Religiosity, ethical behavior, and tax evasion attitude; A confirmatory study of small-medium enterprises in Indonesia

Resumen

This study aims to investigate the intricate relationship between religiosity and tax evasion in Small and Medium Enterprises (SMEs) in the fashion sector in Indonesia, exploring the direct impact of religiosity on individuals’ propensity for tax evasion, mediated by ethical behavior. The study population comprises Small and Medium Enterprises (SMEs) in the fashion sector within West Java Province, selecting 384 SMEs to participate. Collected data were analyzed employing Structural Equation Modeling (SEM) utilizing the SPSS-AMOS application program. The study reaffirmed the positive link between religiosity and ethical behavior, showing how religious teachings guide ethical behavior in SMEs. Furthermore, stronger religious beliefs correlated with reduced tendencies for tax evasion, mediated by ethical behavior. These findings, aligned with prior studies, underscore the importance of religious teachings and ethical values in guiding entrepreneurial attitudes and behaviors in entrepreneurship and taxation studies. The study’s novelty lies in incorporating Ethical Behavior as a mediating variable.