economies

Article
Determinants of Tax Compliance Intention among Jordanian
SMEs: A Focus on the Theory of Planned Behavior
Tareq Bani-Khalid 1, * , Ahmad Farhan Alshira’h 2 and Malek Hamed Alshirah 1

1 Accounting Department, School of Business, Al al-Bayt University, Al-Mafraq 130040, Jordan;

shraamalek@gmail.com
2 Accounting Department, Faculty of Administrative and Financial Sciences, Irbid National University,
Irbid 2600, Jordan; alshraah.ahmad@yahoo.com
* Correspondence: tareq_alkhaldi@aabu.edu.jo

Abstract: The present study aimed to adopt the extended theory of planned behavior (TPB) to
determine the intentions of owner-managers in SMEs towards engaging in sales tax compliance.
The study distributed a total of 660 questionnaire copies through systematic random sampling to
the mangers/owners of Jordanian manufacturing SMEs, from which 385 questionnaire copies were
retrieved and considered useable and appropriate for further analysis. The study made use of Partial-
Least Squares-Structural Equation Modeling (PLS-SEM) for the validation of the measurement model
and structural model, and to establish the predictive relevance of the proposed model. Based on the
obtained findings, the attitude towards behavior, subjective norms, perceived behavioral control and
patriotism were significant determinants of the intentions towards engaging in sales tax compliance
among the examined enterprises.




Keywords: attitudes; subjective norms; perceived behavioral control; patriotism; sales tax compliance


Citation: Bani-Khalid, Tareq, Ahmad
Farhan Alshira’h, and Malek Hamed
Alshirah. 2022. Determinants of Tax 1. Introduction
Compliance Intention among
In the developing nations, considerable challenges are faced in light of increasing
Jordanian SMEs: A Focus on the
tax revenues for the purpose of financing their developmental requirements (Besley and
Theory of Planned Behavior.
Persson 2014). Evading taxes leads to economic costs, slowing down the growth of the
Economies 10: 30. https://doi.org/
economy and mitigating the ability of the government to furnish sufficient goods and
10.3390/economies10020030
services to the public (Alshira’h 2019; Randlane 2016). In other words, tax evasion is
Academic Editor: Ralf Fendel among the main issues that the developing nations have been facing (Alshira’h et al.
Received: 16 November 2021
2020a; Fuest and Riedel 2009). Therefore, policy makers need to determine the causes
Accepted: 4 January 2022
behind tax compliance in order to carry out reforms and minimize the negative effects of
Published: 26 January 2022
evasion all around the globe (Achek 2015; Alshira’h and Abdul-Jabbar 2019a). This involves
understanding and determining the causal factors behind tax compliance, as evidenced
Publisher’s Note: MDPI stays neutral
by the interests of the majority of scholars throughout the past decades (Alshira’h and
with regard to jurisdictional claims in
Abdul-Jabbar 2020; Yucedogru and Hasseldine 2016). Tax compliance at the business level
published maps and institutional affil-
has not been extensively examined, although the majority of the bulk of taxes in countries
iations.
are obtained from firms, with the firms constituting a significant portion of tax evaders
(Alshira’h et al. 2020b; Carsamer and Abbam 2020).
Notably, the tax compliance issue has long been discussed among economists, who
Copyright: © 2022 by the authors.
have proposed models to clarify the reason behind tax non-compliance (Alshira’h et al.
Licensee MDPI, Basel, Switzerland. 2019; Ya’u et al. 2020). Despite the fact that the proposed models’ purpose is to shed
This article is an open access article light on the reasons behind the evasion of taxpayers, they are still unable to completely
distributed under the terms and explain the phenomenon because they exclude socio-psychological variables. The majority
conditions of the Creative Commons of nations all over the globe have high tax compliance in the face of low degrees of
Attribution (CC BY) license (https:// deterrence (Alshira’h 2018; Torgler 2007). Other relevant studies (Allingham and Sandmo
creativecommons.org/licenses/by/ 1972; Yitzhaki 1974) contributed to the literature by proposing theoretical models that
4.0/). distinguish the determinants of tax compliance behavior, which stressed several variables’

Economies 2022, 10, 30. https://doi.org/10.3390/economies10020030 https://www.mdpi.com/journal/economies

Economies 2022, 10, 30 2 of 20

effects. Nevertheless, these models are generally confined to the economic factors of tax
non-compliance, as evidenced by the initial models, and they largely ignored the social
context (Alshira’h and Abdul-Jabbar 2019a; Molero and Pujol 2012). However, economic
factors in the form of penalties, the audit rate and the tax rate, among others, are not the
only factors that affect tax compliance according to several studies. Notably, despite the
analytical appeal of the economic approach, it mostly misses the realistic and humanistic
aspect. All behavioral treatments generally possess a key feature, stating that the values,
attitudes, perceptions and morals of economic actors are of key significance, and that
evasion is not merely a function of tax rates, opportunity, detection probability and others
but also has to do with the evasion/compliance inclination of the individual (Alshira’h
et al. 2018; Cullis and Lewis 1997). According to researchers, non-economic factors can
shed more light on the issue (Alshir’ah et al. 2016).
More specifically, social factors are significant determinants of tax compliance, as
evidenced by Kirchler et al. (2008), and have to be considered when identifying the tax non-
compliance determinants (Torgler 2002), particularly as only a few authors have tackled
the issue from this point of view.
Moreover, only a few studies have also viewed the issue from the social perspective
of socio-psychology, with a study yet to be performed to analyze the Theory of Planned
Behavior (TPB) in light of compliance towards sales tax among Arab countries’ SMEs,
particularly in Jordan. Added to this, prior studies examined the factors that affect inten-
tions towards sales tax compliance engagement by extending the TPB, in which different
factors were combined (Alleyne and Harris 2017). In the face of these many studies that
extended the TPB, the present study is one of the pioneering ones that expanded the theory
through the incorporation of patriotism and its effect on the intention to engage in sales
tax compliance among SMEs. Only a few studies of this caliber have been conducted, and
were not particularly focused on sales tax. Thus, Alshira’h et al. (2018), Gangl et al. (2016),
and MacGregor and Wilkinson (2012) recommended that the effect of patriotism on sales
tax compliance be examined among SMEs. This factor should be considered as a priority
when it comes to the sales tax compliance of SMEs, particularly in Jordan. Thus, this study
answered the call, and tests patriotism effects using the extended TPB to predict intentions
towards engaging in sales tax compliance among SMEs in Jordan, a Middle Eastern nation.
As mentioned previously, studies have been carried out to examine income tax com-
pliance, but comparatively, sales tax compliance has largely been ignored (Alshira’h et al.
2020a). Additionally, the majority of the studies dedicated to sales tax compliance in
the literature were conducted in developed nations (Alshira’h and Abdul-Jabbar 2019b;
Woodward and Tan 2015). Among business enterprises, deductions can be overstated,
income can be underreported, or tax returns can remain un-filed, as characteristics of the
tax behavior of individuals (Alm et al. 2019). At the same time, sales taxes are riddled with
evasion opportunities, with businesses frequently opting to provide fake invoices, enabling
the understatement of due tax, or they do not register at all, specifically with high sales tax,
as is the case of service providers. Studies dedicated to tax compliance have generally been
examined using individual income tax, with the point of view of owner-managers of SMEs
in sales tax largely ignored, as was highlighted by Alm et al.’s (2019) study. Furthermore,
tax compliance studies among SMEs are still few and far between compared to individual
income tax compliance studies, which form a major portion of the literature. According
to Abdixhiku et al. (2018), tax non-compliance studies among businesses are lacking, and
this is significant because the majority of countries obtain taxes from businesses, with such
businesses constituting a major portion of non-compliant entities (Crocker and Slemrod
2005; Nur-Tegin 2008). Hence, this study attempts to minimize the literature gap by con-
tributing to public finance literature. Throughout the past three decades, an increasing shift
has been made by industrialized economies in their stress from direct taxation to indirect
taxation as a tool to maximize revenues (Wadesango and Chirebvu 2020), specifically sales
tax and custom duties. Sales tax is generally called value added tax (VAT) or goods and
services tax (GST) all over the globe. In particular, while EU members refer to it as VAT,
Economies 2022, 10, 30 3 of 20

