The Influence of Tax Consciousness, Service Tax Authorities and Tax Sanctions on Tax Compliance (Survey On Individual Taxpayer Conducting Business Operations and Professional Service in Jakarta)

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THE INFLUENCE OF TAX CONSCIOUSNESS, SERVICE TAX AUTHORITIES, AND TAX SANCTIONS ON TAX COMPLIANCE (SURVEY ON INDIVIDUAL TAXPAYER CONDUCTING BUSINESS

OPERATIONS AND PROFESSIONAL SERVICE IN JAKARTA)

By:

DIAH NUR PERTIWI NIM : 109082100023

INTERNATIONAL PROGRAM ACCOUNTING DEPARTEMENT

FACULTY OF ECONOMICS AND BUSINESSES STATE ISLAMIC UNIVERSITY SYARIF HIDAYATULLAH

JAKARTA 1434 H / 2013


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CURRICULUM VITAE

Personal Data

Full Name : Diah Nur Pertiwi Nick Name : Diah

Address : JL Sarbini 1 No 20 RT 008/ RW 06 Kec. Makasar, East Jakarta

Mobile Phone : 081298862069

E-mail : diahnurpertiwi@gmail.com Place, Date of Birth : Jakarta, March 14th 1992 Gender : Female

Religion : Islam Nationality : Indonesia

Personality : Responsible, hard worker, good in individual and team work

Education

Elementary School SDN 05 1997-2003

Junior High School SMP Islam PB Sudirman Jakarta 2003-2006 Senior High School SMAN 10 Jakarta 2006-2007

SMAN 67 Jakarta 2007-2009

University UIN Syarif Hidayatullah Jakarta 2009-now Major: Accounting International Class Program

Informal Education


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Work Experience

 Internship at Koperasi Dinas Sosial Provinsi DKI Jakarta (2012)

Organization Experience

 Member of BEMJ Akuntansi UIN Syarif Hidayatullah Jakarta (2010)

Seminar

 Summer School “Renewable Energy-Leadership and Enterpreneurship” in

Weiden, Germany, sponsored by DAAD ( September 10-18, 2011)

Activity of Co-curricular


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ABSTRACT

The purpose of this research was to analyze the influence of tax consciousness, service tax authorities and tax sanctions on individual taxpayer compliance conducting business operations and professional services. The number of taxpayers are increase every year. But, it is not balanced with the level of tax compliance. The compliance problem becomes an obstacle in optimizing of tax revenue. This research examines the level of compliance of individual taxpayers conducting business operations and professional services in Jakarta by using several independent variables such as tax consciousness, service tax authorities and tax sanctions.

The data used in this research is primary data and selected by using convenience sampling method. The samples consists of 57 respondents, that is an individual taxpayers conducting business operation and professional service in Jakarta. The data is tested by using multiple linier regression analysis. The data tested using SPSS 20. Researcher also did validity and reliability test for the questioners. Classical assumption test using multicollinearity test, normality test, and heteroscedasticity test. For hypothesis testing, researcher using the coefficient of determination (R2), simultaneous test (F-test), and partial test (T-test).

Based on the results of the analysis undertaken concluded that tax consciousness, service tax authorities and tax sanctions have significant effect on tax compliance.


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ABSTRAK

Tujuan penelitian ini adalah untuk menganalisis pengaruh kesadaran pajak, pelayanan fiskus, dan sanksi pajak terhadap kepatuhan wajib pajak orang pribadi yang melakukan kegiatan usaha dan pekerjaan bebas.Jumlah wajib pajak dari tahun ke tahun semakin bertambah. Namun bertambahnya jumlah wajib pajak tersebut tidak diimbangi dengan kepatuhan wajib pajak dalam membayar pajak. Masalah kepatuhan tersebut menjadi kendala dalam pemaksimalan penerimaan pajak. Penelitian ini mengkaji tingkat kepatuhan wajib pajak orang pribadi yang melakukan kegiatan usaha dan pekerjaan bebas di Jakarta dengan menggunakan beberapa variabel bebas seperti kesadaran pajak, pelayanan fiskus, dan sanksi pajak.

Data yang digunakan dalam penelitian ini adalah data primer yang dipilih menggunakan metode convenience sampling. Sampel terdiri dari 57 responden yaitu wajib pajak orang pribadi yang melakukan kegiatan usaha dan pekerjaan bebas di Jakarta. Data diuji dengan menggunakan analisa regresi linier berganda. Pengujian data menggunakan SPSS 20. Peneliti juga melakukan uji validitas dan uji reliabilitas untuk keusioner. Uji asumsi klasik yang digunakan adalah uji multikoliniaritas, uji normalitas, dan uji heteroskedasitas. Untuk pengujian hipotesis peneliti menggunakan koefisien determinasi(R2),Uji simultan (F-test),dan uji parsial (T-test).

Berdasarkan hasil analisis yang dilakukan maka diperoleh kesimpulan bahwa kesadaran pajak, pelayanan fiskus, dan sanksi pajak memiliki pengaruh yang signifikan terhadap kepatuhan pajak.


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FOREWORD

Assalammu'alaikumWr.Wb

All Praise to Allah SWT as the Hearer, the Seer and above all an abundance of grace, Taufiq, as well as his guidance. So, because Allah SWT I can finish this research on time.

Shalawat always gives to the Prophet of Muhammad SAW and all his family and friends who always helped him in establishing Dinullah in this earth.

With the strength, intelligence, patience, and strong desire from Allah SWT, I am able to finish this mini thesis as graduation pre requirement for bachelor degree. I believe there is an invisible hand which have helped me going through this process.

My special thank for my mother, Nuri Sawitri, and my father, Soewignjo, who has been helping and support me to finish the thesis. I just can pray that Allah SWT will give you back for everything that you have done. Thank you also, you always pray for me in your sholah.

I believe I am nothing without each one of you who has helped me in finishing this thesis. Thus, in this very special moment, let me say many thanks to all of them have been helping me in the process of this thesis, including:

1. Prof. Dr. Abdul Hamid, MS as Dean of Faculty of Economics and Business

2. M. Arief Mufraeni, Lc., Msi as Head of International Program.

3. Ahmad Dumyathi Bashori, MA as Secretary of International Program. 4. Dr. Amilin, SE., Ak., M.Si as thesis supervisor I, you are my mentor

who has provided direction and guided me, share your knowledge to me, and thank you so much for your time and your help. So I can finish this thesis.


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5. Wilda Farah SE., M.Si,AK as thesis supervisor II. You are the best mentor with your carefulness, specificity and punctuality. You have given me direction and guided me. Thank you so much for your time and your help. So, I can finish this thesis.

6. All lecturers who have taught me patiently, may they have given are recorded in Allah SWT almighty and all staff UIN Syarif Hidayatullah Jakarta, special thank to Mr. Sugih Waluyo “thanks a lot you have taught me and gave explainantion about thesis and also for provide information and official stuffs that I needed in college”.

7. My sister, Niken and my brother, Royyan, who has always helped and supported me for my best, whatever I do and whenever it is.

8. All my friends in accounting international 2009. Thanks for the remarkable moments that we had been through together and special thanks for some of you that already shared and taught me your valuable experiences, especially in doing thesis. Thanks also for my friends in management international 2009.

9. Thanks for all seniors and juniors that had helped me during my study, comprehensive test and thesis.

I realize this minithesis is still far from perfection, thus suggestions and constructive criticism from all parties are welcome, in order to improve my thesis. Finally, only Allah SWT will return all and I hope this thesis will be useful to all parties, especially for writers and readers in general, may Allah bless us and recorded as the worship of Allah’s hand. Amin.

