Do Covid-19 Tax Incentives Work Insights from Micro, Small and Medium Enterprises

ABSTRACT

The COVID-19 pandemic has impacted Indonesia's economic and business growth. Therefore, the government issued stimulus in tax incentives for micro, small, and medium-sized enterprises (MSMEs) taxpayers affected. However, MSMEs' participation in utilising tax incentives is still low. This study aims to investigate tax knowledge, tax socialisation, and taxpayer awareness influence on tax compliance among MSMEs taxpayers in using tax incentives. A survey with 394 MSMEs taxpayers registered in the DGT Regional Office of Aceh as respondents were performed to gather primary data. This quantitative study uses multiple linear regression as a data analysis method to test the hypothesis. The results reveal that tax knowledge, tax socialisation, and taxpayers' awareness positively affect tax incentives utilisation. Higher tax knowledge, tax socialisation, and taxpayers' awareness rate lead to higher compliance in tax incentives utilisation. These findings may help policymakers establish future tax policies emphasising tax compliance and incentives. This study also provides an overview of the tax incentive utilisation compliance of MSMEs taxpayers in Aceh Province. © 2022 IEEE.