Taxation

CHAPTER 1
THE PROBLEM AND ITS BACKGROUND
Introduction
Taxation refers to the inherent power of the state to exact an enforced contribution
from persons, property or rights for the purpose of generating revenues for the use and
support of the government. Its primary purpose is to raise revenues to enable it to carry
out its appropriate function. The power of taxation is based upon the theory that
government cannot exist without taxation, thus taxation is an important necessity (Litonjua
& Litonjua, 2013). It is like the bread and butter or the lifeblood of the government. Hence,
the collection of taxes must keep going.
A business is described as trade or commercial activities which are “regularly
engaged in” as means of livelihood or with a viewpoint of obtaining profit. The sales of
goods and services related to trade, profession or business in the Philippines are
generally subject to business taxes, except when exempted as provided by law (Valencia
& Roxas, 2016). There are three (3) kinds of business taxes in the Philippines as classified
by the Tax Code. These are Value-added Tax (VAT), Other Percentage Taxes (OPT) and
Excise Taxes (ET). In a practical manner, all business taxes are indirect taxes, the cost
of which could be shifted on to the buyers.

In relation to this, compliance with the tax law typically means: a) true reporting of
the tax base; b) correct computation of the liability; c) timely filing of the return; and d)
timely payments of amounts due. Not complying with the law will lead to penalties and/or
surcharges ordered by the Authority. The people, whether currently a taxpayer or not,
must have the knowledge about taxation and understand the tax regulations. Without this
knowledge, the conflict arises such as not paying the imposed taxes or not filing the
required return on due dates and worst, making it as an excuse to escape from
obligations. This study will assess the Level of Effectiveness and Awareness of Business
Tax Management of stores in the University of the Philippines (UP) Teachers Village.
Background of the Study
University of the Philippines (UP) Teacher’s Village, known as Maginhawa, is a
great destination for people who love to eat varieties of foods and drinks. Maginhawa and
few surrounding streets in Quezon City became popular neighborhoods for those seeking
new restaurant experiences. Since they offer a unique, nice presentation, and remarkable
taste of foods, they are well known not only to people residing in the Quezon City village
but also to those who came from different places in Manila. The prices are quite affordable
and worth buying.
Based on 2014 figures provided by the Philippine Statistics Authority (PSA), there
are 946,988 establishments in the Philippines. Of these, 99.6% (942,925) are micro, small
and medium enterprises (MSMEs) and the remaining 0.4% (4,063) are large enterprises,
and the UP Teacher’s Village is a part of these MSMEs. Being part of MSMEs and
knowing that they are getting a lot of attention from people, the researchers had the desire
to know about the level of awareness and effectiveness of business tax management in
UP Teacher’s Village.
There are many issues in the Philippines regarding taxes. The Tax Management
Association of the Philippines (TMAP) claims that Filipinos pay the highest tax rates
among countries in the Association of Southeast Asian Nations (ASEAN). On the other
hand, an issue about lowering tax rates was mentioned in the State of the Nation Address
(SONA) 2016. President Rodrigo Duterte confirmed that his administration will
aggressively pursue lower tax rates in his first State of the Nation Address last July 25,
2016, Monday. “My administration will pursue tax reforms towards a simpler, more
equitable and more efficient tax system that can foster investment and job creation. We
will lower personal and corporate tax rates," he said during his Address.
In the case of developing countries like the Philippines, taxation is an important
matter to be considered. From the past until now, one of the major problems in the
Philippines is corruption, wherein it reduces the available funds and increase government
losses. The money collected goes to the wrong people with a wrong purpose. With the
knowledge about these issues, it is reasonable to find out the level of awareness and
effectiveness in one of the top food destinations in Manila.
Theoretical Framework
Taxation is a means by which governments finance their expenditure by imposing
charges on citizens and corporate entities. Meaning, it is the source of revenue for the
government to encourage or discourage certain economic decisions. Whereas, the
Bureau of Internal Revenue is the primary revenue-generating (body) in the country,

which needs all the support it can get to inculcate awareness about taxation and its
importance. The people must have a knowledge and understanding of tax regulations,
due to meet tax obligations. Taxpayer awareness has a positive effect on tax compliance.
Becoming aware with the importance of paying taxes, and what benefits it can bring to
the country, the people will better understand the importance of paying taxes. Under the
Proclamation No. 812, President Gloria Macapagal Arroyo declared the month of April
2005 as Tax Awareness Month on the 21st day of March 2005. This serves as a step
towards promoting, enhancing and stilling nationwide awareness and appreciation of the
importance and value of taxes to the society.
In the Theory of Planned Behaviour by Ajzen’s (1991), human behaviour is guided
by three kinds of considerations: (1) beliefs about the likely outcomes of the behaviour
and the evaluations of these outcomes (behavioural beliefs), (2) beliefs about the
normative expectations of others and motivation to comply with these expectations
(normative beliefs), and (3) beliefs about the presence of factors that may facilitate or
impede performance of the behaviour and the perceived power of these factors (control
beliefs). In their respective aggregates, behavioural beliefs produce a favorable or
unfavorable attitude toward the behaviour; normative beliefs result in perceived social
pressure or subjective norm; and control beliefs give rise to perceived behavioural control.
The theory states that attitude toward behaviour, subjective norms, and perceived
behavioural control, together shape an individual's behavioural intentions and behaviours.

It relates to the awareness of the taxpayer. Taxpayers, who are aware of the tax,
will know through the behavioral belief of the favorable benefits of paying taxes, its
importance to help the government finance its costs in providing the public needs. A
person, complying with tax regulations because of social normative pressures or the
normative expectations of others in paying taxes is caused by its normative beliefs. It
encourages every taxpayer to have the confidence and decide to become an obedient
taxpayer which pays their tax obligations, linking to the effectiveness of the tax system.
According to the self-awareness theory by Duval and Silvia (2001), when people
focus attention on the self, they compare the self with standards, try harder to meet
standards, and show stronger emotional responses to meeting or failing to meet a
standard. The tendency to change the self to match a standard depends on other
variables, particularly perceptions of how hard it will be to attain the standard. Duval and
Wicklund proposed that, at a given moment, people can focus attention on the self or on
the external environment. Focusing on the self enables self-evaluation. In the objective
of self-awareness, it means that a person focuses their attention on the self and his
behaviour, which allows him to evaluate what he sees based on the standards and
expectations that he has developed throughout his life.
Tax awareness of a taxpayer refers to the satisfaction and pride for fulfilling tax
obligation when it is due. It also refers that tax is likely to be a duty of every citizen,
therefore paying the tax is a prior expenditure. People are expected to follow the
requirements given by the Tax Code because the public pay taxes for the reason that this
is what our law says. In connection, a business owner views his business separate from
everything else; the owner will evaluate his business based on the standards that is
expected on how a business should work. The taxpayer will become conscious and aware
of the importance of complying with the requirements of the Tax Code.