Wassalammualaikum Wr.Wb

Jakarta, May 2013


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TABLE OF CONTENTS

Cover ……… i

Certification from Supervisor ……….. ii

Certification of Comprehensive Exam Sheet ... iii

Certification of Thesis Exam Sheet ... iv

Sheet Statement Authenticity Scientific Work ... v

Curriculum Vitae ... vi

Abstract ... viii

Abstrak ... ix

Foreword ... x

Table of Contents ……….. xii

List of Tables ……… xvi

List of Figures ………... xviii

List of Graph ……….. xix

List of Appendix ………. xx

Chapter I INTRODUCTION A. Background Issues ……….... 1

B. Problem Formulation ……… 11

C. Objectives Research ………. 12


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Chapter II LITERATURE REVIEW

A. Literature Review……… 14

1. Taxation…..………... 14

2. Tax Consciousness…………..………. 20

3. Service Tax Authorities…….……….………… 23

4. Tax Sanction………..…. 28

5. Tax Compliance………..………… 32

6. Taxpayer Conducting Business Operations and Professional Service………... 35

B. Previous Research ……….. 38

C. Logical Framework ……… 41

D. Hypothesis ……….. 43

Chapter III RESEARCH METHODOLOGY A. Research Scope ……….. 46

B. Sampling Method ………... 46

C. Data Collection Method ………. 47

D. Analysis Method ………. 48

1. Descriptive Statistics ……….. 48

2. Data Quality Test ………. 48

3. Classical Assumptions Test ……… 49

a. Multicollinearity Test ……… 50


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c. Heteroscedasticity Test ………. 50

4. Hypothesis Testing ……….. 51

a. Coefficient of Determination ……… 52

b. Statistic F- Test………. 53

c. Statistic t-Test……….……….. 53

E. Operational Research Variable ………. 54

Chapter IV RESULT AND ANALYSIS A. General Description of Research Object ………... 57

1. Place and Time of Research……… 57

2. Characteristics of Sample……….. 58

3. Characteristics of Respondents……….. 59

B. Test Result of Analysis Methods………... 64

1. Descriptive Statistics ……… 64

2. Data Quality Test ………..……… 66

a. Validity Test ……….……… 66

b. Reliability Test ………. 69

3. Result of Classical Assumptions Test ……….. 70

a. Result of Multicollinearity Test……… 70

b. Result of Heteroscedasticity Test ………. 71

c. Result of Normality Test…………..……… 72

4. Hypothesis Testing ……… 73


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b. Result of Coefficient Determination ……… 74

c. Result of F- Test (Simultaneous) ………. 76

d. Result of t-Test (Partial)………. 77

C. Analysis……….. 78

Chapter V CONCLUSION AND IMPLICATION A. Conclusion ………. 82

B. Implication………….……… 83


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LIST OF TABLES No. Description

1.1 Domestic Revenues 2006-2011 ……….…… 2

2.1 Previous Research …..……… 38

3.1 Operational Research Variable ……….………..…. 56

4.1 Tax Revenue Target in Jakarta 2010-2012 ….………. 57

4.2 Questionnaires Distribution ……….… 58

4.3 Characteristic Respondents ……… 59

4.4 Characteristic Respondents Based on Gender …..……….... 60

4.5 Characteristic Respondents Based on Ages……… 61

4.6 Characteristic Respondents Based on Job ……….. 62

4.7 Characteristic Respondents Based on Education ……… 63

4.8 Characteristic Respondents Based on Time as Taxpayer ……… 64

4.9 Descriptive Statistics ………... 65

4.10 Validation Test for Tax Consciousness ………... 67

4.11 Validation Test for Service Tax Authorities ………. 67

4.12 Validation Test for Tax Sanctions ……… 68

4.13 Validation Test for Tax Compliance ………. 68

4.14 Reliability Test ……….. 69

4.15 Multicollinearity Test ……… 70

4.16 Multiple Regression Test ……….. 73


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4.18 Statistic F Test ……… 76 4.19 Statistic t Test ………. 77


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LIST OF FIGURES No. Description

2.1 Logical Framework ………... 42

4.1 Characteristic Respondents Based on Gender ………... 60

4.2 Characteristic Respondents Based on Ages ……….……. 61

4.3 Characteristic Respondents Based on Job ……..……….. 62

4.4 Characteristic Respondents Based on Education ……….. 63


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LIST OF GRAPH No. Description

1.1 Domestic Revenue 2006 -2011 ……… 3 4.1 Heteroscedasticity Test ( Scatterplot ) ……… 71 4.2 Normality Test ( P- Plot) ………. 72


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LIST OF APPENDIXES

No Description

Appendix 1 Research Letter ………. 90

Appendix 2 Research Questioner ……….... 91

Appendix 3 Respondent Identity ………. 94

Appendix 4 List of Respondents ……….. 95


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CHAPTER I INTRODUCTION

A. Background

Source of state revenue comes from a variety of sectors, both internal and external sectors. One source of revenue from the internal sector is taxes, while external revenue sources such as foreign loans. Source of state revenues are used to finance government spending and national development, one of which is taxed as internal sector. Tax revenues are not directly aimed at improving the welfare and prosperity of the people.

According to Soemitro (Accounting Taxation, 2010:4), the tax is a contribution to the treasury of the State under the law (which can be enforced) and did not receive reciprocal services directly demonstrated, it is used to pay for general expenses.

In an effort to reduce dependence on external sources of revenue, the government try to maximize internal revenue. The role of tax revenues from year to year has increased its overall revenue, it can be seen in Table 1.1 and describe in graph 1.1. Tax revenues is very important for the state, therefore the Directorate General of Tax which is a government agency under the Ministry of Finance acting as manager of the tax system in Indonesia is trying to increase tax revenues by reforming the tax aims to simplify the tax system can have a includes tax rates, non taxable income, and the tax collection system. It is stated in Act No. 36 year


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2008 which is the fourth amendment of the Act No. 7 year 1983 on Income Tax Act No. 36 year 2008 was passed on 23 September 2008 and came into force on January 1, 2009.

Act No. 28 year 2007 on "General Provisions and Tax Procedures", mentions that the taxpayer is an individual or entity, including taxpayers, cutting taxes, and the tax collectors who have rights and obligations in accordance with the provisions of tax legislation taxation. One form of the reaction can be seen from tax compliance to pay tax. It becomes important because it affects the amount of state income taxes.

Table 1.1

Domestic Revenues 2006-2011 (trillion rupiah)

Year Tax Revenue

Percentage of Tax Revenue

Non-Tax Revenue

Percentage of Non-Tax Revenue

Total Percentage of Total 2006 409,2 64,3% 227 35,6% 636,2 100% 2007 491 69,5% 215,1 30,46% 706,1 100% 2008 658,7 67,2% 320,6 32,7% 979,3 100% 2009 619,9 73,17% 227,2 26,8% 847,1 100% 2010 723,3 72,8% 268,9 27,1% 992,2 100% 2011 878,7 75,4% 286,6 24,5% 1.165,3 100% Source: www.anggaran.depkeu.go.id 2011


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Graph 1.1

Source: Data are processed

From the graph 1.1 by table 1.1 it can be seen that the development of domestic revenue from the year 2006 to 2011 was increased, although each year fluctuated on tax revenue that could be seen in the percentage from 2006 to 2011 but in the end of year 2011 increased on the tax revenue, and when seen in non-tax revenue was decreased from 2006 to 2011 in the percentage amount, and if looked the ratio of the percentage each year in tax revenue and non-tax revenue, the amount of tax revenue is higher than non-tax revenue, as in 2006 the percentage of tax revenue was 64.3%, and non-tax revenue was 35.6%, as well as in 2011 the percentage of tax revenue was 75.4% and non-tax revenue was 24.5%, thus it can be said that tax revenue as a main source of income for the State. The increase in the tax sector as one of the sources is possible and open wide, based on the number of taxpayers, both individual taxpayer or corporate taxpayer that increases each year, with increasing population and prosperity. In addition, the tax is a sector that plays a major role for government revenues. Therefore, the amount of tax revenue that government use for national development of a country takes the role of the

0 500 1000 1500

2006 2007 2008 2009 2010 2011

Tax Revenue

Non-Tax Revenue


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community, where a willingness of the whole both individual taxpayers and entities to comply with the tax laws that hold in a country.

The role of the tax as a source of revenue for the State, efforts to increase tax revenues continue to be made by the government in this case is the task of the Directorate General of Tax in Minister of Finance. Various attempts were made in order that the Directorate General of Tax maximum tax revenues, among others, is to extensification and intensification taxes. This is done by way of extension of tax subject and object, to capture new taxpayers.

Effort to maximize tax revenue cannot rely solely on the role of the Directorate General of Taxation and the tax officer, but also takes an active role from the taxpayers themselves. The role of community in tax revenue is on whether or not people are willing to either agency or individual who signed up to have a NPWP and implement tax obligations. Role of the taxpayer has always been considered the greatest contribution in the world of taxes and the taxpayer has low contribution of tax. Actually, the role of individual taxpayer also has a high contribution in tax revenue. It can be seen from the Population Census conducted by the Central Statistics Agency (BPS) in 2010 showed that the population of the entire Indonesian population of 237,641,326 people and 9,607,787 people of DKI Jakarta (www.bps.go.id). Central Statistics Agency (BPS) also explains that in Indonesia taxpayer who reports SPT only 8.5 million people, equivalent with 7.73% of the 110 million people who work actively, while


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corporate taxpayer reported SPT only 466 thousand people equivalent with 3,6% of 12.9 million existing macro corporate taxpayer (Kompas, October 2011).

