The Effect of Tax Knowledge and Financial Literacy on Tax Compliance with Taxation Socialization as a Moderating Variable

Abstract

Tax compliance remains an important concern, particularly among self-employed individual taxpayers whose compliance may be influenced by their understanding of taxation and financial management. However, the role of tax knowledge and financial literacy, as well as the extent to which taxation socialization strengthens these relationships, requires further empirical examination. This study aimed to analyze the effects of tax knowledge and financial literacy on tax compliance and to examine taxation socialization as a moderating variable. A quantitative confirmatory survey design was employed, involving active self-employed individual taxpayers registered at the South Makassar Primary Tax Office. Data were collected through questionnaires, and 80 valid responses were obtained using purposive sampling. The data were analyzed using SmartPLS 4 through measurement model evaluation, structural model assessment, and moderation analysis. The results showed that tax knowledge had a positive and significant effect on tax compliance (β = 0.330, t = 5.770, p < 0.001), while financial literacy also had a positive and significant effect (β = 0.224, t = 3.603, p < 0.001). Taxation socialization strengthened the effects of tax knowledge (β = 0.160, t = 3.084, p = 0.002) and financial literacy (β = 0.168, t = 2.500, p = 0.013) on tax compliance. The model explained 45.8% of the variance in tax compliance, with a predictive relevance value of 0.593. These findings highlight the importance of integrating tax education, financial literacy, and taxation socialization to strengthen taxpayer compliance.