Malaysia, Singapore and Australia prefer to call it GST. The pioneering introduction of VAT
was made in France in 1954, as documented by Adams and Webley (2001); in the current
times, VAT is used in about 160 nations all over the world (Alshira’h et al. 2021; Azmi et al.
2016; Ramli et al. 2015). Furthermore, Alm and El-Ganainy (2013) indicated that sales tax is
the major government revenue source in over 120 nations, involving around four billion
people, and it is considered to be effective in light of tax revenue because it garners a high
revenue while mitigating deficits (Chan et al. 2017; Lee et al. 2013).
A good example of the above would be the collection of tax revenue through VAT in
Brazil, Argentina, Venezuela and Uruguay, constituting 70%, 65%, 60% and 52%, respec-
tively (Wright et al. 2017). Moreover, VAT has a key role as a budget income source in EU
nations, inclusion Portugal, Poland, Greece, Ireland and Hungary, ranging from 40 to 64%
of the total revenues (Dobrowolska 2008). For governments, sales tax is crucial because
it provides a tax revenue source at a wide coverage, and this holds true particularly for
developing nations (Faridy et al. 2016; George and Reddy 2015; Huang and Rios 2016). In
fact, sales tax is currently the major form of consumption tax system that most countries
are using (Giesecke and Tran 2012). Non-compliance to this type of tax is prevalent among
developing nations (Keen and Smith 2007), and has been a critical issue for some time;
thus, it is high time that its high level is mitigated (Goh et al. 2016). Furthermore, sales
tax compliance has also been of concern among policy makers throughout different coun-
tries (Das-Gupta and Gang 2003), and non-compliance to it has brought about significant
government losses (Nguyen 2017). In the context of Europe, the countries’ level of VAT
non-compliance stands at 16%, but in the context of developing nations, the rate is much
higher (e.g., the VAT tax non-compliance in Latin American countries is 31% on average),
and this holds the same for Jordan. Among enterprises, small and medium enterprises
(SMEs) have been noted to be the drivers of the developing nations’ economic growth,
creating significant employment (low-large scale) opportunities through local inputs and
technologies. Entrepreneurship is developed through such enterprises as they mobilize
small and fragmented private savings, and owing to their key role in economies, govern-
ments have stressed the nurturing of a healthy SME sector, and have introduced several
policies for their development (Hansford et al. 2003).
As for the SMEs–taxation relationship, the compliance to sales tax and the related
activities has been a burden to such enterprises in comparison to compliance to other
tax types (Hansford and Hasseldine 2012). There is also a great proportion of SMEs
that constitutes the population of taxpayers in any country (Świstak et al. 2015), which
indicates that tax payment compliance has a direct effect on the tax revenues collected
by governments (Maseko 2014). However, the opposite cannot be truer, as SMEs are the
most tax non-compliant entities around the globe (Alshira’h 2019), and at the same time
they are the main contributors to the shadow economy of developing nations (Arachi and
Santoro 2007), including Jordan. Contrary to large businesses, SMEs are operated by their
owners, as a result of which they are quite responsive to personal and social factors (Świstak
et al. 2015); thus, SMEs’ taxation has been one of the major issues tackled by countries
(developed as well as developing) since the beginning of the millennium.
Moving on to the study context, Jordan—or the Hashemite Kingdom of Jordan—is
a developing Arab country in the Middle East, located off the Mediterranean sea’s south-
eastern shores, at the junction of Asia and Africa. It is characterized by hills and an arid
climate, occupying an area of 35,637 sq miles (Alshirah et al. 2021b; Haddad et al. 2017)
and having a population of 1.5 million as of 1970, which increased to 9.5 million in 2015.
Thirty-five percent of the population is aged under 14 years old (Alshira’h et al. 2020a).
The increasing population stems from the high birth rate and low rate of mortality in the
country, with the majority of the citizens emigrating from their countries to Jordan because
of political/religious reasons (e.g., from Palestine, Iraq and Syria). According to Haddad
et al. (2017) the country’s national income sources mostly come from foreign US and Gulf
countries’ aid, and from expatriates working abroad. With regards to taxes for the year
2017, Jordan gathered around 70% as governmental revenues, indicating that the country is
Economies 2022, 10, 30 4 of 20

largely dependent on taxes, particularly direct tax (income tax) and indirect taxes (sales tax
and customs tax), with a strong inclination to the latter, which contributes approximately
68% to the tax revenue. In other words, taxes are significant for the Jordanian government
(Alshira’h and Abdul-Jabbar 2020). Based on the information concerning the tax revenue
size and tax non-compliance for the years spanning from 2011 and 2015, the tax revenue
increased from JD3062.2 million to JD4096.8 million. Evidence over this period documented
an increase in the tax non-compliance level that spiked from JD1067.4 million (2011) to
JD1578.2 million (2015), a 48% increase, while tax revenues increased by 33% in the same
time period, from JD3062.2 million to JD4096 million (Alshira’h 2018).
From the above, it is notable that the increase in non-compliance (48%) surpassed that
of the tax revenue (33%), and based on Alshira’h (2018), the average sales tax compliance
was around 71% from 2011 to 2015, with no actual tax non-compliance estimate data
being available for the year 2016. Nevertheless, the tax revenue increase constituted
JD4.254 billion (Alshira’h et al. 2018), with predictions of an increase in tax non-compliance
accordingly. Added to this, tax non-compliance cases relating to sales tax exceeded those for
income tax non-compliance (Nsour 2014), where every JD3 collected as sales tax equated
to over JD1 lost to non-compliance of the same (Alasfour 2019). Ofthe non-compliant
enterprises in Jordan, 87% were small enterprises and 35% were medium ones, which
all evaded sales tax payment (Alshira’h et al. 2018). This indicates the seriousness of
tax non-compliance in Jordan, with millions in tax revenues uncollected because of sales
tax fraud. Consequently, the Jordanian government has had to borrow from domestic or
foreign sources to make up for the tax revenue shortfall (Alkhdour 2011). In this regard, tax
compliance among SMEs in Jordan could mitigate the government budget deficit, which
increasingly became worse from 2010 to 2016 (from JD1.447 billion to JD1.720 billion)
(Alshirah et al. 2021a; Alshira’h et al. 2018).