Several phenomena of cases occurring in the world of taxation Indonesia recently made public and concerned taxpayers to pay taxes. Of the cases that convolute the country, tax case in the second rank after case of corruption is endemic in all walks of life today. In the past, this department is known loaded with games between the employees associated with the taxpayers. One of the cases was phenomenal from the Gayus Tambunan case. Gayus arguably iconic Indonesian tax case. Former tax official IIIA group was suspected of accepting bribes and gratuities, and stored in a safe deposit box owned by him Rp 74 billion. Gayus assets totaled reached 659.8 thousand U.S. dollars and 9.68 Singapore dollars. Gayus was also involved in cases of alleged bribery prison chief Mako Brimob (Vivanews, Juny 2010). The condition can affect tax compliance and reduced public trust of taxation, because the taxpayers do not want any tax already paid by the tax authorities abused themselves. Therefore, some of the public and the taxpayer sought to avoid taxes, even though it is the duty of a good citizen.

According to John Hutagaol et al (2007) concerning the conclusion of research conducted by previous researchers Andreoni et al (1998) several aspects that affect taxpayer compliance in terms of the public finances, in terms of law enforcement, organizational structure, labor and ethics.

Financial terms of the realization of the public views the government's tax revenue earned. For the law enforcement side views of how fair government


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sanctions against those who not doing tax obligations including the government's own family or friends. When viewed in terms of organizational structure, manpower and ethics is a form of internal problems derived from the tax office. Those issues concerning professionalism in the service of an employee tax to taxpayers (Hutagaol et al: 2007).

Good service tax authorities are expected to increase taxpayer compliance. In research Supadmi (2010) mentioned that to improve tax compliance in meeting tax obligations, quality of service tax should be increased by the tax authorities. Good service tax authorities will provide comfort to taxpayers. Hospitality workers and ease the tax information system of taxation, including the taxation services. Jatmiko research (2006) found that the service tax authorities have a significant positive effect on tax compliance.

Various ways have been done by the government to increase tax compliance which is still low. One way is to improve the quality of service tax authorities or tax officials. Service tax authorities is also important to explore the state income, tax authorities which should serve the taxpayers with an honest, professional and responsible, but in a fact that the tax authorities are not all clean and some are naughty in the sense often abuse their authority to manipulate the data associated with the SPT mandatory tax as an example the case of Gayus Tambunan in 2011. With this case the taxpayers feel that the money from the taxes that they pay are not managed properly and honestly. Therefore, the quality of service tax


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authorities can greatly affect tax compliance. If the quality of service tax authorities is very good, then taxpayer perceptions of the service will increase.

Good service tax authorities which is gives service tax authorities (serve) for the person or people who have an interest in the organization in accordance with the basic rules and procedures that have been established. Services tax authorities include the ability competencies that are have skills, knowledge, and experience in terms of tax policy, administration and taxation laws and motivation as a public servant. The tax authorities work in a transparent, voluntary helped difficulty of taxpayer (willing to provide counseling), tax authorities always maintain neatness in appearance, said keeping well and be polite, provide the tax authorities with quick and agile to help taxpayers difficulties.

Meanwhile, another phenomenon is for taxpayers raised the question as to how much tax will be calculated and how much tax will be paid by the taxpayer, until giving rise to the violation, because there is less of taxpayer consciousness of tax obligation in performing tax payments to the State, by not submit SPT in specified period, with stalling to make payment or deliver SPT incorrectly, such as by deliberately manipulating the total personal income tax. If the number of income tax payers are small, then the amount of tax to be paid to the state for the payment of any tax as small as possible, and deliberately did not meet tax obligations that cause loss for the State of the obligation to pay a tax specified in the provisions of general law of taxation.


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If there deliberately manipulate data with the aim to make tax payments to be as efficient as possible, or not submit a SPT within a certain time, it will be subject to administrative sanctions that may be tax penalties, interest, and gains.

General provisions and procedures of tax laws has been stipulated in the Act, and the tax sanctions. Sanctions need to provide lessons for tax offenders. For example, in Article 7 of Art No. 28 Year 2007 on General Provisions and Tax Procedures when the SPT was not delivered within the period referred to in Article 3 paragraph (3) or an extension of the deadline submission of the SPT as referred to in Article 3 paragraph (4), subject to administrative sanctions in the form of a fine of Rp 500.000,00 (five hundred thousand rupiah) to the Value Added Tax SPT Period, Rp 100,000,00 (one hundred thousand rupiah) to another SPT Period, and Rp 1,000,000,00 (one million rupiah) for the Annual Income Tax of Corporate Taxpayer and Rp100.000,00 (one hundred thousand rupiah) to the Annual Income Tax of individual Taxpayer. Thus, it is expected that tax laws obeyed by the taxpayer. The taxpayer will meet the tax obligation when taxation view that sanctions would be more detrimental (Jatmiko, 2006). Research conducted by Purnomo (in Supadmi, 2010) found that perceptions of sanctions taxation taxpayer has a positive influence on tax compliance. The results Yadnyana (2009) in Muliari and Setiawan (2010) found that sanctions have a positive effect on tax compliance of taxpayers.

Taxpayer consciousness of the functions of taxation as state funding is needed to improve tax compliance (Jatmiko, 2006). According Suardika (quoted from


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Muliari and Setiawan, 2010), the public must be aware of its existence as a citizen and must always uphold the Constitution of 1945 as the legal basis for organizing the state. Research conducted by Jatmiko (2006) found that consciousness of taxation has a significant positive effect on tax compliance. Research conducted by Muliari and Setiawan (2010) also found that consciousness of the taxpayer and a significant positive effect on compliance reporting individual taxpayers.

Individual taxpayers conducting business or professional services must fill out SPT yearly Form 1770. Individual taxpayers conducting business or professional service is an individual who organizes activities and is not bound by a bond with the employer. Individual taxpayers conducting business enterprise carries on business as trade, services, industry, and others. While the definition of professional service is work performed by an individual who has special expertise in an effort to generate income and is not bound by a bond with the employer. Examples of professional service is in private practice as a physician, consultants, lawyers, and others. Individual taxpayers in the country with respect to employment or occupation, services, and activities of related work in the form of salaries, wages, honoraria, allowances and other payments. In this case, the tax calculation will be based on the provisions of the Income Tax Law Article 21. Income received in connection with the work of the tax will be deducted by the employer, government treasury, or event organizers.

Based on the statement above, the researchers motivated to do this research about tax consciousness, service tax authorities, and tax sanctions towards tax


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compliance on individual taxpayers conducting business activitity and professional services, because tax compliance for individual taxpayers is still considered low to implement tax liability because most taxpayers are concerned to pay tax liability that could be misused for vested interests. Thus researchers motivated to examine the consciousness for individual taxpayers, especially taxpayers conducting business activity and professional service in Jakarta, and motivated to examine the taxpayer's perception of the service tax authorities whether it is helps, administer, and prepare all the needs of taxpayers well, and perceptions about tax sanction whether it is followed, obeyed, and complied by the taxpayer in accordance with the tax laws, by complied tax sanction given the taxpayer would not violate norms of taxation. Based on that statement, the factors to be tested in this research is the tax consciousness, service tax authorities, tax sanction and tax compliance on individual taxpayers. Based on the description above, the authors are interested in preparing thesis entitled "The Influence of Tax Consciousness, Service Tax Authorities, and Tax Sanctions on Tax Compliance" (Survey on the Individual Taxpayer Conducting Business Operations and Proffesional Service in Jakarta).

This research is a development from previous research, the research conducted by Muliari and Setiawan (2010). The difference of this research with previous research is as follows:

1. Variables that used in previous researchers are tax sanction, tax consciousness, and compliance reporting on individual taxpayers. Meanwhile,


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in this research, the researchers added a variable that is the service tax authorities, which suggested in previous research to examine other factors that may affect tax compliance reporting.

2. The object of this research is the individual taxpayer conducting business activity and professional services, such as doctors, teachers, lawyers in Jakarta. Meanwhile, the object of previous research are all taxpayers in the Tax Office Primary East Denpasar.

3. Previous research is conducted in 2010, whereas this research conducted in 2013.

B. Problem Formulation

Based on the description contained in the above background, the problem to be formulated as:

1. Is tax consciousness has significant influence with tax compliance? 2. Is service tax authorities has significant influence with tax compliance? 3. Is tax sanctions has significant influence with tax compliance?


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C. Research Objective and Benefit 1. Research Objectives

The purpose of this research is as follows:

a. Analyzing the influence of tax consciousness on tax compliance. b. Analyzing the influence of service tax authorities on tax compliance. c. Analyzing the influence of tax sanctions on tax compliance.

