ABSTRACT
There has been global economic fallout from the Pandemic COVID-19. Micro, Small and Medium Enterprises (MSME) is one of the industries hit worst. Many MSMEs have seen their profits decline or even disappear. Consequently, tax income dropped. In order to raise tax revenue, the government has implemented a number of reforms, one of which is a push for greater tax compliance among MSMEs. This study aims to analyze the effect of providing tax incentives and understanding taxpayers on MSME tax compliance during the COVID-19 pandemic. This study also examines risk preferences as moderation. The population in this study is the MSMEs food sector in the city of Pekanbaru, Indonesia. Samples were selected using convenience sampling. A total of 397 MSMEs in the food sector participated in this study. During the months of December 2021 and February 2022, data was gathered by distributing questionnaires to taxpayers directly and also by using Google forms. Data analysis techniques used SEM with Warp PLS. Tests show that tax incentives affect the compliance of MSME taxpayers during the COVID 19. This study demonstrates that understanding MSME tax rules can boost compliance. The high risk faced by taxpayers can reduce tax compliance even though the government provides tax incentives. However, with a high level of understanding, even though taxpayers have risks, they still carry out their tax compliance. This study aids the government's effort to give tax incentives and outreach to better comprehend the needs of MSME taxpayers.