2. Literature Review
Tax compliance is an issue that has a broad reach, and in effect, researchers have
defined it based on their studies’ natures and objectives. To begin with, Allingham and
Sandmo (1972) referred to tax compliance as the decision to declare actual income to
the authorities in charge under uncertain conditions. Stated differently, taxpayers may
decide whether or not to declare an accurate amount of their tax liability, depending on
the probability of being found out, and on the rate of the penalty (p. 324). The empirical
findings did not, however, support this model, and it is extensively known that taxpayers’
compliance behavior is related with certain factors (social and psychological), which affects
their innate beliefs and their attitudes, determining their behavior towards compliance
(Devos 2013). Thus, Roth et al. (1989) adopted a social and psychological approach, and
defined tax compliance as the accurate reporting of tax liability (p. 20), while Kirchler
(2007) defined it as the willingness of the taxpayers to pay taxes (p. 21). According to
Jayawardane (2015), tax compliance behavior can be deeply understood by examining
the socio-psychological drivers in terms of individual, social and government factors. In
their review of 18 tax compliance studies dated from 1985 to 2012, Marandu et al. (2015)
reached the conclusion that the TPB is the most suitable tax framework to examine the tax
compliance determinants when it comes to intention and behavior via behavioral elements
(attitude towards behavior, subjective norms and perceived behavioral control). Hence, the
present study used the TPB to develop the conceptual framework with five main variables,
which were attitude, subjective norms, perceived behavioral control, patriotism, and the
intention to comply to sales tax. These variables were reviewed in the relevant literature,
after which the study hypotheses were formulated.

2.1. Theoretical Framework—Intentions to Engage in Sales Tax Compliance

According to the Theory of Reasoned Action (TRA), an individual’s behavior is di-
rected through the behavioral intentions of the individual—a fact that was pioneered by
(Fishbein and Ajzen 1975b) in their study, which examined intention among individuals.
Economies 2022, 10, 30 5 of 20

However, critiques like Gentry and Calantone (2002) indicated the broad and general nature
of the theory in its explanation of the relationship between attitudes, subjective norms,
behavioral intention and actual behavior. In terms of taxes, general beliefs are affected by
the individual’s attitudes and subjective norms (Hanno and Violette 1996; Benk et al. 2011).
More importantly, Ajzen (1991) proposed the Theory of Planned Behavior (TPB) as an
extension of the Theory of Reasoned Action (TRA), which argues that attitudes, subjective
norms and perceived behavioral control form the major determinants of the intentions
of individuals to engage in a specific behavior, and eventually it affects the behavioral
performance (Fishbein and Ajzen 1974). In fact, the TPB has become one of the most
extensively utilized socio-psychological models that behavioral researchers have employed
to shed light on and predict behavior (Armitage and Conner 2001). Its framework has been
made used of by authors hailing from various disciplines to explain behavioral intentions’
antecedents and the ultimate behavior. The TPB can be traced back to the Expected Utility
theory, which proposed several explanatory variables that (Fishbein et al. 1980) were stated
to explain any behavior of a human being. If this holds true, then behaviors are easily
predictable, and the TPB could potentially assist the tax authority in their prediction and
support of taxpayer behavior. The theory has been extensive applied in different disciplines,
including health, psychology, leisure choice and even IT (Ajzen 1987; Ajzen and Driver
1992), but surprisingly, the theory’s usage in the examination oftax compliance has yet to
gain traction.
According to Ajzen’s (1991) arguments, the most suitable model to provide a deeper
insight into taxpayer behavior is the TPB, as it has generally been used to examine com-
munity behavior in other behavioral types as well, including traffic control (Elliott et al.
2005; Letirand and Delhomme 2005) and health (Armitage et al. 1999). However, tax
payment studies have not been availing of the model’s potential (Langham et al. 2012).
Therefore, this study develops and brings forward a new compliance model based on the
TPB to clarify the tax compliance decision-making complexity, and to develop compliance
strategies for the broader population (Langham et al. 2012). In some studies, the authors
extended the TPB through the addition of predictors, e.g., spirituality variables (Widuri
et al. 2019). Others like Yusof and Lai (2014) related the TPB with the TRA and Fraud
Diamond Theory, while Bobek and Hatfield (2003) extended the TPB by adding ethical
variables, and Damayanti (2012) added cultural variables. Hence, in the present study, the
TPB was extended through the addition of patriotism. According to Ajzen (1991), the TPB
model can be extended through the addition of predictors in addition to attitude, subjective
norms and perceived behavioral control.

2.2. Attitude towards the Behavior (Sales Tax Compliance)

The attitude towards tax compliance does not have a clear definition; as a result of
this, it is considered to be an ambiguous construct (Eriksen and Fallan 1996). This was
agreed upon by Kirchler (2007), who revealed that the tax compliance attitude is rife
with complexity, representing the social construct of taxes that affects the tax compliance
behavior. In this regard, attitudes refer to the evaluation of the favorableness or otherwise
of an object (Fishbein et al. 1980). Based on the empirical evidence, attitude influences
intention, and although extensive evidence has been provided to validate the TPB, there
are only a few studies dedicated to sales tax compliance that used the model. The literature
provides an instance of tax attitudes, including perceived fairness (Hite and Roberts 1992),
the degree of moral reasoning that the taxpayers possess (Chan et al. 2000), increased tax
knowledge (Roberts 1994), financial gain possibilities (Baldry 1987) and perceived trust in
the government (Torgler 2005). In a related study, Bobek (1997) reported that the positive
attitude of tax payers towards tax payment ensures a higher intention towards such a
payment, whereas in Witte and Woodbury’s (1985) study, the authors showed the key role
of attitude in affecting intention towards tax compliance. This was supported by Bobek
and Hatfield (2003), who found a significant influence of the attitude towards compliance
towards tax payment.
Economies 2022, 10, 30 6 of 20

Added to the above, a positive attitude non-compliance behavior towards tax was
established by Kirchler et al. (2008) and Trivedi et al. (2005). In fact, the evidence along
this line shows that the attitude towards tax is the primary determinant of compliance
or otherwise regarding tax among individuals (Jackson and Milliron 1986). Despite the
fact that the attitude of taxpayers towards tax evasion is something unlawful, this does
not ensure that they would adhere to the tax regulations (Onu 2016). This premise has
been supported by Kuria et al.’s (2017) research on taxpayer compliance behavior in the
Kenyan context, which showed the influence of the perception of government accountability
for public funds management. In other words, taxpayers who perceive that tax non-
compliance is unfavorable are not as likely to engage in tax non-compliance, and those
who hold favorable attitudes towards tax non-compliance are more likely to engage in the
same (Alleyne and Harris 2017). In this study, attitude sheds light on the confidence of
the taxpayer that the tax obligation will furnish them some advantages; thus, the study
proposes that:

Hypothesis 1 (H1). The attitude towards tax compliance positively relates to intentions to engage
in sales tax compliance among Jordanian SMEs.