Conceptual Framework
INPUT PROCESS OUTPUT
 Survey  Policy Recommendation for:

 Profile
 Age  Improving business tax
Questionnaire
 Sex compliance by
 Position in the store establishing
 Length of Service  Personal Interview transparency to the
 Highest Educational public with regards to the
Attainment
inflows and expenditures
 Frequency of training attended
about tax of revenues from the
 Documentary collection of business
 Profile of the company Search taxes.
 Form of the Business  Disseminating programs
Organization
for taxpayer education
 Years of Operations  Readings
 Capitalization which includes
 Number of Employees organizing seminars for
existing and aspiring
 Profile of the Business tax entrepreneurs.
Practices  Statistical Analysis
 Inducing a relatively
 Taxes Files and Paid  Frequency and large number of
 Frequency of Tax Filing and
Tax Payment Percentage researchers to engage in
 Duties and Responsibilities  Ranking extensive researches
 Use of Computer and studies regarding
 Frequency of Tax Review  Weighted Mean business tax
 Perception of the organization’s  One Way ANOVA administration and
Management People
 Registration compliance.
 Keeping the accounting  Improving the
books/records implementation
 Issuing official receipts and regarding business tax
sales invoices programs within the
 Filing of the Monthly Value-
management
added Tax Declaration
 Enhancing the
 Paying the Tax
performance of the
 Civil Penalties and
people involved in tax
 Surcharges management with
 Problems with regards to its respect to awareness of
compliance with the BIR. business tax
 Advancing activities
involving tax knowledge
among persona involved
in tax management
Feedback
Figure 1. Conceptual Paradigm

The conceptual framework discussed the flow of the study to be taken. The study
used the systems approach. The system of three (3) frames is composed of input which
went through the process or operation and emerged as the output.
The input contains the leading variables regarding effectiveness and awareness
of business tax management of stores in UP Teachers Village. It includes personal profile
of the respondents. In addition to that are the problems encountered by the company
regarding its tax management and its proposed solutions.
The process consist the methods and procedures to be used to analyze those
variables by using surveys, conducting personal interview, and analyzation of data
obtained from the respondents.
The output contains the perception and conclusion of the researchers regarding
the effectiveness and awareness of business tax management of stores in UP Teachers
Village. It also contains policy recommendations that the researchers suggested for the
improvement of the management with regards to their awareness and effectiveness of
business tax management.
The arrows show the relationship between each during the research. On the other
hand, the feedback loop connects the output to the process involved as well as to the
input. It made the system continuous.

Statement of the Problem
This study aimed to assess the effectiveness and awareness of the Business Tax
Management of the selected stores in UP Teachers’ Village. This study specifically seeks
answers to the following questions:
1. What is the profile of the store in terms of
1.1. Personnel involved in the tax practices
1.1.1. Age
1.1.2. Sex
1.1.3. Position in the store
1.1.4. Length of Service
1.1.5. Highest Educational Attaintment
1.1.6. Frequency of training attended about tax
1.2. Profile of the company
1.2.1. Form of the Business Organization
1.2.2. Years of Operations
1.2.3. Capitalization
1.2.4. Number of Employees
2. Profile of Business Tax practices
2.1. Taxes filed and paid
2.2. Frequency of tax filing
2.3. Frequency of tax payment
2.4. Duties and responsibilities
2.5. Use of computer

2.6. Frequency of tax review
3. What is the perception of the organization’s management people about the level of
awareness in terms of:
3.1. Registration
3.2. Keeping the accounting books/records
3.3. Issuing official receipts and sales invoice
3.4. Filing of the Monthly Value-added Tax Declaration
3.5. Paying the Tax
3.6. Civil Penalties and Surcharges
4. What is the perception of the store management people about the level of
effectiveness in terms of:
4.1. Registration
4.5. Paying the Tax
5. Is there a significant difference in the respondents’ perception of the organization’s
level of awareness when they are grouped according to their profile?
6. Is there a significant difference in the respondents’ perception of the organization’s
level of effectiveness when they are grouped according to their profile
7. Is there a significant relationship in the respondents’ perception of the organization’s
level of awareness and in the level of effectiveness of the organization?

Hypothesis
1. There is no significant difference in the respondents’ perception of the organization’s
level of awareness when they are grouped according to their profile
2. There is no significant difference in the respondents’ perception of the organization’s
level of effectiveness when they are grouped according to their profile
3. There is a significant relationship in the respondents’ perception of the organization’s
level of awareness and in the level of effectiveness of the organization?
Scope and Limitation
This study will focus on the level of awareness and effectiveness of business tax
provisions of selected food stores in Teacher’s Village, Quezon City. The 3 business tax
which are VAT,POT and Excise tax are the taxes covered of the study. This was done to
have an understanding in whether the level of awareness in business taxes of the
respondents effectively applies to their respective business.
This study was composed of 42 respondents from the stores located in Teacher’s
Village who have sufficient knowledge regarding business taxes. There is, however, a
number of respondents who are staff of the stores. The questions were administered in
September 2016 and retrieved on the day of the survey.