2. Research Benefit

The benefits of this research are as follows:

a. For General Directorate of Tax in Minister of Finance

To provide information and reference in formulating tax policy extension appropriate to improve tax compliance in relation to consciousness of taxation, service tax authorities and tax sanction primarily on individual taxpayers conducting business and professional services. To provide input to the General Directorate of Tax to determine strategies to improve adherence to pay taxes and hoped that this research can provide feedback on actions that can be taken by tax authorities in order to improve compliance of individual taxpayer that serves.

b. For Academics

For further reference material in matters relating to tax compliance. It also adds insight and knowledge about them, as well as obtaining the benefits of the research experience.


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c. For authors

The research is expected to provide better theoretical understanding profound the principles of tax consciousness, service tax authorities and tax sanction, and to know how application in real life so it can be an additional useful knowledge, and provide greater insight in understanding and analyzing the factors that influence compliance to pay tax.


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CHAPTER II LITERATURE REVIEW A. Literature Review

1. Taxation

Tax issue is a problem of society and the State, and any person who lives in a State have to deal with taxes, so the tax issue is also a problem of all the people in the state, thereby differing people as members of the public should be aware of all the problems associated with taxes.

Many experts in the field of taxation that describes the meaning or definition of tax on diverse taxes, but from different understanding or definition, it has a core or common purpose. Understanding or definition of taxes, according to some experts, among others:

a. According Rochmat Soemitro, on a book entitled Taxation Theory and Case by Siti Resmi (2009:1):

"Taxes are the dues of the people to the state treasury under the law (which can be enforced) and did not receive reciprocal services that goes to show, and are used to pay for general expenses".

b. According Smeets on a book written by Sukrisno Agoes, Accounting Taxation (2010:4):

"Tax is payable to the government performance through general norms, can be enforced, without any reciprocity can be demonstrated individually; intention is to finance government spending."


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c. Tax according to Article 1 No 28 year 2007 on General Provisions and Tax Procedures are:

"The contribution shall be payable to the state by the individual or entity that is enforceable under the Act, without get feedback directly and used for the purposes of the state for the maximum prosperity of the people".

After learning the definitions of tax above, it is made a conclusion of the definition of tax that the tax has some basic aspects:

1. Payment of taxes should be based on the law; 2. Characteristics can be imposed;

3. There is no immediate contra can be felt by taxpayers; 4. State tax collections by both the central and regional levels;

5. Taxes used to finance government expenditures (routine and development) for the benefit of the general public.

Based on the above definitions of tax, there are some responses from experts and tax practitioners. Rochmat Soemitro quoted by Setiyaji (2005) stated that the actual tax owed, for example, members of the public debt to society. This debt according to the law is engagement. Though, the tax is located in the field of public law, but it is very close relationship with the civil law and customary law. On the other hand, the fulfillment of tax obligations will have an impact on the economic aspects, from microeconomics to macroeconomics. Therefore, when the members of the community meet their tax obligations properly, the economic mechanisms of society will go well.


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Meanwhile, Abdul Asri Harahap (2004) quoted by Setiyaji (2005) criticized a basic understanding of tax by revealing that the definition of tax and its implementation needs be addressed by efforts to moral consciousness and aspects of divinity in paying taxes is injected in consciousness "secular" taxation which tends to emphasize the contractual relationship between government and society.

From the several definition of tax, raised by the experts it can be conclude the definition of tax are :

a. Can be collected based on the tax law and an implementing regulation can be imposed.

Accordance with the third amendment of the 1945 Constitution article 23A which states "taxes and other levies for the purposes of the state regulated by law." So ensure legal certainty for both the tax authorities as a tax collector and the taxpayer. Tax can be imposed if the taxpayer does not meet the tax obligations and may get the sanctions in accordance with regulation.

b. Taxes levied by the central and local government.

Tax is one of the sources of state revenue, so if the tax levy is allocated between the central government and local government, then the government will have the same opportunity to advance and develop the region.


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c. In the payment of tax cannot be contra indicated the individual by the government.

For example, people who obey paying vehicle taxes are going through the same quality with those who do not pay taxes on vehicles.

Taxes have a very important role in the life of the state, particularly in the implementation of development as a source of state income, to fund all expenses including development expenditure.

According to Resmi (2009:3) in book Taxation: Theory and Cases, taxes have several functions:

1. Budgetair Function

Tax is one of the sources of government revenue to finance both routine and development expenditures. As a source of state finance, the government attempted to include as much money for the state treasury. 2. Regularend Function

Taxes as a means to organize or carry out government policy in the field of social and economic, as well as achieving certain goals beyond finance. From some of the tax functions mentioned above it can be concluded that the definition of the tax function is:

a. As a source of state revenue, taxes serve to finance the expenses of the State. Taxes are used to finance routine as personnel expenditures, spending on goods, and maintenance.


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b. As a regularend function, tax can be used to achieve the goal. For example in order the capital investment, both domestic and abroad are given a variety of tax relief. In order to protect domestic production, the government set a high import duties on foreign products.

According to Resmi (2009:7), In Indonesia, for instance, the tax is classified into several categories, tax as faction, nature, and the institution of tax.

1. Tax as Faction

a) Direct tax is a tax which is borne by the taxpayer and not transferred or charged to another person or another party.

For example: Income Tax

b) Indirect tax is a tax that could ultimately be charged or delegated to other persons or third parties.

For example: Value Added Tax 2. Tax as Nature

a) Tax Subjective, is the imposition of tax at attention on personal circumstances or the taxation of taxpayers who pay attention to a state subject.

For example: Income Tax

b) Tax Objective, is a tax at the time of loading attention on the object either in the form of objects, circumstances, actions, or events that


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result in the obligation to pay taxes, regardless of the subject of taxes and shelter.

For example: Value Added Tax and Sales of Luxury Goods 3. Tax as Institution

a) State Tax (Tax Center), is a tax levied by the central government and used to finance the state in general households.

For example: Income Tax, Value Added Tax and Sales Tax on Luxury Goods, Land and Building Tax, and Stamp Duty.

b) Local Tax, is a tax levied by local governments both Local and Regional Level I and Level II are used to finance the household each area.

a) Provincial tax, for example: Motor Vehicle Tax and Motor Vehicle Fuel Tax.

b) Taxation regency/city, for example: Hotel Tax, Restaurant Tax and Entertainment Tax.

According to Resmi (2009:11-12), the system of tax collection can be divided into:

a. Official Assessment System

It is a tax collection system that gives authority to the government (fiscus) to determine the amount of tax payable.


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b. Self Assessment System

It is a tax collection system that gives authority, trust, and responsibility for taxpayers to calculate, estimate, pay, and report their own amount of tax to be paid.

c. With Holding System

Tax collection system that gives authority to a third party who appointed to determine the amount of tax payable by the taxpayer in accordance with the tax laws and regulations. The appoinment of third party is done according to the tax laws, presidential decrees and other regulations to cut and collect taxes, deposit, and account for through taxation means available.

2. Tax Consciousness

Consciousness is an element in human beings to understand reality and how they act or behave towards reality. Jatmiko (2006) explains that consciousness is a state of knowing or understanding. Irianto (2005) in Widayati and Nurlis (2010) outlines some form of consciousness pay taxes that encourage taxpayers to pay their taxes. The realization that taxes are a form of participation in supporting the country's development. Knowing this, the taxpayer would pay taxes because they are not be aggrieved from the collection of tax.

Consciousness is the behavior or attitude of an object which involve assumptions and feelings as well as the tendency to act in accordance the


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object. Thus it can be said that the tax consciousness in paying taxes is a form of taxpayer behavior or outlook feelings involving knowledge, belief and reasoning with tendency to act on the stimulus provided by the system and the tax provisions.

In Jatmiko (2006), Sumarso (1998) stated that low public consciousness of taxation often be one of the reasons many potential taxes that could not be captured. Still in Jatmiko (2006), Larche (1980) also suggests that consciousness of taxation is often a constraint in the public issue of tax collection. Empirically also been demonstrated that higher of tax consciousness it will be the higher level of tax compliance (Suyatmin, 2004 in Jatmiko, 2006).

As one important part to rotate state economy, taxes are points that must be recognized and doing by society whose are taxpayers. Taxpayers consciousness to fulfill their tax obligations needed to realize that taxes have an important contribution in the State as a means of development progress, economic evenly and prosperity for the country.

From the literature and research above, it can be obtain several dominant internal factors that make a taxpayer consciousness to comply, which are : a. Taxpayer Perception

Taxpayer consciousness to fulfill their tax obligations will be increased if the public perception appears positive of taxes. Torgler (2008) states that the taxpayer consciousness to dutifully pay taxes associated with the


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perception that include paradigm will be the tax function for financing development, usability taxes in the provision of public goods, as well as justice (fairness) and legal certainty in the fulfillment of tax obligations. Availability public goods is a matter of taxpayer trust in the use of taxes paid. If taxpayers feel that the taxes paid cannot be properly managed by the government, so the taxpayers feel do not get benefit of tax paid, then taxpayers would not be obey to pay tax.