2.3. Subjective Norms

Another significant determinant of the tax compliance behavior of individuals is
societal norms, and in Allingham and Sandmo’s (1972) synthesis of prior studies, updated
later by Richardson and Sawyer (2001), peer influence (subjective norms) is considered
as a factor of tax compliance. In the same way, Fischer et al. (1992) highlighted the
importance of subjective norms in the Fischer Model in terms of the way it explains the
taxpayers’ tax compliance behavior. Ajzen (1991) defined subjective norms as the global
social pressure from the individuals close to the person (family and friends), who could
affect the ethical decision-making of the person, with what is considered to be ethical being
inconsistent universally. Stated clearly, an individual would behave a certain way if he/she
is convinced that individuals close to him/her believe that he should behave in such a way
(Bidin et al. 2009). Kirchler (2007) supported this argument in light of the tax compliance
behavior of taxpayers, in that the group that the individual is associated with influences his
behavior. In other words, if the taxpayer is convinced that other individuals are evading
their taxes or cheating with them, not adhering to the regulations, then he will also be
inclined towards the same (Alm 2012; Bergman 2002; Sandmo 2005). Broadly speaking,
when non-compliance is deemed to be more socially acceptable, it would lead to a lower
subjective probability of being detected (Alm 2012), and subjective norms in this case refer
to the referent others according to (Ajzen 1991).
In prior studies, the perceived subjective norms–tax evasion relationship was sup-
ported by several authors (Bobek and Hatfield 2003; Cullis and Lewis 1997; Richardson
2006; Tsakumis et al. 2007). More specifically, Kirchler et al. (2008) contended that the belief
in the extensive non-compliance among the taxpayers and its approval of their referent
groups could lead to non-compliance, while Scholz (1994) indicated that others’ opinion is
the top driver of the change in the commitment of the respondents towards tax compliance.
In a related study, a positive and significant effect was established by Bobek and Hatfield
(2003) of subjective norms on tax compliance, and this was a similar to a finding reported
by Trivedi et al. (2005). Bobek et al. (2013) revealed that subjective norms had a positive
influence on the intention towards tax refund application for overpaid tax, and Saad (2011)
supported the importance of the construct in the individual taxpayer’s compliance behavior
in overstating the business income scenario, as well as understating other income scenarios.
In other words, taxpayers who are convinced that their referent others approve of their
non-compliance to paying taxes, have a greater likelihood to engage in such behavior,
while on the other hand, if the significant others frown upon tax evasion behavior, then
they are not as likely to engage in non-compliance behavior. The subjective norm in the
present study is referred to as the belief of the taxpayer concerning the power of influencing
Economies 2022, 10, 30 7 of 20

individuals and other factors in the environment towards compliance intentions; as such,
this study proposes that:

Hypothesis 2 (H2). Subjective norms positively relate to intentions to engage in sales tax compli-
ance among Jordanian SMEs.

2.4. Perceived Behavioral Control

The TRA was extended to the TPB (Fishbein and Ajzen 1975a) by including perceived
behavioral control in order that the behaviors that are not volitional can be explained—
with PBC being the perceived ease/difficulty in performing a specific behavior (Ajzen
1991; Ajzen and Madden 1986; Beck and Ajzen 1991). In relation to this, there is direct
influence of perceived behavioral control on actual behavior, via intentions. PBC has
notably undergone extensive testing in terms of tax compliance behavior as an independent
variable and in a full compliance model. This needs to be clarified because studies mainly
refrained from adopting the TPB to shed light on tax compliance behavior according to
Saad (2011). The prior studies include e.g., Ajzen (1991), Beck and Ajzen (1991), and Bobek
and Hatfield (2003). The basis determined for PBC is the belief of the individual concerning
the presence of resources and avenues, along with the barriers towards specific behavioral
engagement (Alleyne and Harris 2017). It is noteworthy that PBC has yet to be examined by
tax compliance studies, with prior studies reporting unfavorable findings on the influence
of the variable on tax compliance (Hamid 2014). According to Ajzen (1991), higher levels
of perceived behavioral control have a likelihood to lead to greater intentions toward
behavioral performance.
Based on some of the limited studies dedicated to the PBC’s role in tax compliance
behavior (Bobek 1997; Trivedi et al. 2005), there is not a significant relationship between the
two variables, although Bobek (1997) found that PBC interacted with subjective norms to
have a significant influence on compliance intention. In a more recent study, Smart (2012)
found an insignificant influence of PBC on the compliance intention towards tax law for the
study sample. Based on Bobek and Hatfield (2003), PBC is not the level of ease/difficulty to
evade or cheat when paying taxes, but it is the level of control that a taxpayer is convinced he
has when carrying out specific activities of tax law compliance (e.g., income underreporting
and expenses overstatement). PBC, according to Kirchler (2007) is the self-confidence that
an individual has when filing a tax return in a way that is advantageous to him. In addition,
the perception of being caught has a considerable effect on the compliance decisions of
individuals, where those with low perceived behavior control (high difficulty/barriers)
do not have an inclination towards tax evasion engagement. In the context of Malaysia
and New Zealand, Saad (2012) found that the perceptions of justice among taxpayers in
the tax system control their compliance behavior towards tax payment, and Alleyne and
Harris (2017) revealed that PBC influences the avoidance of tax fraud among taxpayers.
Specifically, taxpayer compliance behavior is controlled by perceptions of law enforcement,
tax audits, the use of tax administration technology and high tax sanctions; these also help
steer clear of negative outcomes in the future. PBC’s influence on taxpayer compliance
behavior represents efforts to relate the current taxpayer action and its outcome in the
future. In this regard, individuals possessing high levels of PBC have a greater likelihood
to engage in sales tax compliance. Thus, PBC is referred to in this study as the influence
of the taxpayer and the tax system to enhance intentions towards tax compliance; as such,
this study proposes that:

Hypothesis 3 (H3). The perceived behavioral control level of Jordanian SME owners-managers
positively relates to their intention towards sales tax compliance engagement.
Economies 2022, 10, 30 8 of 20