Significance of the Study
This study is anticipated to contribute further information to serve the following
individuals and organizations.
Bureau of Internal Revenue. This study will help them evaluate the effectiveness
of their tax campaigns regarding business tax provisions and will help improve adherence
to said business taxes.
Students. This will deepen the understanding of the students concerning business
taxes. This study will assess their awareness and contribute as additional knowledge.
Researchers. This study will enhance their knowledge as to business taxes and
whether these taxes are effectively adhered to by the selected food stores. This study will
also improve their view on taxpayer’s standpoint on business taxes.
Future Researchers. This study will serve as a future reference and tool to any
further relevant study mainly on awareness and effectiveness of business taxes in the
Philippines.
Definition of Terms
For better understanding and interpretation of this study, the following items are
operationally defined.
Age. It refers to the respondent’s span of life when the research was conducted.
Bureau of Internal Revenue (BIR). It is the governing body that implements
administrative provisions of National Internal Revenue Code of the Philippines also known
as Tax Code.
Business Taxes. It refers to impositions collected by the National Government on
onerous transfer of property, service, or rights in the regular or ordinary course of
business conducted within the Philippines.
Business Tax Awareness. It refers to the respondent’s level of knowledge
regarding registration, keeping of accounting record or books, issuance of sales invoices
and official receipts, filing of tax returns, payment of taxes and civil penalties and
surcharges.
Business Tax Effectiveness. It refers to the respondent’s business application of
business taxes according to their awareness regarding registration, keeping of accounting
record or books, issuance of sales invoices and official receipts filing of tax returns,
payment of taxes and civil penalties and surcharges.
Lead Variables. In this study, these are the measures that will assess the
awareness and effectiveness of the food stores,
Length of Service. It refers to the number of years the employee is employed in
the store or the number of years the owner runs the business.
Other Percentage Tax. It refers to a national business tax imposed on certain
persons or merchants, whether sellers of goods or sellers of services, specified under
sections 116 to 127 of the Tax Code.
Position of the Employee. It refers to the current employment situation of the
respondent.
Possible Solutions. It refers to the recommendations on how to solve problems
encountered as regards business tax awareness and effectiveness.
Problems Encountered. This refers to the issues faced regarding business tax
awareness and effectiveness.
Profile of the Respondents. It refers to the respondents' age, sex, civil status,
highest educational attainment, company position and length of service.
Profile of the Respondents’ Company. It refers to the company’s form of
business organization, years of operation, capitalization and number of employees,
Respondents. It refers to the management people of the stores or businesses
who were asked to answer the questionnaires.
Sex. It refers to the classification of respondents according to male or female when
the research was conducted.
Teacher’s Village. It refers to Brgy. Teachers Village East, Maginhawa Corner
Masinsinan Street.
Value-added Tax. It refers to a national business tax imposed on certain persons
or merchants, whether a seller of goods, importer of goods or seller of services based on
their business sales/receipt transactions.
CHAPTER 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter presents the general concepts, principles, theories and conclusions of
related literature and studies formulated by the experts of past generations. This chapter
includes local literature from locally published books and references, and local studies
taken from research works and studies related to the subject matter. The synthesis that
dealt with theories, principles, concepts, approaches and techniques are reviewed which
contributed a lot towards the enrichment of knowledge, in-depth understanding and
insights of the researchers.
Foreign Literature
In Taiwan, business tax generally applies on the sale of goods and services within
its premises as well as the importation of goods in to the said country. Business tax is
imposed under two systems: Value Added Tax or VAT and Non- VAT (also known as
Gross Business Receipts Tax or GRBT). It is said to be applicable especially on general
industries. Non- VAT is applicable to financial institutions, special vendors on beverages
and food, small scale business enterprises. Business entities that sell goods or services
in Taiwan are required to pay business tax and issue government uniform invoice to
buyers at time of sale, delivery or receipt of payment, unless exempt from doing so.
Business tax is also levied on the consignees or holders of imported goods and the buyers
of services supplied by foreign companies with no fixed place of business in Taiwan. An
enterprise, whether or not it has sales must generally file a bi-monthly VAT return with the
collection authority by the 15th of each odd month for the two preceding months. A
company that qualifies for zero-rated VAT may apply to file returns on a monthly basis.
(Kuo,2015)
In addition to knowledge in business tax, it composes of VAT and other percentage
tax, excise tax if there is. Much has been written in Value Added Tax (VAT) since its
inception in tax administration worldwide. As per the conceptual meaning of VAT,
opinions differ. According to Bickely, regards VAT as “a tax levied at each stage of
production on the first value added”. In comparison to Oldman and Woods on the other
hand considers VAT as a multi-stage consumption tax levied on the difference between
a firm’s sales and the value of its purchased inputs used in producing goods”. But the
most widely accepted but wooly definition is the one provided by the United Kingdom
Statement of Standard Accounting Practice (SSAP) Number 5, which states “VAT is a tax
on the supply of goods and services, which is eventually borne by the final consumer but
collected at each stages of the production and distribution chain”
Hence, from these definitions, it is evident that the classical VAT is a consumption
tax, its incidence is on the final consumers and it is a multi-state collection tax. The original
form of VAT started in Germany in 1919. In 1937, France introduced a form of VAT known
as production tax, which has helped replaced with producer’s income-based tax in 1948
and consumption tax in 1954. The French VAT system became a condition precedent of
becoming a member of European Economic Community (EEC) under the treaty of Rome
in 1957. The European community unanimously adopted VAT in 1967 following the
reports of the Neumark and Jansen Committees. Nigeria also adopted VAT in 1993. Many
other countries have come to replace sales tax with VAT for certain reasons. VAT is more
comprehensive and well equipped for taxing, more equipped to ensure voluntary
compliance for its multi-stage collection and credit mechanism through the use of
invoices, it also provides a well-defined audit-trail for tax authorities and thus it is easier
to integrate VAT with income tax audit.
Furthermore, VAT has characteristics which include neutrality, equity, and
regressive nature. VAT is neutral to foreign trade; individual or household choices;
individual or household savings and consumption decisions; forms of business
ownership; mode of financing and the choice amongst inputs except where the supplies
are VAT exempt or zero-rated. The argument on the equity of VAT based on the Hobbies
theory of equity, which states that the people should pay tax based on what they withdraw
from society’s resources, as measured by consumption, rather than what they contribute
to such resources, as measured by income according to Shenk. The equity of VAT is
therefore based on the fact that it is a consumption tax. The regressive characteristics of
VAT have been argued that it is only in a short run period; say a year that VAT is
regressive. However, on life cycle concept VAT burden tends to even out in the long run.
(Oladipupo,2013)
The strategic policy decisions in establishing VAT systems have attracted of tax
scholars such as Obadagbonyi. According to him some of these strategic policy decisions
range from the desirability of VAT adoption or otherwise, the form of VAT system to adopt,
coverage of VAT system, the government department to be responsible for VAT
administration. On the desirability of VAT, two groups exist. There are those countries,
which adopted it on a mandatory platform either because it was a condition precedent to