2. The level knowledge on the provisions of the applicable tax.

The level knowledge and understanding of taxpayer on the provisions of tax that existing, effect on behavior of tax consciousness. Taxpayers whose do not understand the tax laws are clearly likely to be a taxpayer whose do not obey, and conversely the taxpayers whose understand the tax laws, more conscious of the sanction that will accepted if shirking their tax obligation. Research conducted by Fikriningrum (2012) gives the result that the taxpayer understanding of the tax rule has a positive and significant influence on taxpayer consciousness in its tax reporting.

3. Taxpayer financial condition.

Financial condition is an economy factor that affects tax compliance. The financial condition is the company financial ability that reflected on the level of profitability and cash flow. Company profitability is one of the factors that influence the consciousness to comply with tax regulations. Companies which have high profitability tend to report honestly on the tax


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than companies with low profitability. Companies with low profitability in generally are experiencing financial difficulty and tend to tax non-compliance. Similarly, the cash flow with liquidity conditions.

Taxpayer that have consciousness (Manik Asri, 2009) in accordance with the following:

1. Know the laws and tax regulations.

2. Determine the function of taxes for state financing.

3. Understand that the tax liability must be carried out in accordance with the applicable regulations.

4. Understand the function of taxes for state financing. 5. Calculate, pay, tax reporting voluntarily.

6. Calculate, pay, tax reporting correctly. 3. Service Tax Authorities

Service is a way to serve (help administer or prepare all the necessary requirements a person). Meanwhile, the tax authorities is a tax officer. Thus, service tax authorities can be interpreted as a way of tax officer to help, to administer, or to prepare all the necessary needs someone who in this case is the taxpayer (Jatmiko, 2006).

Ilyas and Burton (2010) explains that although taxation and education campaigns have been implemented by Directorate General of Taxation, which is considered the best way to be able to change the attitude of people who still do not understand the importance of pay taxes, and eventually want to


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register to obtain a NPWP is through by service . Still in the Ilyas and Burton (2010), explained that the good attitude of the tax authorities or the ministry was to be given to all taxpayers, because to pay tax the person does not have reciprocity directly. If there is a saying in the world of commerce "Buyer is King", the phrase "Taxpayer is King" also needs to be promoted, so that taxpayers eager to pay taxes.

Provisions that control a duty and authorities of the tax authorities, Art No 28 year 2007 on General Provisions and Tax Procedures (KUP). Article 35 Paragraph (1) that said, if in carrying out inspection tasks, billing, tax or criminal investigations required information or evidence from banks, public accountants, notaries, tax consultants, administrative agency, or other third parties who have a relationship with a taxpayer, the Directorate General of Taxation written request the parties shall provide the requested information or evidence. Paragraph (2), in which case the parties are duty bound to keep, then for the purpose of examination, billing, tax or criminal investigations, secrecy obligation was abolished. Especially for bank secrecy obligation was abolished upon written request the minister.

In the case to determine how best services that should be done by the tax authorities to taxpayers, also required an understanding of the rights and obligations of the tax authorities. Obligations of tax authorities set out in the tax act are:


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a. The obligation to foster taxpayer.

In order to carry out the functions of development, the Directorate General of Taxation shall give guidance to taxpayers as in the implementation of accounting/record keeping, calculation of tax liability tax reporting, invoicing tax and tax administration.

b. The obligations issued a tax overpayment.

If in a given tax period, or the taxable year by a taxpayer calculating the overpayment occurred, the taxpayer may apply for its return (restitution). After a thorough investigation/examination by the tax authorities, if it is in accordance with the provisions of overpaid tax bill, the tax authorities will issue refund overpayment for tax overpayments.

c. Obligations to keep taxpayer data.

Confidentiality of taxpayer data on existing taxpayer data and submitted to the tax authorities, kept secret for interests outside the Directorate General of Taxation.

Meanwhile, there are also the rights of tax authorities set in Tax Law, among others:

a. Rights issued a NPWP or NPPKP office. Taxpayers/employers should voluntarily taxable/consciousness itself registered as a taxpayer/report as taxable entrepreneur. Otherwise, based on the data and information or extension, carried its adoption in office. KPP will provide a NPWP and NPPKP.


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b. Right to issue tax assessments. Upon inspection done, KPP will issue tax provisions (such as SKP, STP, SPPT), as the basis for determining the amount of legal tax due by the taxpayer.

c. Rights issue Forced Letter and Warrant Implement Foreclosure. When to maturity payment has passed and been reprimanded, then the tax debt, KPP (through a bailiff) issuing and executing Forced Mail (SP), and seizure (SPMP).

d. Rights of inspection and sealing. In carrying out the functions of guidance, the Directorate General of Taxation conduct tax audits of taxpayers to determine the level of compliance of the implementation of tax obligations or other purposes. In the case of an uncooperative taxpayer, did not provide the document/file requested by examiner, then conducted over the sealing of the document/file.

e. Right to conduct an investigation. When taxpayer allegedly committing a crime of taxation, there will be an investigation into the taxpayer. Investigations carried out by civil investigators. If convicted of a crime of taxation, will be submitted to the Court for a sequel.

Several previous studies have also described the importance of the service tax authorities. Karanta et al, 2000 (in Suryadi, 2006) emphasizes the importance of the quality of personnel (HR) taxation in providing services to the taxpayer. Forest and Sheffrin (2002), quoted by Suryadi (2006) examined the importance of simplifying the tax system. This is due to the complexity of


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the tax system will affect the taxpayer's noncompliance, although a simple tax system does not guarantee taxpayers will obey (Suryadi, 2006).

Taxpayers and tax authorities can work together to achieve their respective goals. This condition will be achieved if in every activity of life in carrying out the rights and obligations of each party consciously rely on the values of a good relationship. Transparency, accountability and responsibility are some of the many values of life in the world of tax that should be the ideal value carried in the interest-based model of bilateral relations between the taxpayer and the tax authorities.

From the explanation above it can be concluded that the success rate of tax revenue is influenced by the tax payer is also influenced by tax policy, tax administration and tax law. The latter three factors attached and controlled by the tax authorities themselves, while the tax payer-dominated factor of the taxpayer's own self. Tax authorities in carrying out their duties to serve the public or taxpayers greatly influenced by the existence of tax policy, tax administration and tax law.

The tax authorities are expected to have competence in the form of expertise (skills), knowledge, and experience in terms of tax policy, tax administration and tax legislation. In addition to the tax authorities should have high motivation as a public servant.


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4. Tax Sanctions

Sanctions are an act of punishment given to those who break the rules. Regulations or laws are signposts for someone to do something about what to do and what should not be done. Sanctions need to be rules or laws are not violated. Sanctions taxes is an assurance that the provisions of tax laws (taxation norms) will be followed, observed, complied, in other words, the tax penalty is a deterrent so that taxpayers do not violate norms of taxation (Mardiasmo, 2006 in Muliari and Setiawan, 2010).

The view of these tax sanctions is measured by indicators (Yadyana, 2009 in Muliari and Setiawan, 2010) as follows:

a. Criminal sanctions for violators of the rules imposed heavy taxes. b. Administrative sanctions imposed for violators of tax laws is ethereal. c. The imposition of heavy sanctions is one means of educating taxpayer. d. Sanctions should be imposed on violators tax without tolerance. e. Imposition of sanctions for violations of the tax can be negotiated.

As long as there is a general perception in the community that will be subject to taxation only if the sanctions do not pay taxes. In fact,many things that make the community or taxpayers sanctioned taxation, whether it be administrative sanctions (interest, penalties, and rising) and criminal penalties. Conventionally, there are two kinds of sanctions are positive sanctions and negative sanctions. Positive sanction a reward, while negative sanction is a punishment (Soekanto, 1988 in Ilyas and Burton, 2010). However, if the


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taxpayer reward obedient and has included the Notice has not been pay on time. Currently, the Directorate General of Taxation is still focusing on the negative sanctions demanding that taxpayers complied with the tax laws. When associated with the applicable tax bill, according to Ilyas and Burton (2010), there are four things that are expected or required of taxpayers, namely:

a. Demanded adherence (compliance) in taxpayers paying tax implemented with full awareness.

b. Demanded responsibility taxpayers in submitting or entering the Notice on time according to Art No. 28 year 2007.

c. Demanded honesty taxpayers in filling out the Notice in accordance with the actual situation.

d. Impose sanctions (law enforcement) are more heavily to taxpayers who do not obey the regulations.