2.5. Patriotism
In the realm of taxpayer compliance behavior prediction, patriotism—which implies
love for one’s country—is a relevant factor (Callan et al. 2006). Taxpayers’ patriotism has
the potential to boost higher tax payment in the country, and to prohibit the taxpayers’
shift to other countries in response to the increasing rate of tax. Such a reduction in the
tax base flexibility allows the demand for a higher tax level in countries (Qari et al. 2012).
Hence, the patriotism of taxpayers and their wish for their country to develop are reflected
in their performance of tax payment (Kahne and Middaugh 2006). Patriotic feelings play
a key role in every life aspect, including tax compliance (Qari et al. 2012); as such, social
identity theory should be used to examine patriotism and its effects on tax compliance
(Tajfel 1974). In this study, patriotism is referred to as the affective attachment feelings
and positive identification of managers of SMEs towards paying sales tax, rather than
taking part in fraud to hide or evade the sales tax revenue required to be paid for the
country’s development. With regards to the effect of patriotic obligations on democracy, it
especially stresses the difference between constructive and blind patriotism, as explained
in Kahne et al. (2006). The authors revealed that constructive patriotism is the applauding
of some government work and the exposing and criticizing of others for positive alteration
and consistency. Contrastingly, blind patriotism refers to the promotion of unquestioning
approval towards the state, refraining from analysis and criticism, basically cementing
all-sizing loyalty and symbolic activities. Blind patriots are thus those that are nationalists,
supporting the notability of their nations and hegemony over other nations.
Moreover, nationalism is different from patriotism (Druckman 1994), with patriotism
being the love of a state that is not related to a certain conflict schema; despite such a
relation, it composes a more positive cooperation with other nations. Patriotism is not
related to hostility towards other nations or outsiders within the nation. Comparably,
nationalism refers to a form of racism towards other ethnicities, in that positive sensation
is placed on nationality and hostility is placed on other nations or nation groups. In
other words, nationalism is linked to passive feelings towards foreign states, outsiders
inside one’s nation, and the inclination towards hegemony with other countries. Similarly,
patriotism was referred to by Ben-Porath (2012) as a morally preferable form of attachment
to a political community, which is inclusive and respectful of the fundamental rights of
individuals and groups, whereas nationalism refers to intolerance, exclusionism or violence.
In another related study, the difference between the two was drawn by Costa (2018) in light
of their objectives—the majority of countries constitute more than one nation within their
borders, with some extending to more than a single state; as a result of this, patriotic and
nationalist targets do not coincide. Moreover, the most appropriate way to differentiate
between the two is through their focus on loyalty objectives, with patriotism involving
loyalty to one’s nation, and nationalism involving loyalty to a people. Added to this,
the objective behind patriotism is primarily an institutionalized political community like
a country, including its fellow citizens, sharing legal and political institutions among
themselves, while in nationalism, the objective is a group of people sharing a common
identity.
Patriotism played a key role in encouraging taxpayers to promote the stability of
the government during the Second World War (Konrad and Qari 2012). The focus on
patriotism’s effects on tax obligation was compounded during war times and conflicts,
while during the time of peace, patriotism is not as high. In the past ten years, a debate has
been rampant concerning US taxation and patriotism, and this held particularly true in the
2008 presidential election campaign, where Vice Presidential Candidate Joe Biden claimed
that Americans pay their taxes as a patriotic obligation, and in the same way, Presidential
Candidate Senator John Kerry claimed that taxes are patriotism-dependent (MacGregor and
Wilkinson 2012). According to other studies, the influence of patriotism leads to economic
revival and national development (Ochulor 2011), and patriotic individuals are inclined
towards paying for public transportation in their country (Doerrenberg 2015). Furthermore,
the internal motivation of tax obligation behavior stems from intrinsic personal norms
 Economies 2022, 10, x FOR PEER REVIEW 9 of 21

(MacGregor and Wilkinson 2012). According to other studies, the influence of patriotism
Economies 2022, 10, 30 leads to economic revival and national development (Ochulor 2011), and patriotic 9 ofindi-
20
viduals are inclined towards paying for public transportation in their country (Doerren-
berg 2015). Furthermore, the internal motivation of tax obligation behavior stems from
intrinsic
like patriotismpersonal norms 2007),
(Kornhauser like patriotism
although (Kornhauser
taxpayers should 2007), although
give patriotictaxpayers
value towardsshould
give patriotic value towards
paying their taxes (Wynter 2014). paying their taxes (Wynter 2014).
In In
thethe context
context of MacGregor
of MacGregor and and Wilkinson’s
Wilkinson’s (2012)(2012)
study,study, taxpayers’
taxpayers’ patriotism
patriotism has
has a positive
a positive relationship
relationship with increased
with increased tax compliance,
tax compliance, with non-compliance
with non-compliance consid-
considered
to ered to be unpatriotic
be unpatriotic by the patriotic
by the patriotic taxpayers. taxpayers. Such findings
Such findings are alignedare with
aligned
those with those
found
byfound
Konrad byand
Konrad
Qariand QariNevertheless,
(2012). (2012). Nevertheless, otherlike
other studies studies
GangllikeetGangl et al.reported
al. (2016) (2016) re-
noported no significant
significant direct effectdirect effect of patriotism
of patriotism on tax compliance,
on tax compliance, although although
it has an it indirect
has an in-
direct significant effect through trust on tax authority and voluntary
significant effect through trust on tax authority and voluntary cooperation. On the basis cooperation. Onofthe
thebasis
aboveof literature,
the above onlyliterature,
a few only a fewstudies
empirical empiricalhavestudies have beento
been dedicated dedicated to the re-
the relationship
lationship
between between
patriotism andpatriotism and tax
tax compliance, with compliance,
the majoritywith the ignoring
of them majorityOECD of them ignoring
countries.
In OECD countries. is
sum, patriotism Inasum, patriotism
significant is a significant
determinant determinantbehavior,
of tax compliance of tax compliance
although itbe-
hashavior,
not beenalthough it has not
consistently been consistently
supported, as studies supported,
concerning as studies
patriotismconcerning
and income patriotism
tax
compliance
and income have
tax been few and
compliance far between.
have been few and To the
farbest of theTo
between. researchers’
the best ofknowledge,
the research-
noers’
study has been carried
knowledge, no study outhasonbeen
the patriotism–sales
carried out on the tax patriotism–sales
compliance relationship, with
tax compliance
prior studies onwith
relationship, the patriotism–tax
prior studies on compliance relationship
the patriotism–tax being limited
compliance to the individual
relationship being lim-
level,
ited leaving SMEs’ sales
to the individual tax compliance
level, leaving SMEs’ behind. Hence,
sales tax studies are
compliance suggested
behind. Hence,tostudies
add
to are
the suggested
evidence of to the
addrelationship
to the evidence between
of thepatriotism
relationship and sales tax
between compliance
patriotism andamong
sales tax
Middle Eastern
compliance SMEs.Middle
among On theEastern
basis of the above
SMEs. On the discussion of above
basis of the the literature,
discussionthisofstudy
the lit-
proposes that:
erature, this study proposes that:

Hypothesis
Hypothesis 4 (H4).Patriotism
4 (H4). Patriotismpositively
positivelyrelates
relatesto to
intentions towards
intentions engaging
towards in in
engaging sales taxtax
sales
compliance among Jordanian SMEs.
compliance among Jordanian SMEs.