becoming a member of a regional grouping, like EEC or because of the linkage with the
colonial French master, as Cote d’Ivoire and Senegal. Then there are other countries,
which were merely persuaded to adopt VAT systems as a means of enhancing their
revenue-base by such international bodies as World Bank, International Monetary Fund
(IMF). Examples of which is Nigeria. VAT system has not in any way been attractive in
some other countries particularly those with strong pure federation. In these countries,
sales tax was doing very well and that each component state is seriously guarding its
revenue-base as well as its relative independence more jealously. Examples of such
countries include United States of America and Canada.
(Oladipupo,2013)
Three methods for calculating VAT have been identified. These are the credit
method (the Japanese model) and the addition and subtraction methods respectively.
The credit method is the most popular even though it does not define value added. The
attractions include easy policing and affordability of good audit trail due to the use of
invoicing.
Local Literature
A business is characterized as trade or commercial activities such as selling goods
or services to customers with a viewpoint of obtaining profit. The basic conditions for an
economic activity to be subject to business tax are (1) related to trade, profession or
business (2) occurred within the Philippines and (3) not exempted by law from business
tax. The regular business activity which are the sales of goods or services are the basis
of charging business tax. Exemptions to this rule of regularity is the sale of services or
goods by a non-resident foreign person. The major business taxes in the Philippines are
value added tax, percentage tax and excise tax.
The value-added tax is a form of consumption tax imposed on each (1) sale, barter,
exchange or lease of goods, properties or services in the course of trade or business in
the Philippines and (2) Importation of goods into the Philippines; whether or not in the
course of trade or business (Valencia & Roxas, 2016). It is an indirect tax whereas the
seller is statutorily liable for payment but may be shifted on to the buyer, transferee or
lessee of goods, properties or services. In the case of importation, the importer is the one
liable for payment of VAT.
There are three classifications of merchants organizations as to VAT liability
namely: (1)Non VAT-registered (2) VAT-registered and (3) VAT registrable. Non VAT-
registered person refers to a person who is not liable to the VAT and did not register as
such. On the other hand, a VAT-registered person refers to a person who is liable to the
VAT and did register as such. Lastly, a VAT- registrable person refers to a person who is
liable to VAT but did not register as such. Both VAT-registered persons and VAT
registrable persons are subject to the 12% VAT rate. (Litonjua & Litonjua, 2013)
The criteria of knowing when a person/business is subject to VAT are as follows:
(1) transactions are taxable (2) actual/expected yearly gross sales or gross receipts
exceeds P 1,919,500 (3) registered as VAT-registered person or VAT-registrable and (4)
transactions are made in the course of trade or business.
There are two methods in computing VAT namely: Tax Exclusive Basis and Tax
Inclusive Basis. Under the former, the 12% vat rate is applied on the basis of gross
sales/receipts which still excludes the VAT. However, in the tax inclusive basis, the
12/112 VAT factor is applied on the invoice price/receipts which includes the VAT.
In the standpoint of a seller, the tax added to the goods or services sold that is
collectible from the buyer is called Output VAT which is to be treated as current liability of
a VAT-registered seller. A non-VAT seller is not permitted to collect output VAT from the
buyer. While, on the view of the buyer, a tax added on the purchase price of goods or
services payable to the VAT-registered seller is called input VAT which shall be recorded
and treated by the VAT-registered buyer as a current asset. The taxpayer-seller that is
VAT registered is liable only up to the amount excess of his output VAT over his input
VAT.
Other Percentage Tax (OPT) also called “Non-VAT” is a business tax imposed with
the varying rates (from 0% to 30%) on business transactions specifically identified by law
(Litonjua & Litonjua, 2013). A Non-VAT business is a business with an annual gross sales
or gross receipts of P1,919,500 and below is subject to 3% OPT.
OPT is imposed on (1) sale of goods or services by non-VAT persons whose
annual total sales or gross receipts do not exceed P1,919,500 (2) gross receipts of a Non-
VAT TV/radio franchise grantees whose annual gross receipts do not exceed
P10,000,000 and (3) specifically mentioned under OPT in accordance with Section 117
to 127 of NIRC which are (1) Domestic Common Carriers and Keepers of Garage (2)
International Common Carriers (3) Franchise Grantees (4) Overseas Communicators
from the Philippines (5) Banks and Non-Bank Financial Intermediaries (6) Other Non-
Bank Financial Intermediaries (7) Life Insurance Companies (8) Agents of Foreign
Insurance Companies (9) Amusement Places (10) Winners in Horse Races, Jai-Alai and
(11) Sellers/Transferors of Shares of Stock.
Excise tax is generally imposed on harmful and non-essential goods manufactured
or produced in the Philippines for domestic sale, consumption or for any other disposition
including imported goods (Valencia & Roxas, 2016). In general, the excise tax return shall
be filed and the corresponding excise tax due shall be paid by the producer, manufacturer
of local goods or by the importer of foreign goods before removal of the
manufactured/produced or imported goods from the place of production/manufacturing or
from the custody of the Bureau of Customs as the case maybe. (Litonjua & Litonjua, 2016)
The value added tax and other percentage tax are mutually exclusive; which
means that a product or service cannot be subject to both taxes at the same time whereas
the excise tax shall be in addition to the value added tax (in the case of a VAT registered
person) or to the percentage tax (in the case of non-vat registered person) imposed upon
its sales.
In connection with the effectiveness of the collection of business taxes, a Filipino
journalist named Chito Chavez of the Manila Bulletin wrote that the business tax collection
in Quezon City increased during the first 10 months of 2012 by about 12.22% compared
to the same period last year. In 2011, the Bureau of Local Government Finance of the
Department of Finance, has named Quezon City as the best individual revenue performer
among the 17 local government units comprising the NCR. The registered businesses in
Quezon City has increased from 60,154 in 2011 to 67,096 in 2015. (Quezon City
Information Technology Development Office 2012)

Foreign Studies
The spread of value-added tax (VAT) in developing countries has been dramatic
over the decade of 1990s. Adopted by more than 130 countries, including many of the
poorest, VAT has been, and remains, the key of tax reform in many developing countries.
While adopting VAT, there are arguments for and against uniform general VAT system.
A uniform and general VAT on all commodities is considered to be efficient and less
distortionary. On the other hand, from the distributional perspective many goods
especially food are exempted from VAT net as low income people spend a high share of
income on food. This paper analyzes income distribution and welfare impact of VAT
reform for Bangladesh with taking the special consideration into local and super market
food sectors.
Being a developing country with low tax-GDP ratio, reforming the existing tax
structure is essential for Bangladesh. The challenge is how to redesign the VAT system
without deteriorating the income distribution. We applied the CGE model by Bohlin (2010)
to analyze effects from VAT reforms where all the simulations were made to keep the
revenue unchanged.
Comparing the equivalent variations we see that a uniform and general VAT on all
the goods and services is welfare improving. However, it is more about an implementation
issue. For a low income country with a large informal sector, VAT avoidance is existent.
For the equity concern food and agricultural commodities are exempted from VAT in
Bangladesh. Moreover, there is a threshold for VAT compliance. Therefore, VAT
broadening by exempting the 17 agriculture and local market food sector are justified in
the presence of an informal economy with tax avoidance. The imposed VAT rate is much
lower than the present official VAT rate. (Jörgen Levin and Yeasmin Sayeed, 2014)
Value added tax (VAT) is a key part of the fiscal revenue of many countries. Yet
this broad-based tax on consumer spending exempts financial services. This seems
puzzling to many, particularly given the significance of that sector and the size of its value-
added in today's world economy. The fact that the European Commission is currently
reviewing the tax treatment of financial activities in the European Union (EU) underscores
the importance of addressing the issue.
Conventional wisdom holds that taxing financial services under a transaction-
based VAT system entails difficulties that render it impossible to tax the services. The
thesis investigates where the difficulties lie. The research is undertaken using
benchmarks, namely the character of European VAT as an indirect tax on consumption
expenditure and the specific features of financial activities, namely that they turn around
money and the functions of money. The various key VAT concepts (e.g., taxable person,
activities, namely that they turn around money and the functions of money.) The various
key VAT concepts (e.g., taxable person, taxable transactions, and taxable amount) are
researched in order to establish whether the inclusion of financial activities in the
European VAT system entail specific difficulties both from a practical, legal point of view
and from a theoretical point of view (in the light of the benchmarks). The thesis contains
an extensive investigation of the law inter alia as regards the scope of the exemption for
financial services and the scope of the European VAT system. It is found that, particularly
with regard to defining the scope of European VAT, what constitutes a taxable
transaction, the taxable amount and calculating a deductible proportion, clear practical
and theoretical difficulties exists.
Finally, the thesis describes and evaluates alternative treatments to an exemption
of financial services such as using both additive and cash-flow methods. The current
review of financial services is also discussed. It is found that no clear best practice can
be established. However, based on both theoretical and practical considerations, a
preferred treatment is presented (Henkow,2007).
Ethical tax awareness of a taxpayer refers to the satisfaction and pride for fulfilling
tax obligation when it is due. It also refers that tax is likely to a duty of every citizen
therefore paying the tax is a prior expenditure.
It is such a good signal for government that potential taxpayers, in average, have
been aware of tax obligation. The government must accordingly take into account to keep
the awareness become compliance in the future when potential taxpayers become real
taxpayers.
Tax knowledge also affects the taxpayers’ attitude towards the accuracy of the tax
return (Eriksen and Fallan, 1996; Kirchler et. al., 2008)
“No study has been done to investigate which parts of tax knowledge have the
greatest effect on attitude toward taxation. Experiments with different types of courses
could provide new understanding.” (Eriksen and Fallan, 1996: 399).
The tax administrators should not only focus on their convenience but must also
consider taxpayers’ convenience particularly in terms of tax regulations, filings,