From the fourth above, the most effective according to Ilyas and Burton (2010) is to impose sanctions (law enforcement) indiscriminately and carried out consistently. From the juridical point of view, taxes do contain an element of coercion. That is, if the tax liability is not implemented, then there are legal consequences that can occur. The legal consequence is the imposition of sanctions taxation.


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Here are the tax sanction stipulated in Art No 28 year 2007:

a. Article 7 (1): administrative sanction in the form of fines of Rp 500,000.00 (five hundred thousand rupiah) for Value Added Tax SPT Period, if SPT not delivered within a maximum period of 20 (twenty) days after the end of the tax period.

b. Article 7 (1): sanction administrative fine amounting to Rp 100,000, 00 (one hundred thousand rupiah) for SPT another period when the SPT is not delivered within a maximum period of 20 (twenty) days after the end of the tax period.

c. Article 7 (1): sanction administrative fine amounting to Rp 1,000,000 00 (one million rupiah) for SPT Income Tax Taxpayer when SPT is not delivered within a maximum period of 4 (four) months after the end of the tax year.

d. Article 7 (1): sanction administrative fine amounting to Rp 100,000, 00 (one hundred thousand rupiah) Annual Income Tax for individual taxpayers later than 3 (three) months after the end of the tax year.

The purpose of the imposition of administrative sanctions such as fines as provided in this paragraph is for the interest of the orderly administration of taxes and increase taxpayer compliance in fulfilling the obligation to submit the SPT.

From the explanation above it can be conclude that tax sanction is an assurance that the provisions of the tax legislation (tax norm) will be


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followed/observed/complied, in the other words tax sanction is a deterrent in order to the taxpayer does not violate the norms of taxation (Mardiasmo, 2006:39). Taxpayers will meet tax payments when looking at the tax penalty would be more detrimental (Jatmiko, 2006). The higher or severity of sanctions, it will be more detrimental to the taxpayer. Therefore, the tax penalties are expected to affect the level of tax compliance in paying taxes.

In essence, the imposition of sanctions imposed taxation to create taxpayer compliance in implementing tax obligations. It is important for taxpayers to understand tax penalties thus knowing the legal consequences of what was done or not done.

Knowledge of sanctions in taxation is important because the Indonesia’s government choose to implement self-assessment system for the implementation of tax collection. Under this system, taxpayers are given the confidence to calculate the deposit and report their own tax returns. To be able to run it well, then any taxpayer requires knowledge of taxation, both in terms of technical and administrative regulations. So that implementation can be orderly and in accordance with their intended target, the government has prepared the guidelines set forth in the applicable tax bill.


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5. Tax Compliance

a. Definition of Tax Compliance

In General Indonesia Dictionary, compliance means submission or obedience to the teachings or rules. Meanwhile, according to Gibson (1991) in Agus Budiatmanto (1999) as quoted by Jatmiko (2006), compliance is the motivation of a person, group or organization to act or not act in accordance with the rules set. In the tax rules that apply are Tax Law. Thus, tax compliance is a compliance of person, in this case is the taxpayers, towards regulation or taxation laws.

According to Simon James et al, quoted by Gunadi (2005), the notion of tax compliance is having the willingness of taxpayers to meet their tax obligations in accordance with applicable rules without need for the holding of the examination, thorough investigation, a warning or a threat, the application of law and administrative sanctions. Santoso (2008) defines tax compliance as a situation where the taxpayer meets all tax obligations and enforce rights of taxation.

According Nurmanto in Rahayu (2010:138) says that tax compliance can be defined as a state where the taxpayer meets all tax obligations and enforce rights of taxation.

Compliance was said by Norma D. Novak was "a climate" awareness and compliance of tax obligations that are reflected in the situation taxpayers understand or try to understand all of the provisions of the tax


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legislation, filling out tax forms with complete and clear, calculate the amount of tax payable correctly, pay the tax due on time (Devano, 2006 in Supadmi, 2010).

Muliari and Setiawan (2010) explains that the criteria taxpayer abiding by the Ministry of Finance of the Republic of Indonesia Number abiding taxpayers 192/PMK.03/2007 as follows:

a. Timely in submitting the Notice;

b. Has no tax arrears for all types of taxes, unless the delinquent taxes that have been licensed in installments or defer payment of taxes; c. Financial Statements audited by a public accountant or a public

financial supervisory agency with unqualified opinion for 3 (three) years in a row;

d. Never convicted of a crime in the field of taxation based on court decisions that have been legally binding for a period of 5 (five) years. b. Types of Tax Compliance

Tax compliance divided into two kinds, namely formal compliance and material compliance. Formal compliance is a situation where the taxpayer has formal obligations in accordance with the provisions of the tax laws. Material compliance is a condition in which the taxpayer meets all of the material terms of taxation, which is in accordance with the letter and spirit of tax laws.


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Formal compliance, which can be measured by assessing adherence to enroll, the deposit compliance, and compliance reporting. Material compliance is more important, because it may be formally demonstrated taxpayer compliance, but what was deposited and reported by the taxpayer is not necessarily in line with what it should be. Indicators that can be used to measure compliance is the result of the examination material. In an effort to improve taxpayer compliance, administrative corrective measures are expected to encourage taxpayer compliance through:

a. Taxpayers comply because getting good service, fast, and pleasure, and the taxes that they pay will useful to the development of the nation. b. Taxpayers will comply because they think they will get severe

sanctions due to taxes that they are not report detected by information system and tax administration.

Tax compliance is the fulfillment of tax obligations by taxpayers in order to contribute the development expected in the fulfillment given freely. Hopefully with the fulfillment of voluntary compliance, the tax revenue target will be met.

From some explanation above it can be concluded, understanding tax compliance is an abiding taxpayers and to implement and fulfill tax obligations in accordance with the provisions of tax laws and also taxpayer who fulfill compliance is a taxpayer who fill SPT with honest, good and


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correct that SPT accordance with the provisions of the tax laws and submit to the tax office before the deadline.

With the compliance, then it implies that tax revenues will go fluently, because tax compliance has been shown that the taxpayer has properly implement tax obligations. Tax compliance defined as a situation where the taxpayer meets all tax obligations and implement rights of taxation in accordance with the provisions of applicable legislation. In order for tax target achieved, need to be grown continuously for public’s consciousness and compliance to fulfill tax obligations. Consciousness of taxation arising from within its own taxpayers without regard to any tax sanction. While tax compliance arising due to aware of any tax sanction.

6. Taxpayer Conducting Business Operations and Professional Service Tax revenues are derived from individual and corporate tax object. Tax revenues from the acquired entity from the company, while tax receipts from individuals obtained from employees and non-employees or independent. Professional service is work done by individuals who have special expertise in an effort to earn revenue that is not bound by an employment relationship, such as lawyers, accountants, architects, notaries, consultants, actries, and appraisers. Professionals with particular expertise in the work criteria for free because it has characteristics corresponding to Art No 28 year 2007, which features the work of free taxpayer is the taxpayer's particular expertise achieved through formal education and earn an income that is not tied to


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employment. The willingness of the taxpayer of professional service in paying taxes is important for the state as a source of revenue from individual income tax.

Individual taxpayers conducting business or professional services are those that organize business activities and is not bound by a bond with the employer. The definition of running the business activity in question is any effort in many areas, agriculture, industry, trade, or otherwise. While commonly associated with professional services expertise or profession carried on by the relevant experts such as lawyers, accountants, consultants, notaries, or doctor. That is, the independent actor opened his own practice with his own name. If the work is concerned only or employee status, such as an accountant working in the Office of Public Accountants, so it does not include professional individual taxpayer.

Individual taxpayers to conduct business and professional services in Indonesia should be held to present the accounting particulars sufficient to calculate the taxable income or cost or delivery of goods or services, in order to count the amount of tax under the provisions of tax laws and regulations. For taxpayers who due to inadequate capacity, it is possible to be freed from the obligation to hold the books, in the sense that as long as the ability to hold the books not owned, taxpayer justified to just make records that are simple bookkeeping that contains the baseline data that can be used for calculating the tax payable by a taxpayer in question.


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Referring to Article 28 paragraph (1) and (2) of Art No 28 year 2007 which is the bookkeeping required to hold an individual taxpayer conducting business or professional services and agencies in Indonesia taxpayer. Exempted from the obligation to keep books but must keep records, an individual taxpayer is conducting a business or professional services in accordance with the provisions of tax laws allowed calculating net income using the norm calculation of net income (the gross income in a year is less than Rp 4.800.000.000) and individual taxpayers who do not do business or independent.