Based
Basedon on
thethe
above reviewed
above literature,
reviewed the present
literature, study brings
the present study forward the following
brings forward the fol-
conceptual framework
lowing conceptual (Figure 1).(Figure 1)
framework

Attitude

Subjective
Norms
Tax compliance

Perceived
Behavioral

Patriotism

Figure
Figure 1. Research
1. Research framework
framework for compliance.
for tax tax compliance.

3. 3.
Methodology
Methodology
The study
The study adopted
adopted a quantitative approach
a quantitative approach to to
testtest
thethe
formulated hypotheses.
formulated hypotheses.TheThe
quantitative approach
quantitative approach provided
provided confirms
confirmsthethe
conceptual
conceptual model
modelwith thethe
with constituting
constituting
variables statistically. For this approach, a questionnaire was developed for data collection
variables statistically. For this approach, a questionnaire was developed for data collec-
to gather data about the attitudes of the respondents towards tax compliance behavior, PBC,
tion to gather data about the attitudes of the respondents towards tax compliance be-
subjective norms, patriotism, and intentions towards sales tax compliance engagement in
havior, PBC, subjective norms, patriotism, and intentions towards sales tax compliance
the SMEs of Jordan. The effects of the attitudes towards the behavior, subjective norms,
perceived behavioral control, and patriotism on the intentions towards engagement in
sales tax compliance were measured in this context. The sample comprises SMEs listed in
Jordan (Lutfi et al. 2017), with small businesses being enterprises that have 10–49 full-time
employees, and medium ones having 50–249 full-time employees. The study’s unit of
Economies 2022, 10, 30 10 of 20

analysis is the organization that owner-managers represent, with these being individuals
who have key roles in the tax decisions among SMEs (Kamleitner et al. 2012). They
generally hold the suitable information and knowledge concerning the financial affairs of
the enterprises (Lignier and Evans 2012). Among SMEs in Jordan, the owner is generally
the manager, and they have the likelihood to take part in decisions on compliance issues.
Prior to the actual data collection, the participants were informed of the study’s
nature and purpose, and their consent was taken prior to the data collection. They were
also informed that their participation in the survey was voluntary, and so they could
drop out at any time—all of these were included in the questionnaire instructions. The
respondents were ensured anonymity by our refraining from obtaining names, addresses
and contact information. The questionnaire items were developed to avoid confusion and
ambiguity, and the anticipation of any negative outcome was ensured, whether physical or
psychological. These safeguards were all practiced so as not to breach any ethical issues
which could arise owing to the sensitivity and incriminating nature of the research.
Therefore, as mentioned, a self-administered questionnaire was used for the data
collection, and a comprehensive updated list of the SMEs from the manufacturing sector in
Jordan was used as a sampling frame. Specifically, the list was obtained from the Jordan
Chamber of Industry (JCI), containing manufacturing SMEs’ names and details, by officially
applying for it. There are 17,749 manufacturing SMEs in Jordan. Through the list, details of
the SMEs including their name, phone number and email were included. The JCI mandates
any business in the country to register in order to obtain a work license. As for the size of
the sample based on the population size, it was calculated to be 377 out of 17,749 firms,
based on Krejcie and Morgan’s (1970) calculation. However, in order to obtain a high rate
of response, which is a common issue when it comes to Jordanian SMEs (Lutfi 2017, 2020;
Lutfi et al. 2017), the sample size was increased based on the suggestion of Israel (1992).
This trend is based on prior literature that showed the non-response rate varying from 70
to 75% in Jordanian businesses (Lutf and Mohamad 2016).
Therefore, the present study increased the sample size by 75%, in that it included
660 SMEs to collect data from. The sample selection procedure adopted was the probability
sampling method because of its lower bias and ability to produce generalizable findings
(Sekaran and Bougie 2003; Zikmund et al. 2013). Accordingly, a systematic random sam-
pling method was used to choose 660 respondents from the JCI list, with the sampling
interval being the population/sample size, 17,749/660 = 27. The researcher made use of
the number 27, in the sense that the sampling elements chosen were 27, 54, 81 and so on, to
the last selected sample (660). A total of 398 (60.3%) questionnaires were returned out of
the total 660, but 13 questionnaires were dropped because they contained issues, leaving
385 (58%) questionnaires useable for the analysis.
The measurement items used to gauge the five latent variables were adopted from
the past literature as shown in Table 1, and a 5-point Likert scale was used, ranging from
strongly disagree (1) to strongly agree (5). To begin with, the measurement items of attitude
were seven in number, and they were adopted from Beck and Ajzen (1991) and Bobek and
Hatfield (2003); the subjective norm items were four in number, and were adopted from the
same authors. Moving on to PBC, its measurement items numbered six statements, and
they were adopted from MacGregor and Wilkinson (2012). The patriotism items were six in
number, and were adopted from MacGregor and Wilkinson (2012). Lastly, the behavioral
intention of sales tax compliance items were three in number, and were adopted from Beck
and Ajzen (1991). The five latent variable items were tweaked to suit the study context,
which was tax compliance among SMEs. Operational definitions of the five latent variables
as shown in following Table 2:
Economies 2022, 10, 30 11 of 20

Table 1. Measurement of the variables.

Variable Items Source

1. Sales tax compliance is good.
2. Engaging in Sales tax compliance wise.
Attitude

3. Sales tax compliance can be useful.

(Beck and Ajzen 1991;
4. I find the concept of sales tax compliance attractive.
Bobek and Hatfield 2003)
5. I think I would pay more sales taxes if I engaged in sales tax compliance.
6. I would be pleased if I paid more sales taxes because I engage in sales tax compliance.
7. Cheating on sales taxes is unpleasant.
Subjective

1. Most people I know would approve of me to pay sales taxes.

norms

2. If I comply on my sales taxes, most people who are important to me would. (Beck and Ajzen 1991;
3. No one who is important to me thinks it is ok to cheat on sales taxes. Bobek and Hatfield 2003)
4. Most people who are important to me will look down on me if I cheat on Sales taxes.
behavioral
Perceived

1. For me to cheat on sales taxes, it is difficult.

control

2. If I want to, I can comply on sales taxes.

(Beck and Ajzen 1991)
3. I can imagine times when I might comply on sales taxes even if I hadn’t planned to.
4. Even if I had a good reason, I could not bring myself to cheat on sales taxes.
1. Businesses are more patriotic when they buy goods made in Jordan thangoods made in other countries.
Patriotism

2. A business that pays more in sales taxes is more patriotic than a business that pays less in taxes.
3. A person who cheats on his/her sales taxes is not patriotic. (MacGregor and
4. A business that hides its sales revenue in a foreign country to avoid sales taxes is not patriotic. Wilkinson 2012)
5. Businesses that cheat on sales taxes are not patriotic.
6. I would be willing to increase sales tax rate if it would help my country.
Behavioral
intention

1. If I had the opportunity, I wouldn’t cheat on sales tax.

2. I would never cheat on sales tax. (Beck and Ajzen 1991)
3. I wouldn’t cheat on sales tax in the future.

Table 2. Operational definitions of the variables.