assessments, payments, administration and costs of administering the tax system
(Sandford, 1993).
Specific tax education programmes for taxpayers have been implemented in most
countries including the US (including via online education22), Canada and the UK. Tax
education can constitute any informal or formal programme organised by the tax authority
or independent agencies by which to facilitate taxpayers in completing tax returns
correctly and also to cultivate awareness of their responsibilities in respect of the tax
system (Eriksen and Fallan, 1996; IRB Annual Report, 2006; McKerchar, 2007).
In addition to tax education, knowledge about tax laws also plays a major role in
determining taxpayers’ compliance behaviour (Eriksen and Fallan, 1996). Therefore a
step ahead, for example continuous education programmes and effective monitoring
mechanisms must be taken into account by tax authorities to ascertain that taxpayers 43
have a good and reasonable knowledge and understanding of tax matters. However, the
awareness and attitude of the taxpayer himself is more important since the effectiveness
of tax education depends on the readiness, acceptance and honesty of taxpayers.
The study provides further evidence that tax knowledge is important and
significantly affects tax compliance (in a positive direction) meaning, developing tax
knowledge further would probably help to increase tax compliance. (Palil,2010)
Local Studies
The conclusion the researchers arrived at, is that the industry will gain more if the
corporate tax is reduced followed by the abortion of the documentary stamp tax. However,
the government may not lower the corporate tax because of the VAT tax. Thus, making
the industry earn more withour lowering the corporate income tax. (Erestain, 2006)
In a study conducted by undergraduate students of Dela Salle University focusing
on the tax system of Philippines vis a vis India, they said that India is a bit better off than
the Philippines because the bracketing they used in terms of income tax is clearer and
more understandable compared to the bracketing system of the income tax of the
Philippines. The Value added tax of India is based on a multi-point destination system
and is imposed on every stage of the production of the good. However, basic necessities
and goods of local importance have been exempted to the VAT and precious metals such
as gold, silver and precious stones have a tax rate of 1%. The tax collection of India is
more efficient since their tax is straightforward and clearer compared to the Philippines.
The tax system of the Philippines, is not so effective, unlike in the India because there
are so many things to pay, the taxpayer will pay a certain amount and a percentage in
excess of the lower amount. (Camarao et al , 2014)
According to a study conducted in Divisoria, where store owners continue to
comply and implement tax provison. The store managements know very well that when
they do not comply with the tax provision, they will receive penalties and worst is that the
BIR will order the closure of their stores. The study recommends, seminars, forums and
symposiums will help increase the awareness of taxpayers about the tax provisions.
(Barberan, 2015).
According to a study conducted in Cainta, Rizal, value-added tax returns are the
most prominent type of tax returns filed by the management people. VAT is basically a
multiple stage tax. According to which, a person has to pay tax at every stage of
production and distribution. Hence, tax would be charged at every step of value addition.
Since, the tax is charged on commodities purchased for consumption, it is therefore a
consumption tax. From a buyer’s view point, it is a tax charged on purchase price while
from a seller’s perspective; it is levied on value addition made to any product, service or
material at a particular stage in the supply chain. The difference between the two amounts
is paid to the government and the remainder is kept by the producer to makeup for the
changes they have incurred in purchasing inputs (Fernandez et al, 2014).
Synthesis
This review of related literature and studies serves as a benchmark for the
researches to have better insight and synopsis about the concept of the study. The
gathered information encouraged the researchers to further conduct about the issue.
Deeper understanding of the subject of this thesis may not be possible without the aid of
cited significant materials. Consequently, the related literature and studies just reviewed
provided guides and directions necessary for the researchers to meet the aimed
objectives and other useful thoughts which will farther enhanced the foundation of the
researcher’s ideas with regards to the chosen topic.
Our model thesis is the study conducted Divisoria, Manila entitled ““Measuring the
Level of Compliance with Value-Added Tax Provisions on Selected Stores in Divisoria”
aimed to determine the degree of Value-Added Tax (VAT) compliance of selected stores
in Divisoria. by H. Barbaran,K. Badillo, et. al, where value-added tax returns are the most
prominent type of tax returns filed by the management people.(Barbaran, Badillo et al,
2015).
The researchers had also come to identify similarity to the study conducted
by Sandord,(1993) which The tax administrators should not only focus on their
convenience but must also consider taxpayers’ convenience particularly in terms of tax
regulations, filings, assessments, payments, administration and costs of administering
the tax system.
All of the reviewed materials give way for the researchers to gain a better
understanding of the subject matter. The studies were used to put a clearer image of
the problem and better address the problem so stated. The results of the previous
studies obtained have been useful to evaluate the results of this study.
Chapter 3
RESEARCH METHODOLOGY
This chapter discusses the design and procedures undertaken in conducting the
study. It presented the research method used, respondents of the study, population,
sample size, sampling technique, instrument used, data gathering procedures and
statistical treatment of data.
Research methods used

The researchers made use of the descriptive research method which is designed
to obtain information concerning the current status of the phenomena to describe what is
existing with respect to the variables or conditions in the chosen field of study. This
method allows the researchers to interpret the theoretical meaning of the findings and
hypothesis development for further studies.
“Descriptive research, sometimes known as non-experimental or correlational research,
deals with the relationships between variables, the testing of hypotheses, and the
development of generalizations, principles and theories that have universal validity. The
expectation is that if variable A is systematically associated with the variable B, prediction
of future phenomena may be possible and the results may suggest additional and
competing hypotheses to test”. (Singh, Nath, 2007).
Descriptive studies are used to describe various aspects of the phenomenon.
Moreover, descriptive research is used to describe characteristics and/or behaviour of the
sample population. In this study, the researchers were determined to emphasize on
information about variables rather than individuals.
As used in this research, data obtained and treated are data on respondents’profile
such as age, gender, highest educational attainment, position in the company, number of
years of training, and tenure of service in the company.
Population, Sample size and Sampling Technique
According to Parahoo (1997), population is defined as the total number of units
from which data can be collected, such as individuals, artifacts, events or organizations.
Burns and Grove (2003) describe population as all the elements that meet the criteria for
inclusion in a study. The study population consisted of all food stores in the premises of
UP Teachers Village East. The barangay chairman of UP Teachers Village gave the list
of stores to the researchers.
Name of Business
1. M 101 FOOD HUB
2. MAMAY’S IHAW-IHAW
3. JKAS FOOD SERVICES
4. MOONLEAF HOLDING INCORPORATED
5. THE MOONLEAF TEASHOP
6. MARCIANA’S PALABOK SUPREME AND PUTO PANDAN
7. CJSS GRIDDLE STEAK AND CHICKEN HOUSE
8. 1 THEO’S COFFEE SHOP
9. PATRICK ERWIN WAFFLE STATION
10. ROJO YUM FOODS CORP.
11. KUAIZI RESTAURANT
12. MJDA GRILL
13. GEM KINGS CORPORATION
14. PROVINCIANO
15. FAT COUSINS DINER
16. AVTOL PARES AND GRILL
17. AILM FOOD CART

