Tax Compliance in the Digital Age: The Interplay Between Social Media and Tax Morale

Abstract

Tax compliance refers to a condition in which a taxpayer fulfills their obligations in accordance with applicable tax regulations. This study aims to examine the impact of social media in the current digital era on tax compliance, with tax morale as a mediating variable. The data collection technique used purposive sampling, targeting individual taxpayers in the Solo Raya area. Structural Equation Modeling Partial Least Squares (SEM-PLS) was used to simultaneously analyze both direct and indirect paths between country-level factors, tax morale, and tax avoidance. The study’s findings indicate a significant impact of social media on enhancing tax compliance, suggesting that social media can be utilized effectively to educate the public on tax-related matters. The variable of Tax Morale, which also significantly influences tax compliance, underscores the importance of strengthening tax morale through ethics education and awareness of citizens’ responsibilities to pay taxes. If these two factors are well-managed, they can serve as an effective strategy for the government to increase national revenue through taxation. Moreover, tax morale is proven to partially mediate the relationship between social media and tax compliance.