Latent Construct Operationalization

The positive or negative direction and the intensity of the perceived favorable or
Attitude
unfavorable disposition of a person toward an object (Ajzen 2006)
The pressure from important others which is referred to in this study as the parents
Subjective norms referents, the colleagues’ referents, the employers’ referents and the spouse referents to
perform a behavior Adapted from (Rhodes et al. 2006)
Perceived behavior control is an individual factor how a person controls himself to behave
Perceivedbehavioural control
(Ajzen 1991)
Patriotism Patriotism implies love of one’s country (Callan 2006)
Behavioral intention An individual’s readiness to perform a behavior or action Adapted (Ajzen 2006)

4. Data Analysis
Partial Least Squares-Structural Equation Modeling (PLS-SEM) analysis was adopted
for this study using Smart PLS3 to test the formulated hypotheses and conduct an analysis
of the research model. PLS-SEM is basically a statistical instrument that has been garnering
support from researchers using it for empirical data analysis to test different relationships
in a simultaneous manner (Ringle et al. 2012). It is suitable to use for the investigation
of complex models with a significant number of items, variables and relationships, as
described by Chin (2010), and it is capable of investigating even small samples (Hair et al.
2014). PLS-SEM is not concerned with the normality of data (Sarstedt et al. 2014); thus, it
can be used when other methods are not appropriate to be used. It consists of a two-stage
procedure (Hair et al. 2019), which involves the measurement model (outer model) and
the structural model (inner model), with the former being used to assess the reliability
and validity of the constructs and indicators, and the latter being used to evaluate the
hypothesized relationships in terms of their significance.
Economies 2022, 10, 30 12 of 20

4.1. Assessment of the Measurement Model

This study evaluated the measurement model in terms of its convergent validity
and discriminant validity. More specifically, convergent validity refers to the extent to
which the variables’ indicators represent and measure the variables accurately, and to
which they appropriately correlate with other measures of the same variables (Hair et al.
2014). This type of validity is assessed by the evaluation of the indicators’ loadings, by
Cronbach’s alpha, by Composite Reliability (CR), and by the Average Variance Extracted
(AVE). Table 3 tabulates the indicator loadings, Cronbach’s Alpha values, and Composite
Reliability values, and it is evident that they all exceed the threshold values of 0.40 and 0.70
(Hair et al. 2019). On the basis of the results, the convergent validity was confirmed.

Table 3. Convergent validity assessment.

Latent Construct Items Loading CA CR AVE

AT1 0.635
AT2 0.681
AT3 0.735
Attitude (AT) AT4 0.744 0.836 0.878 0.504
AT5 0.732
AT6 0.746
AT7 0.686
SN1 0.813
SN2 0.822
Subjective Norms (SN) 0.808 0.872 0.629
SN3 0.746
SN4 0.790
PB1 0.790
PB2 0.667
Perceived Behavioral (PB) 0.722 0.825 0.544
PB3 0.823
PB4 0.656
PA1 0.774
PA2 0.807
PA3 0.677
Patriotism (PA) 0.820 0.871 0.531
PA4 0.774
PA5 0.741
PA6 0.585
BI1 0.866
Behavioral Intention (BI) BI2 0.850 0.856 0.913 0.777
BI3 0.926

Following the confirmation of the convergent validity, the discriminant validity was
examined using Fornell-Larcker’s criterion, as recommended by Hair et al. (2014). The
discriminant validity of the latent constructs was confirmed through the comparison
of the AVE square roots and the variables’ correlation coefficients. Table 4 shows that
the AVE square roots exceeded the diagonal values in the respective rows and columns,
which is indicative of the presence of discriminant validity among the variables. It can
be stated that the measurement model achieved the requirements in light of the validity
and reliability (reliability, and convergent and discriminant validity) at the level of the
indicators and variables.
Economies 2022, 10, 30 13 of 20

Table 4. Discriminant validity assessment.

Variables AT SN PB PA BI
AT 0.840
SN 0.010 0.730
PB 0.011 0.168 0.786
PA −0.092 0.286 0.167 0.838
BI 0.062 0.186 −0.078 0.156 0.794

The measurement model was evaluated using PLS-SEM, in that the R2 value and
the amount of variance interpreted by the exogenous variable were obtained. This value
is a reflection of the variance value of the dependent construct that is interpretable by
one or more independent constructs (Hair et al. 2020). The three constructs showed an
R2 value of 0.397, which means that attitude, subjective norms and perceived behavioral
control, and patriotism explained 39.7% of the variance in the intention to engage in sales
tax compliance.

4.2. Structural Model Assessment

The structural model testing aims to examine the effect of the exogenous variable
on the endogenous one. Accordingly, the structural model has four primary evaluation
criteria, namely the variance explained (R2 ), effect size (f 2 ), predictive relevance (Q2 ), path
coefficient (β), and hypotheses’ testing results (Chin 2010; Hair et al. 2017; Henseler et al.
2009). The path coefficients’ significance was examined using the bootstrapping method
function using 5000 re-samples. Table 5 shows that the attitudes towards tax compliance
were significantly related to intentions to engage in sales tax compliance (β = 0.150, t = 2.732,
p < 0.05), indicating that the owners-managers of SMEs that had positive attitudes towards
tax compliance had a higher likelihood to engage in sales tax compliance. In addition,
subjective norms were significantly related to intentions to engage in sales tax compliance
(β = 0.187; t = 6.125; p < 0.01), indicating that the owners and managers of SMEs that had
high subjective norms had a higher likelihood to engage in sales tax compliance. Along a
similar line of significant findings, perceived behavioral control was significantly related to
intentions to engage in sales tax compliance (β = 0.163, t = 2.053, p < 0.05), revealing that
SMEs’ owner-managers with high perceived behavioral control were more inclined towards
engaging in sales tax compliance. Finally, patriotism was found to be significantly related
to intentions to engage in sales tax compliance (β = 0.185, t = 2.624, p < 0.05), indicating that
the owners and managers of SMEs who were patriotic had a higher likelihood to engage in
sales tax compliance. In sum, the results fully supported hypotheses H1, H2, H3 and H4.

Table 5. Result of the hypothesis testing.

Hypothesis Path
Relationship T-Value p-Value Decision R2 f2
No. Coefficient
H1 AT -> STC 0.150 2.732 0.006 ** Supported 0.397 0.130
H2 SN -> STC 0.079 0.121 0.000 ** Supported 0.132
H3 PB -> STC 0.163 2.053 0.040 * Supported 0.123
H4 PA -> STC 0.185 2.624 0.009 ** Supported 0.121
Note: * p < 0.05, ** p < 0.01 (one-tailed).