18. DORISSOMO FOODS
19. RBYS STEAL AND SHAKE HOUSE
20. BALIWAG LECHON MANOK INC.
21. BOBO’S PIZZERIA
22. BAKER’S TABLE BAKESHOP
23. GO-EN THE JAPANESE RAMEN RESTAURANT
Table 3.1 Population of the food stores in UP Teachers Village
Some of the stores listed are already closed because of various reasons, and there
are new food stores along the barangay. The new stores are included in the population.
According to Explorable.com (2009) the sample size of a statistical sample is the
number of observations that constitute it and determining the sample size to be selected
is an important step in any research study. Getting sample size is done because it is
impossible to test every single individual in the population. It is also done to save time,
money and effort while conducting the research.
In this study the total number of different categories of stores that were listed was
47. Slovene formula was used to get the sample size.
N
𝑛=
1 + Ne2
47
𝑛=
1 + (47)(0.052 )
𝑛 = 42
The sample sizes of 42 food stores were the total of subjects who were willing to
participate in the research during the period of data collection.
According to United States Bureau of the Census (1998), a sampling technique is
the name or other identification of the specific process by which the entities of the sample
have been selected. According to Royal Geographical Society (2010), in reality there is
simply not enough; time, energy, money, labor/man power, equipment, access to suitable
sites to measure every single item or site within the parent population or whole sampling
frame. Therefore an appropriate sampling strategy is adopted to obtain a representative,
and statistically valid sample of the whole.
There are many sampling techniques that can be used. There are 3 main types of
sampling techniques, namely: Random, Random, And Systematic and Stratified sampling
technique. The researcher used Random Sampling as the technique to achieve the
required sample size. The researchers chose this technique because it is the least biased
of all sampling techniques, there is no subjectivity - each member of the total population
has an equal chance of being selected.
Description of Respondents
The respondents of the study are 42 management people from selected stores
registered at Barangay UP Village, Quezon City through the coordination of Barangay
Chairman Lolita DL. Singson. There were 19 owners, 12 managers, 6 supervisors and 5
staff that participated in the survey.
Research Instrument
In this study, survey questionnaires are used as the principal instrument in data
gathering. Some of the questions are adopted from other various theses regarding tax
compliance. The contents of the questionnaire are patterned from the questionnaire
developed in a study entitled “Measuring the Level of Compliance with Value-Added Tax
Provisions of Selected Stores in Divisoria” by Barberan, Hanah Faye P. et al. By all
means, the researchers designed the questionnaires in a proper form to accommodate
sufficient and relevant information required from the respondents.
The questionnaire is composed of 5 parts, namely: profile of the respondents, the
profile of the respondents, the profile of the respondents’ company, Profile of Business
Tax Practices, level of awareness and level of effectiveness. Likert scale is used to modify
the answers of the respondents considering five (5) options with the corresponding scale.
For level of awareness, the 5 options are (5) Hightly Aware; (4) Aware; (3) Undecided;
(2) Not aware; 1 Strongly not aware. For level of effectiveness, the 5 options are (5)
Hightly Effective; (4) Effective; (3) Undecided; (2) Not effective; (1) Strongly not effective.
Respondents are requested to check the space provided for each option.
Data Gathering Procedures
Upon approval of the topic, the researchers started contacting different malls such
as St. Francis Square Mall across Megamall, Green Hills Mall along San Juan, but
unfortunately the said malls declined the request of the researcher to conduct a survey
within their premises. The researchers decided to locate their subject location area at
Brgy. Teacher’s Village along Quezon City. The researchers began contacting the
Barangay office staff to acquire their permit to conduct a survey within Brgy. Teacher’s
Village. The researchers also began collecting information from the Internet and libraries.
The researchers collected data and information from different libraries within Manila and
Quezon City. Different books, article publication, periodicals and other publications are
collected. With the information gathered the researchers began constructing their
questionnaires. The researchers performed the data gathering procedures through the
use of survey questionnaires to reflect all the important aspects of the study.
After the questionnaire for the respondents have been finalized, the survey is
immediately conducted. The researchers conducted a survey for one (1) day to be able
to gather all necessary information that they needed. They encountered a lot of hard time
doing the survey since most of the manager or owners were not present in their stores
who were needed to be the respondent for having the knowledge on Taxation in their
businesses. Some stores are busy serving the customers that were arriving at that
moment. Despite all of that, the researchers were still able to complete all the needed
details for the survey. Then all the results were tallied and tabulated according to the
frequency of the items checked by the respondents. Results were interpreted using the
selected statistical tools. The results of the tabulation were used in the data gathering
improved by the research team in order for the researchers to arrive at the interpretation
of the study.
Statistical Treatment of Data
The data gathered in this study pertaining to the employees and owners of the
selected stalls within the vicinity of the Brgy. Teacher’s Village are grouped, tabled and
carefully organized to be used in the presentation and interpretation of the results.
1. Frequency and Percentage Distribution

The percentage and frequency distributions are used to classify the respondents
according to personal variables such as age, gender, civil status, highest educational
attainment, position in the company and number of years in position; and their perspective
according to business variables such as form of business, years of existence. The
frequency also presented the actual response of the respondents to a specific question
or item in the questionnaire.
On the other hand, the percentage of that item is composed by dividing it with the
sample total number of respondents who participated in the survey. The formula used in
the application of this technique is:
% = (f/n) x 100
Where:
% = percentage
f = frequency
n = number of cases or total sample
2. Weighted Mean
Another Statistical technique used by the researchers is the weighted mean. It is
used to determine the average responses of the different options provided in the various
parts of the survey questionnaire used. The method is used in conjunction with the Likert
Scale. It is solved by the formula

Where:
𝑥 = ∑ 𝑓𝑥/𝑛
x= weighted mean
∑fx= the sum of all the products of f and x
f being the frequency of each weight
and x as the weight of each operation
n= total number of respondents
3. Analysis of Variance
A common statistical technique used to test a hypothesis concerning the means of several
independent samples. The one-way ANOVA or one-way F-test is used whether the null
hypothesis is rejected or accepted. In one-way ANOVA, mean squares of between groups
and within groups are necessary to compute the F-ratio. The formulas for solving mean
squares are:
Formula:
𝑀𝑆𝑠
𝐹=
𝑀𝑆𝑤
F= F compute
MSs = mean squares of between groups
MSw = mean squares of the within-group
4. Pearson Correlation Coeffcient
Another Statistical Method is the Pearson correlation coefficient that is very
helpful statistical formula that measures the strength between variables and relationships.
Under the field of Statustics, Pearson correlation coefficient formula is often referred to
as the Pearson R test. When conducting a statistical test between two variables, it is
recommended to conduct a Pearson correlation coefficient value to determine just how
strong that relationship is between those two variables. It solve by the formula
Where:
𝑁 ∑ 𝑥𝑦−(∑ 𝑥)(∑ 𝑌)
𝑟= 2
[√𝑁 ∑𝑋 2−(∑ 𝑋)2 ][𝑁 ∑𝑌 2−(∑ 𝑌) ]
N = Number of pairs of scored
∑xy = Sum of the product of paired scores
∑x = Sum of x scores
∑y = Sum of y scores
∑x2 = Sum of squared x scores
∑y2 = Sum of squared y scores

Chapter 4
PRESENTATION, ANALYSIS AND INTERPETATION OF DATA
This chapter shows and discloses the presentation of organized data into logical,
sequential and meaningful categories and classifications to make them amenable to study
and interpretation. The tabulated data were analyzed in order to answer the specific
questions in the statement of the problem. Analytical tables were also presented
according to the sequence of the specific questions.
1. Profile of the store
1.1. Personnel Involved in tax practices
Table 2
Frequency and Percentage Distribution of the
Respondents in terms of Age
Age Frequency Percentage (%)

20-25 years old 13 30.95
26-30 years old 20 47.62
31-35 years old 6 14.29
36-40 years old 2 4.76
41 years old and above 1 2.38
Total 42 100.00
This table shows that out of 42 respondents, 20 or 47.62% are from the range 26-30 years
old; 13 or 30.95% are from the range of 20-25 years old; 6 or 14.29% are from the range
of 31-35 years old; 2 or 4.76% are from the range of 36-40 years old; 1 or 2.38% are from
the range of 41 years old and above.

