid
Y5 0.635** Valid
Y6 0.757** Valid

Table 4:
X1 Reliability Results
Reliability Statistics
Cronbach's Alpha Based on Standardized
Cronbach's Alpha Items N of Items
0.722 0,714 6
Item-Total Statistics
Scale Mean if Scale Variance Corrected Item- Squared Multiple Cronbach's Alpha
Item Deleted if Item Deleted Total Correlation Correlation if Item Deleted
X11 19.2653 12.740 .625 .414 .632
X12 19.5969 14.375 .343 .156 .718
X13 19.6939 13.752 .446 .293 .686
X14 19.1429 16.636 .211 .062 .741
X15 19.4235 12.676 .595 .401 .639
X16 19.5612 12.689 .516 .327 .664

Table 5:
X2 Reliability Results
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
0,701 0,744 8
Item-Total Statistics
Scale Mean if Scale Variance Corrected Item- Squared Multiple Cronbach's Alpha
Item Deleted if Item Deleted Total Correlation Correlation if Item Deleted
X21 26.5969 17.452 .518 .335 .665
X22 27.1276 16.163 .359 .333 .679
X23 28.3878 17.859 .099 .436 .746
X24 28.0612 17.730 .109 .482 .744
X25 27.0969 14.703 .584 .609 .626
X26 26.9847 14.620 .748 .715 .601
X27 27.1633 15.635 .472 .560 .654
X28 27.1173 14.935 .560 .629 .633

Table 6:
X3 Reliability Results
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
0.703 0.711
4
18 Economics & Business Solutions Journal April

Item-Total Statistics
Scale Mean if Scale Variance Corrected Item- Squared Multiple Cronbach's Alpha
Item Deleted if Item Deleted Total Correlation Correlation if Item Deleted
X31 11.5357 5.071 .641 .468 .532
X32 11.5255 6.569 .242 .061 .779
X33 11.7653 5.514 .557 .381 .590
X34 11.4898 5.277 .536 .345 .599

Table 7:
Y Reliability Results
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
0,.725 0,.761 6
Item-Total Statistics
Scale Mean if Scale Variance if Corrected Item-Total Squared Multiple Cronbach's Alpha if
Item Deleted Item Deleted Correlation Correlation Item Deleted
Y1 22.08 6.845 .636 .548 .653
Y2 22.57 6.729 .377 .274 .714
Y3 22.04 7.122 .593 .528 .668
Y4 22.33 6.067 .559 .619 .655
Y5 22.55 6.628 .307 .257 .749
Y6 22.16 6.671 .465 .617 .686

Table 8:
Normality Test Results
One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 196
Mean .0000000
Normal Parametersa,b
Std. Deviation 2.71908529
Absolute .057
Most Extreme DifferencesPositive .030
Negative -.057
Kolmogorov-Smirnov Z .799
Asymp. Sig. (2-tailed) .546
a. Test distribution is Normal.
b. Calculated from data.

Table 9:
Heteroscedasticity Test Results
Coefficientsa
Model
Unstandardized Coefficients Standardized Coefficients t Sig.
B Std. Error Beta
1 (Constant) 2.610 .909 2.871 .005
X1 -.004 .032 -.010 -.132 .895
X2 -.073 .036 -.166 -2.023 .064
X3 .084 .050 .144 1.683 .094
a. Dependent Variable: ABSRES1
2017 Damajanti & Karim 19

Table 10:
Autocorrelation Test Results
Runs Test
Unstandardized
Residual
Test Valuea -.01725
Cases < Test Value 98
Cases >= Test Value 98
Total Cases 196
Number of Runs 91
Z -1.146
Asymp. Sig. (2-tailed) .252
a. Median

Table 11:
Multicollinearity Test Results
Collinearity Statistics
Tolerance VIF
X1 0.81 1.234
X2 0.751 1.332
X3 0.692 1.445

Table 12:
Regression Coefficients & Hypotheses Testing Results
Coefficientsa
Model Unstandardized CoefficientsStandardized Coefficients t Sig. Collinearity Statistics
B Std. Error Beta Tolerance VIF
(Constant) 9.625 1.419 6.781.000
X1 .267 .050 .331 5.317.000 .810 1.234
1
X2 .314 .056 .361 5.579.000 .751 1.332
X3 .131 .078 .112 1.666.007 .692 1.445
a. Dependent Variable: Y

Table 13
Determination Coefficients
Model Summaryb
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .631a .498 .488 2.740
a. Predictors: (Constant), X3, X1, X2
b. Dependent Variable: Y

Table 14:
F-Test Results

ANOVAa
Model Sum of df Mean Square F Sig.
Squares
Regression 951.808 3 317.269 42.252 .000b
1 Residual 1441.718 192 7.509
Total 2393.526 195
a. Dependent Variable: Y
b. Predictors: (Constant), X3, X1, X2