Home⇛International Journal of Multidisciplinary: Applied Business and Education Research⇛vol. 7 no. 5 (2026)

Examining the Association Between Tax Knowledge and Compliance Among Sole Proprietors in Olongapo City: A Moderation Study

John Kyro Mendoza | Raven Choy Pungloy | Frances Jhanine Reyes | Nessa Belle Rull | Crizzalin Eve Supnet | Samantha Claire Vitug | Ediric D. Gadia

Discipline: Finance

 

Abstract:

This study aimed to explore the relationship between tax knowledge and level of compliance of individual taxpayers in Olongapo City, focusing spe- cifically on the influence of variables such as age, education, income, and whether the taxpayer employs an accountant or tax professional. This study used a quantitative correlational design with data-collection done through a survey among 54 registered sole proprietors. The researcher used a combination of descriptive statistics, correlation analysis, and mod- eration analysis for the data gathered. The results indicated that the overall tax knowledge among the respondents was very high, as well as the overall compliance rates. Correlation analysis revealed a strong and statistically significant positive relationship between tax knowledge and tax compli- ance (r values ranging from 0.744 to 0.891, p < .001), indicating that higher levels of tax knowledge are associated with better compliance in terms of timeliness and accuracy. Furthermore, moderation analysis showed that while tax knowledge positively predicts compliance, this link varies by de- mographics and operations: stronger for males (? = .346, p = .008), lower- income proprietors (? = -.107, p = .019), and those not hiring accountants (? = -.477, p < .001, indicating a substitution effect where personal knowledge drives compliance without professionals), but unaffected by education, ? = -.082, p = .213). Despite the limitation of having purposive sampling employed and the fact that responses were provided directly by the owners, this research provides some practical information on how tax education and taxpayer assistance can be effectively designed and imple- mented. With emphasis placed on conditional knowledge-compliance rela- tionship, this study reveals the importance of employing moderation anal- ysis to differentiate between groups of taxpayers to encourage their volun- tary compliance.



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