Table 3
Respondents in terms of Sex
Sex Frequency Percentage (%)

Male 18 42.86
Female 24 57.14
Total 42 100.00
This table shows that out of 42 respondents, 24 or 57.14% are female and
18 or 42.86% are male.
Table 4
Respondents in terms of Position of the Employee
Position of the Employee Frequency Percentage (%)

Owner 19 45.24
Manager 12 28.57
Supervisor 6 14.29
Staff 5 11.90
Total 42 100.00
This table shows that out of 42 respondents, 19 or 45.24% are owner; 12
or 28.57% are manager; 6 or 14.29% are supervisor; 5 or 11.90% are staff.
Table 5
Respondents in terms of Length of Service
Length of Service Frequency Percentage (%)

1-5 years 41 97.62
6-10 years 1 2.38
Total 42 100.00
This table shows that out of 42 respondents, 41 or 97.62% serve from the
range of 1-5 years and only 1 or 2.38% serve from the range of 6-10 years
Table 6
Frequency and Percentage Distribution of the Respondents
in terms of their Highest Educational Attainment
Respondents in terms of their Frequency Percentage (%)

Highest Educational
Attainment
High School Undergraduate 2 4.76
Master’s Degree 1 2.38
High School Graduate 1 2.38
Vocational 3 7.14
College Undergraduate 3 7.14
College Graduate 32 76.19
Total 42 100.00
This table shows that out of 42 respondents, 32 or 76.19% are college
graduate; 3 or 7.14% are college undergraduate and vocational; 2 or 4.76% are high
school undergraduate and 1 or 2.38 are high school graduate and have master’s degree.
Table 7
Frequency and Percentage Distribution of the Respondents
in terms of their Highest Educational Attainment
Respondents in terms of their Frequency Percentage (%)

Highest Educational
Attainment
High School Undergraduate 2 4.76
Master’s Degree 1 2.38
High School Graduate 1 2.38
Vocational 3 7.14
College Undergraduate 3 7.14
College Graduate 32 76.19
Total 42 100.00
This table shows that out of 42 respondents, 32 or 76.19% are college
graduate; 3 or 7.14% are college undergraduate and vocational; 2 or 4.76% are high
school undergraduate and 1 or 2.38 are high school graduate and have master’s degree.
1.2. Profile of the Company
Table 8
Respondents in terms of Form of Business
Forms of business Frequency Percentage (%)

Sole Proprietorship 24 57.14
Partnership 16 38.10
Corporation 2 4.76
Total 42 100.00
This table shows that out of 42 respondents, 24 or 57.14% are sole proprietorship; 16 or
38.10% are partnership; 2 or 4.76% are corporation.
Table 9
Respondents in terms of Years of Operation
Years of Operation Frequency Percentage (%)

5 years and below 40 95.24
6-10 years 2 4.76
Total 42 100.00
This table shows that out of 42 respondents, 40 or 95.24% operates from
the range of 5 years and below and 2 or 4.76% operates from the range of 6-10 years.
Table 10
Respondents in terms of Capitalization
Capitalization Frequency Percentage (%)

Loan 2 4.76
Investment from owners 32 76.19
Partly loan and partly
investment from owners 6 14.29
Others 2 4.76
Total 42 100.00
This table shows that out of 42 respondents, 32 or 76.19% uses investment
from owners; 6 or 14.29% partly loans and partly invests from owners; 2 or 4.76% uses
loan; and another 2 or 4.76% uses other capitalization.
Table 11
Respondents in terms of Number of Employees
Number of Employees Frequency Percentage (%)

5 employees and below 12 28.57
6-10 employees 21 50.00
10 employees and above 9 21.43
Total 42 100.00
This table shows that out of 42 respondents, 21 or 50.00% have a number
of employees ranging from 6-10; 12 or 28.57% have 5 employees and below; 9 or 21.43%
have a number of employees ranging from 10 and above.

2. Profile of Business Tax practices
Table 12
Respondents in terms of Taxes Filed and Paid
Taxes Filed and Paid Frequency Percentage (%)

VAT 39 92.86
Other Percentage Tax 3 7.14
Total 42 100.00
This table shows that out of 42 respondents, 39 or 92.86% filed and
paid VAT and 3 or 7.14% filed and paid Other Percentage Tax.
Table 13
Distribution of the Stores According to Frequency
of Tax Filing and Paying
Frequency of tax filing

Frequency Percentage (%)
and payment
Monthly 30 71.43
Quarterly 7 16.67
Annually 5 11.90
Total 42 100.00
The table indicates that among the 42 stores, 30 or 71.43 % are filing and paying
monthly; 7 or 16.67% are filing and paying quarterly; and the 5 stores or 11.90% are filing
and paying annually. This shows that the majority of the stores chose to file and pay their
taxes monthly.
Table 14
Distribution of the Stores According
to Frequency of Tax Review
Frequency of tax review Frequency Percentage (%)

Monthly 31 73.81
Quarterly 6 14.29
Semiannually 1 2.38
Annually 4 9.52
Total 42 100.00
The result shows that among the 42 stores, 31 or 73.81% review their taxes
monthly; 6 or 14.29% of them review their taxes quarterly; 1 store or 2.38% review their
taxes semi-annually; and 4 or 9.52% are annually. This indicates that most of the stores
review their taxes monthly.
Table 15
Distribution of the Stores According to Preparing of Financial Statements
Preparing of financial
statement
Owner 13 30.95
Manager 3 7.14
Accountant 19 45.24
External Accountant 7 16.67
Total 42 100.00
It shows that in preparing the financial statements among the 42 stores, 13 stores
or 30.95% are being prepared by the owner; 3 or 7.14% are prepared by the Manager;
19 or 45.24% of them are prepared by an Accountant; and the remaining 7 or 16.67% are
prepared by the external Accountant. This indicates that the financial statement of the
stores is mostly prepared by the internal accountant.