Bookkeeping is the recording process is done on a regular basis to collect data and financial information including assets, liabilities, capital, income and expenses, and the total acquisition price and the delivery of goods or services, which closed with the preparation of financial statements in the form of balance sheet and income statement for the period of the tax year.

Recording is the collection of data collected on a regular basis about the turnover or gross receipts and/or gross income as the basis for calculating the amount of tax payable, including income tax is not an object and / or subject to final tax.

According to data from the Directorate General of Taxation, taxpayers generally do not make a personal accounting for its assets. Personal taxpayers also often do not keep records of its receipts and expenditure on the asset. Based on the record of the tax authorities, the private taxpayers generally also


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do cash transactions. Therefore, a lot of transactions and investments actually happens but not recorded. Based on this, a study of individual taxpayers conducting business and professional services is deemed interesting to do. B. Previous Research

This research on the effect of tax consciousness, service tax authorities, and tax sanctions towards tax compliance has been done by previous research with variable and different analysis methods. The previous results from previous studies on topics related to this study can be seen in Table 2.1

Table 2.1 Previous Research No Researcher

(year)

Title Research Method Result

Similarities Differences 1 Muliari and

Setiawan (2010) Influence Perceptions of Tax Penalties and Consciousness in Taxpayer Compliance Reporting Taxpayer in Tax Office Primary East Denpasar The independent variables used taxpayer awareness and tax penalties. The dependent variable used individual tax compliance. Equipment testing multiple linear regression analysis Samples previous studies: KPP East Denpasar. The sample of this study: individual taxpayer whose doing business activities and professional service in Jakarta. No variable service tax authorities. Taxpayer perceptions about the tax penalty partially positive and significant effect on compliance reporting individual taxpayers. Likewise with taxpayer awareness partially positive and

significant at the compliance

reporting individual taxpayers.


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No Researcher (year)

Title Research Method Result

Similarities Differences 2 Fikriningrum

(2012)

Analysis of the Factors Affecting Individual Taxpayers in Meeting Their Tax Obligation The independent variable used are tax consciousness , and service tax authorities No tax sanctions as independent variable, but there is knowledge and understanding of tax regulations. Sample research on KPP Pratama Semarang Candasari 1. Tax consciousness has positive and

significant effect on willingness to pay taxes

2. Knowledge and understanding of tax regulations has positive and

significant effect on willingness to pay tax

3. Good perception of the effectiveness of the tax system has positive and significant effect on willingness to pay tax

4. Service tax authorities has positive and

significant effect on willingness to pay tax.


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No Researcher (year)

Title Research Method Result

Similarities Differences 3 Agus

Nugroho Jatmiko (2006)

The Effect of Taxpayer Attitude on Financial Sanctions, Service Tax Authorities, and Tax Consciousness on Tax Compliance The independent variable used are tax sanctions, service tax authorities, and tax consciousness .And dependent variable is tax compliance. Research with multiple linear regression analysis Survey on Individual Taxpayer in Semarang 1.Taxpayer attitude on financial sanctions has positive and

significant effect on tax compliance. 2.Taxpayer attitude on service tax authorities has positive and

significant effect on tax compliance. 3.Taxpayer attitude on tax

consciousness has positive and

significant effect on tax compliance.


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No Researcher (year)

Title Research Method Result

Similarities Differences 4 Pancawati

Hardiningsi (2011) Factors that Influence the Willingness of Paying Taxes The independent variables used were the taxpayer awareness, quality of service tax authorities

There is no tax penalty variables and different research objects Awareness of paying taxes affect positive impact on the willingness to pay taxes.

Knowledge of tax regulations do not effect on

willingness to pay taxes.

Understanding tax regulations do not effect on

willingness to pay taxes. Perceptions of the effectiveness of the tax system does not

effect on

willingness to pay taxes. Significant service quality has positive

the willingness to pay taxes.

Source: Adapted from various references

C. Logical Framework

In this study will be explained on the effect of tax consciousness, service tax authorities and tax sanctions on personal tax compliance conducting business and professional services. Tax consciousness, service tax authorities and tax sanctions suggested influencing on tax compliance. Logical framework of this research are presented in Figure 2.1.


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Figure 2.1 Logical Framework

Tax as a significant source of state revenue, so that tax compliance is essential for national development, and there are some factors which can

effect of tax compliance

Theory Basis : The theory of tax consciousness, theory of service tax authorities, and theory of tax sanctions

Independence Variable Dependence Variable Tax Consciousness (X1)

Tax Compliance (Y) Service Tax Authorities (X2)

Tax Sanctions (X3)

Analysis Method

Quality Data Test (Validity Test, Reliability Test)

Classical Assumption Test

Multiple Regression Test (R2 Test, F Test, t Test)

Result and Analysis


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D. Hypothesis

1. Tax Consciousness on Tax Compliance.

Tax consciousness is a condition in which the taxpayer know, understand and correctly implement tax provisions and voluntary. The higher level of awareness of the taxpayer's tax liability, the better implementation so as to enhance compliance (Muliari and Setiawan, 2010). Taxpayer consciousness of the functions of taxation as state funding is needed to improve tax compliance (Jatmiko, 2006).

Pancawati Hadriningsih (2011) states that the taxpayer consciousness affect tax compliance. Soemarso (1998) in Jatmiko (2006) suggested that low public awareness of taxation often be one of the reasons many potential taxes that could not be captured. Taxpayer consciousness is needed in improving tax compliance (Jatmiko, 2006). Tax consciousness on taxation is required in order to increase the willingness of the taxpayer to pay the tax. The higher consciousness of taxpayers in paying taxes the higher willingness of taxpayers to pay taxes. Based on that, the hypothesis is formulated as follows:

H1: Tax consciousness has significant influence on tax compliance 2. Service Tax Authorities on Tax Compliance

Compliance of taxpayers in meeting their tax obligation depends on how tax officers provide the best quality service to taxpayers (Jatmiko, 2006). Karanta et al, 2000 (in Suryadi, 2006) emphasizes the importance of the quality of personnel (HR) taxation in providing services to the taxpayer.


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The tax authorities have competence in the sense of having the expertise, knowledge and experience in terms of tax policy, tax administration and tax laws. Besides the tax authorities should also be highly motivated as a public servant (Ilyas and Burton, 2010).

The tax authorities are expected to provide a good service to the taxpayer, that taxpayer would pay taxes payable. The better the services provided to the taxpayer's tax authorities, greater willingness of taxpayers to pay taxes. Based on the description it can be said that the service tax authorities are expected to influence the tax compliance in paying taxes. Therefore, the hypothesis is formulated as follows:

H2: Service tax authorities has significant influence on tax compliance. 3. Tax Sanctions on Tax Compliance

Tax sanctions created with the aim that taxpayers are afraid to violate the Law on taxation. Taxpayers will comply with tax payments when it considers that the sanctions would be more detrimental (Jatmiko, 2006).Tax sanctions is an assurance that the provisions of tax laws (taxation norms) will be followed/observed/complied, in other words, the tax sanctions is a deterrent so that taxpayers do not violate norms of taxation (Mardiasmo, 2006 in Muliari and Setiawan, 2010).

Taxpayers will comply with the payment of a tax sanction if view would be more adverse. The more rest of arrears of tax due the taxpayers, it will be increasingly difficult for the taxpayer to pay it off. Therefore, the attitude or


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outlook on sanctions taxpayers are expected to affect the level of tax compliance in paying taxes.

Therefore, the view of taxpayers suspected of tax sanctions will affect the tax compliance in paying taxes. Under these conditions, the hypothesis is formulated as follows:


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CHAPTER III

RESEARCH METHODOLOGY

A.

The Scope of Research

The study was conducted to analyze the effect of tax consciousness, service tax authorities and tax sanctions towards tax compliance on personal taxpayer conducting business activity and professional services. This study is a survey, in which researchers directly involved in the research. The population in this study is the individual taxpayer either live or work in Jakarta area.

B.

Determining Sample Method

The sampling technique is done by convenience sampling method, which is a general term that includes variations in the level of respondent selection procedures the member population sampling technique is based on convenience alone. Someone sampled by chance people had been there or investigators know the person. This type of sampling is very good if used for research assessment, which is then followed by advanced research sample taken at random (Sugiyono, 2007:56).

Convenience sampling means that the sampling units drawn easily accessible, it is not difficult, it is easy to measure, and cooperative. (Hamid, 2007:30). Convenience sampling method was used because researchers have freedom to choose a quick sample of the elements of the population, which is easy to be obtained by the researcher. Respondents in this research were individual


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taxpayers conducting business operation and professional service who living or working in Jakarta area.

C.