4.3. Predictive Relevance of the Model

In this study, the predictive relevance of the model was tested using the Stone-Geisser
test, through the blindfolding approach (Geisser 1974; Stone 1974). The blindfolding
technique was applied to determine the predictive relevance of the model, as suggested by
Sattler et al. (2010), because they stated that the “blindfolding procedure is only applied to
endogenous latent variable that have reflective measurement model operationalization”.
The premise behind reflective measurement is that a latent construct produces a variation on
Economies 2022, 10, 30 14 of 20

observable items. The entire endogenous latent construct is reflective; thus, a blindfolding
technique was employed in its analysis, where a cross-validated redundancy measure (Q2 )
was employed to determine the predictive relevance of the model, as suggested by the
prior literature (Chin 2010; Geisser 1974; Hair et al. 2013; Ringle et al. 2012; Stone 1974).
According to Chin (1998) and Hair et al. (2014), the cross-validated redundancy measure
(Q2 ) determines the way in which the model predicts the data of omitted cases, while
Henseler et al. (2009) explained that a Q2 statistic exceeding zero represents predictive
relevance. Added to this, a model with a higher positive Q2 value has higher predictive
relevance. Table 6 presents the cross-validated redundancy Q2 value for this study. Based on
Cohen’s (1988) suggestion, f 2 values of 0.02 represent small impacts, values of 0.15 represent
medium impacts, and values of 0.35 represent large impacts in the structural model.

Table 6. Construct cross-validated redundancy (Q2 ).

Endogenous Latent Variables SSO SSE 1-SSE/SSO

Sales Tax Compliance 1484.000 1343.060 0.091

Based on the above table (Table 6), the Q2 value for the endogenous latent construct
exceeds zero, confirming the predictive relevance of the model according to Chin (1998)
and Henseler et al. (2009).

5. Conclusions
The paper primarily aimed to investigate the influencing factors of SMEs’ owner-
managers’ engagement in sales tax compliance in the Jordanian context. On the basis
of the obtained findings, a positive attitude towards sales tax compliance lead to easy
performance, and this held true for patriotism in boosting higher intentions towards sales
tax compliance engagement. All of the hypotheses (H1, H2, H3 and H4) were supported by
the study using Ajzen (1991) and Beck and Ajzen’s (1991) models.
More specifically, significant support was obtained for PBC as a significant predictor
and driver of sales tax compliance, as aligned with the results reported by prior studies
in the literature (Carnes and Englebrecht 1995; Robben et al. 1990). PBC reflects the
opportunities and barriers, and as such, it can be stated that the tax authority can be
enhanced to make tax compliance easier, and to deter non-compliance. Accordingly,
governments can establish penalties to enhance the former, while balancing this against
potential abuse by the tax authority (corruption or harsh penalization) for honest mistakes
or oversight by the taxpayers (Slemrod 2007).
Another significant predictor of sales tax compliance is attitude, and SMEs are gen-
erally reported as having high tax non-compliance; as such, in effect, changing attitudes
could be promoted through effective communication (seminars, media use, etc.) in order
to make the public aware of the requirement of tax payment. Furthermore, because of the
adverse attitude towards the tax authorities by the SMEs, tax staff should be trained to
inform and raise awareness among customers through increased customer service levels,
increased courtesy, assistance and service convenience. Such a service-centered approach is
expected to help the taxpayers to be viewed as a potential client, rather than a potential
criminal (Bird and Zolt 2008).
In the context of developing nations, the spirit of trust in enabling tax self-declaration
has to be focused on by the tax policymakers in order to boost citizens’ tax payment, as
this will instill confidence and credibility in the delivery of tax returns from the collected
taxes (Torgler 2005). With regard to patriotism, it was found to have a positive relationship
with the intention to engage in sales tax compliance among SMEs in Jordan, and this result
is consistent with the prior literature (Woodward and Tan 2015). This finding shows that
tax compliance is enhanced with high levels of patriotic feelings for one’s country. At the
individual level, income tax compliance was also found to have a significant relationship
to compliance with tax payment (Gangl et al. 2016; Konrad and Qari 2012; MacGregor
Economies 2022, 10, 30 15 of 20

and Wilkinson 2012). The study analysis results reaffirmed the outcome of prior studies
concerning the influence of patriotism on the engagement in sales tax compliance. The
current study contributes to the extension of the TPB by the inclusion of patriotism as a
determinant of sales tax compliance in the context of SMEs in Jordan.

6. Implications and Limitations

The current study focused on the examination of the determinants of sales tax compli-
ance among SMEs in Jordan using an extended TPB framework; in so doing, it minimizes
the gaps in the literature on tax compliance. Prior studies were confined in their focus on
the patriotism law on income tax, with the sales tax lagging behind; this study, based on
the authors’ best knowledge, is among the first studies to examine patriotism’s effect on
the intention towards sales tax compliance among SMEs. In other words, this study offers
a new dimension to the literature on tax compliance.
Prior studies that examined the influencing factors of the intention towards tax com-
pliance combined various relevant TPB factors but no single model has been successful
in accounting for such compliance, and no study has extended the TPB by including pa-
triotism as an independent variable. This study considered patriotism as a potential key
determinant that affects the sales tax compliance intention in Jordanian SMEs. Suffice it
to say, tax compliance behavior affects the economy and the whole equitable and efficient
tax system, changing the economic resource allocation system. This is why economists are
constantly focused on tax compliance behavior, owing to its significant influence on the
whole economy of the country.
With regard to the implications to practice, this study provides tax authorities, govern-
ments and policymakers in Jordan with relevant tax compliance information. To begin with,
patriotism and related behaviors can support the sales tax payment environment of SMEs.
Furthermore, relevant tax actors should promote high-quality public governance through
suitable education, fundamental infrastructure development, safety of life, property, peace-
ful law and order, new job creation, private- and public-sector opportunities, effective
and efficient government, good business surroundings with a free-market economy, the
decrease of the digital divide, the increase of positive societal effects, liberty in speech
and work, non-interference from the government, and citizens’ readiness to pay taxes for
quality services.
Similarly to other studies, the present one has several limitations. First, the study
focused on sales tax compliance intention in Jordan, a Middle Eastern country, and while
the study framework can be used by researchers, caution should be taken as to the findings’
generalization, owing to the limited geographical area. In this regard, future authors can
use the study model and test it in other Arab countries.
Another limitation is the use of a quantitative approach—future authors can combine
quantitative and qualitative approaches (questionnaires, case studies and interviews) to
generate deep insights into the topic, and to provide the accurate validation of the findings.
Such a combined approach or mixed-approach could cover various perspectives and tackle
the limitations that arise from one single approach. Lastly, this study largely depended
on a dataset obtained from a self-report survey, which could have led to the occurrence of
biased and dishonest data. In order to mitigate such an occurrence, indirect questions with
anonymity support could be adopted.

Author Contributions: T.B.-K.: conceptualization, original draft preparation, writing; A.F.A.: valida-
tion, resources; data curation, project administration; M.H.A.: theoretical analysis review, methodol-
ogy and edit. All authors have read and agreed on the published version of the manuscript.
Funding: This research received no external funding.
Conflicts of Interest: The authors declare no conflict of interest.
Economies 2022, 10, 30 16 of 20

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