ANALYSIS OF MSME TAXPAYERS’ UNDERSTANDING IN FULFILLING TAX OBLIGATIONS IN TUMINTING DISTRICT

Abstract

This study aims to analyze MSME taxpayers’ understanding of tax obligations in Tuminting District, analyze how MSME taxpayers fulfill their tax obligations, and identify factors affecting their understanding. This research uses a descriptive qualitative approach. Data were obtained through in-depth interviews, observation, and documentation involving five MSME taxpayers who own a Taxpayer Identification Number (NPWP). The findings show that MSME taxpayers’ understanding of tax obligations remains inadequate even though all informants have NPWP. Four of the five informants obtained NPWP mainly because of external administrative needs, while only one informant obtained it from personal awareness. Tax obligation fulfillment was also not optimal. Four informants had never reported an Annual Tax Return, while one informant had reported it twice but did not continue because of limited understanding of the reporting procedure. In addition, two informants did not regularly record business turnover. All informants stated that they had never paid MSME income tax and generally could not explain the tax provisions underlying their position. The factors affecting understanding consist of internal factors, particularly limited tax knowledge and the perception that tax obligations apply only to large businesses, and external factors, including administrative needs, environmental influence, limited access to information, and the lack of tax socialization. The findings indicate that having NPWP does not necessarily mean that MSME taxpayers understand and fulfill their subsequent tax obligations.