Data Collection Methods

Data collection methods refers to the way which is needed in this research it can be obtained. In this regard, the data collection techniques can be used directly through the combination.

The data obtained in this study, researchers used two ways, namely library research and field research.

1. Library Research

Researchers obtained data related to the problem being researched through books, journals, theses, internet, and other devices related to their topic. 2. Field Research

Main data of this study obtained through field research, researchers obtained the data directly from the first (primary data). In this study, the study subjects were individual taxpayers conducting business operations and professional service in Jakarta. Researchers obtained data by sending questionnaires to individual taxpayers either directly or through intermediaries. Primary data were obtained using a questionnaire that has been structured with a view to collecting information from individual taxpayers as respondents in the study (Indriantoro and Supomo, 2002:154). Primary data were collected by survey method using questionnaires media. A number of statements presented to


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respondents and later respondents were asked to answer according of their opinion. To measure the opinion of respondents used a Likert scale of five numbers starting from number 5 to the opinion strongly agree and 1 for strongly disagree. The breakdown is as follows:

Figures 1 = Strongly Disagree Figures 2 = Disagree

Figures 3 = Less Agree Figures 4 = Agree

Figures 5 = Strongly Agree

D.

Analysis Methods

The data analysis method using descriptive statistics, test data quality, classic assumption test and hypotheses test.

1. Descriptive Statistic

Descriptive statistics provide a picture or description of the data as seen from the average (mean), standard deviation, maximum, and minimum (Ghozali, 2009:19).

2. Data Quality Test a. Reliability Test

Reliability is a tool to measure a questionnaire which is an indicator of the variables or constructs. A questionnaire said reliable if someone answers the statements are consistent or stable over time (Ghozali,


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2009:45). Ghozali (2009:46) states that the reliability of the measurement can be done in two ways, namely:

1. Repeated Measure, here someone will present with the same questions at different times, and then see if he remains consistent with his answers. 2. One Shot or measurement once, here measurement only once and then

the results were compared with another question or measure the correlation between the answers to the questions.

Criteria testing conducted using test Cronbach Alpha (α). A variable is said to be reliable if it delivers value Cronbach Alpha > 0.60 (Priyatno, 2012:108)

b. Validity Test

Validity test is used to measure whether a legal or valid questionnaires. A questionnaire as valid if the questions in the questionnaire were able to reveal something that will be measured by questionnaire (Ghozali, 2009:49). Testing the validity of the study using Pearson Correlation is by calculating the correlation between the values obtained from the questions. If Pearson Correlation earned value below 0.05 means that the data obtained are valid (Priyatno, 2012:101).

3. Classical Assumptions Test

To test the classical assumption data on these primary data, the researcher used mulitcollinearity test, normality test, and heteroscedasticity test.


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Variables Entered/Removeda

Model Variables Entered Variables

Removed

Method

1

TAX SANCTIONS, TAX CONSCIOUSNESS, SERVICE TAX

AUTHORITIESb

. Enter

a. Dependent Variable: TAX COMPLIANCE b. All requested variables entered.

Model Summaryb

Model R R Square Adjusted R

Square

Std. Error of the Estimate

1 ,773a ,598 ,575 1,855

a. Predictors: (Constant), TAX SANCTION, TAX CONSCIOUSNESS, SERVICE TAX AUTHORITIES

b. Dependent Variable: TAX COMPLIANCE

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1

Regression 271,427 3 90,476 26,305 ,000b

Residual 182,292 53 3,439

Total 453,719 56

a. Dependent Variable: TAX COMPLIANCE


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Coefficientsa

Model Unstandardized Coefficients Standardized

Coefficients

t Sig. Collinearity Statistics

B Std. Error Beta Tolerance VIF

1

(Constant) 5,523 3,062 1,804 ,077

TAX

CONSCIOUSNESS ,820 ,123 ,591 6,669 ,000 ,965 1,037

SERVICE TAX

AUTHORITIES ,128 ,045 ,251 2,818 ,007 ,956 1,046

TAX SANCTION ,348 ,087 ,355 3,995 ,000 ,962 1,040

a. Dependent Variable: TAX COMPLIANCE

Collinearity Diagnosticsa

Model Dimension Eigenvalue Condition Index Variance Proportions

(Constant) TAX

CONSCIOUSNESS

SERVICE TAX AUTHORITIES

TAX SANCTION

1

1 3,944 1,000 ,00 ,00 ,00 ,00

2 ,039 10,051 ,00 ,00 ,69 ,17

3 ,013 17,382 ,05 ,27 ,27 ,72

4 ,004 30,371 ,95 ,73 ,04 ,11

a. Dependent Variable: TAX COMPLIANCE

Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 28,49 38,86 32,60 2,202 57

Std. Predicted Value -1,866 2,843 ,000 1,000 57

Standard Error of Predicted

Value ,278 ,931 ,462 ,168 57

Adjusted Predicted Value 28,75 38,82 32,57 2,205 57

Residual -3,922 3,255 ,000 1,804 57

Std. Residual -2,115 1,755 ,000 ,973 57

Stud. Residual -2,222 1,859 ,006 1,012 57

Deleted Residual -4,331 3,654 ,023 1,958 57


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Cook's Distance ,000 ,140 ,022 ,033 57

Centered Leverage Value ,005 ,235 ,053 ,055 57

a. Dependent Variable: TAX COMPLIANCE


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Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N

Predicted Value 28,49 38,86 32,60 2,202 57

Residual -3,922 3,255 ,000 1,804 57

Std. Predicted Value -1,866 2,843 ,000 1,000 57

Std. Residual -2,115 1,755 ,000 ,973 57

a. Dependent Variable: TAX COMPLIANCE

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1

Regression 271,427 3 90,476 26,305 ,000b

Residual 182,292 53 3,439

Total 453,719 56

a. Dependent Variable: TAX COMPLIANCE

b. Predictors: (Constant), TAX SANCTION, TAX CONSCIOUSNESS, SERVICE TAX AUTHORITIES

Coefficientsa

Model Unstandardized Coefficients Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 5,523 3,062 1,804 ,077

TAX CONSCIOUSNESS ,820 ,123 ,591 6,669 ,000

SERVICE TAX

AUTHORITIES ,128 ,045 ,251 2,818 ,007

TAX SANCTION ,348 ,087 ,355 3,995 ,000


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Casewise Diagnosticsa

Case Number Std. Residual TAX COMPLIANCE Predicted Value Residual

1 -,422 30 30,78 -,783

2 -1,897 29 32,52 -3,519

3 1,444 37 34,32 2,677

4 -,924 32 33,71 -1,714

5 ,434 35 34,19 ,805

6 -1,067 32 33,98 -1,979

7 ,289 32 31,46 ,536

8 ,078 39 38,86 ,144

9 -,442 30 30,82 -,819

10 1,419 37 34,37 2,632

11 ,565 32 30,95 1,048

12 1,007 32 30,13 1,868

13 -1,622 28 31,01 -3,007

14 -1,622 28 31,01 -3,007

15 -,638 34 35,18 -1,183

16 1,139 33 30,89 2,113

17 -,646 30 31,20 -1,199

18 ,741 32 30,63 1,374

19 -,191 31 31,35 -,354

20 -,942 31 32,75 -1,747

21 -1,177 33 35,18 -2,183

22 ,088 29 28,84 ,164

23 1,755 35 31,75 3,255

24 -2,115 29 32,92 -3,922

25 ,522 33 32,03 ,968

26 -,529 30 30,98 -,981

27 -1,645 32 35,05 -3,051

28 -,763 32 33,42 -1,416

29 -,845 34 35,57 -1,568

30 -,709 30 31,31 -1,315

31 1,378 36 33,44 2,555

32 -,770 30 31,43 -1,428


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34 1,199 32 29,78 2,223

35 -1,341 26 28,49 -2,488

36 ,095 31 30,82 ,176

37 -,666 33 34,24 -1,235

38 -,252 32 32,47 -,468

39 -,252 32 32,47 -,468

40 ,913 40 38,31 1,693

41 ,810 35 33,50 1,502

42 ,565 32 30,95 1,048

43 ,565 32 30,95 1,048

44 ,565 32 30,95 1,048

45 1,007 32 30,13 1,868

46 1,180 40 37,81 2,188

47 ,190 32 31,65 ,352

48 ,384 34 33,29 ,713

49 1,581 36 33,07 2,932

50 ,565 32 30,95 1,048

51 -,459 33 33,85 -,851

52 ,356 33 32,34 ,660

53 ,714 36 34,68 1,325

54 ,569 34 32,94 1,056

55 ,620 35 33,85 1,149

56 1,027 33 31,09 1,905

57 -,815 35 36,51 -1,511