Table 16
Distribution of the Stores According to Tax Filing
Tax Filing Frequency Percentage (%)

Owner 12 28.57
Manager 3 7.14
Accountant 25 59.52
Total 42 100.00
The table indicates that in tax filing among the 42 stores, 12 or 28.57% are being
filed by the owner; 3 or 7.14% are being filed by the Manager; 25 or 59.52% are filed by
an Accountant; 2 or 4.76% are filed by an External Accountant. The result shows that the
taxes of the stores are mostly filed by their internal accountant
Table 17
Distribution of the Stores According to Tax Payment
Tax Payment Frequency Percentage (%)

Owner 14 33.33
Manager 3 7.14
Accountant 23 54.76
Total 42 100.00
The table shows that in payment of taxes, out of 42 stores, 14 or 33.33% are paid
by the owner; 3 or 7.14% stores are paid by the Manager; 23 or 54.76% are being paid
by an Accountant; 2 or 4.76% are paid by an External Accountant. This indicates that
taxes are being paid mostly by the Internal Accountants.

Table 18
Distribution of the Stores According to Tax Review
Tax Review Frequency Percentage (%)

Owner 14 33.33
Manager 2 4.76
Accountant 24 57.14
Total 42 100.00
The table shows that in reviewing their taxes, among the 42 stores, 14 stores or
33.33% are being reviewed by the owner; 2 or 4.76% are reviewed by the Manager; 24
or 57.14% of them are reviewed by their Accountant; 2 or 4.76% are reviewed by the
External Accountant. This shows that the taxes of the stores are mostly reviewed by their
internal accountant.
Table 19
Distribution of the Stores According to Use of Computer
in Preparing Financial Statement
Use of Computer -
Preparing of Financial Frequency Percentage (%)
Statement
Yes 32 76.19
No 10 23.81
Total 42 100.00
The table shows that among the 42 stores, 32 or 76.19% uses computer in
preparing the financial statement; 10 stores or 23.81% do not use computer in financial
statement preparation. This indicates that majority of the stores uses computer in financial
statement preparation.
Table 20
Distribution of the Stores According to Use of Computer in Tax Filing
Use of Computer - Tax

Filing
Yes 36 85.71
No 6 14.29
Total 42 100.00
The table indicates that out of the 42 stores, 36 stores or 85.71% use computer in
filing their tax; 6 or 14.29% do not use computer in tax filing. The result shows that most
of the stores use computer in filing their taxes.
Table 21
Distribution of the Stores According to Use of Computer in Tax Payment

Payment
Yes 32 76.19
No 10 23.81
Total 42 100.00
The table shows that among the 42 stores, 32 or 76.19% of them uses computer
in paying their tax; 10 stores or 23.81% do not use computer in tax payment. This
indicates the most stores uses computer in paying their taxes.

Table 22
Distribution of the Stores According to Use of Computer in Tax Review

Review
Yes 34 80.95
No 8 19.05
Total 42 100.00
The table shows that among the 42 stores, 34 or 80.95% uses computer in reviewing their
taxes; 8 stores or 19.05% do not use computer during tax review. This indicates that
majority of the stores uses computer during tax review.
3. Level of awareness
3.1. Registration
Table 24
Level of Awareness of the Organization's Management People on Business
Tax Management in the Aspects of Keeping the Accounting Records
Weighted Verbal
Issuance of Sales Invoices and Official Receipts Mean Interpretation
The business must issue duly registered receipt or invoice for every
sale of goods or service rendered 4.71 Highly Aware
The business’s invoice must always show the quantity, description of
merchandisor nature of service and the name of the customer 4.71 Highly Aware
The business’s invoice and official receipt must always prepared in
duplicate or more. 4.69 Highly Aware
The business’ Tax Identification Number, name of owner, business
address, contact number and the business name must always be
indicated in any invoices, statements or documents filed by the
company 4.69 Highly Aware
Overall Weighted Mean 4.70 Highly Aware
This indicates that the respondents are highly aware at an average of 4.71 that
the must issue duly registered receipt or invoice for every sale of goods or service
rendered. At an average of 4.71, the respondents are highly aware that the business’s
invoice must always show the quantity, description of merchandisor nature of service
and the name of the customer. The table also indicates that an average of 4.69 the
respondents are highly aware that the business’s invoice and official receipt must
always prepared in duplicate or more. The respondents are highly aware that the
business’ tax Identification Number, name of owner, business address, contact
number and the business name must always be indicated in any invoices, statements
or documents filed by the company at an average of 4.69. The overall weighted mean
of 4.7 indicates that the respondents are highly aware as to issuance of sales invoices
and official receipts.
Table 25
Tax Management in the Aspects of Issuing Receipts and Sales Invoices
Weighted Verbal
Issuance of Sales Invoices and Official Receipts Mean Interpretation
The business must issue duly registered receipt or invoice for every
sale of goods or service rendered 4.71 Highly Aware
The business’s invoice must always show the quantity, description of
merchandisor nature of service and the name of the customer 4.71 Highly Aware
The business’s invoice and official receipt must always prepared in
duplicate or more. 4.69 Highly Aware
The business’ Tax Identification Number, name of owner, business
address, contact number and the business name must always be
indicated in any invoices, statements or documents filed by the
company 4.69 Highly Aware
the must issue duly registered receipt or invoice for every sale of goods or service
rendered. At an average of 4.71, the respondents are highly aware that the business’s
invoice must always show the quantity, description of merchandisor nature of service
and the name of the customer. The table also indicates that an average of 4.69 the
respondents are highly aware that the business’s invoice and official receipt must
always prepared in duplicate or more. The respondents are highly aware that the
business’ tax Identification Number, name of owner, business address, contact
number and the business name must always be indicated in any invoices, statements
or documents filed by the company at an average of 4.69. The overall weighted mean
of 4.7 indicates that the respondents are highly aware as to issuance of sales invoices
and official receipts.

Table 26
Tax Management in the Aspects of Filing Tax Return
Weighted Verbal
Filing of Tax Returns Mean Interpretation
The business must file all the applicable tax returns 4.67 Highly Aware
The business must observe the implemented due date of filing
by the BIR 4.71 Highly Aware
The business must observe the proper place of filing the
applicable tax returns 4.69 Highly Aware
The business must file a monthly and quarterly declaration of
the tax return 4.76 Highly Aware
The tax returns must be filed with to the authorized collecting
agent 4.71 Highly Aware
This indicates that the respondents are highly aware at an average of 4.67 that the
business must file all the applicable tax returns. At an average of 4.71, the respondents
are highly aware that the business must observe the implemented due date of filing by
the BIR. The table also indicates that at an average of 4.69, the respondents are highly
aware that the business must observe the proper place of filing the applicable tax returns.
The respondents are highly aware that the business must file a monthly and quarterly
declaration of the tax return at an average of 4.76. An average of 4.71 of the respondents
are highly aware that the returns must be filed with to the authorized collecting agent. The
overall weighted mean of 4.71 indicates that the respondents are highly aware as to filing
of tax returns.
3.4. Paying the Tax
Table 27
Tax Management in the Aspects of Paying the Tax
Weighted Verbal
Payment of Taxes Mean Interpretation
The business must always pay its tax liability upon the date of
filing of the tax return 4.71 Highly Aware
The amount of the tax liability explicitly written in the tax
return must rarely in disagreement with the assessed amount
of the BIR Commissioner 4.76 Highly Aware
The business as a taxpayer must be keen to changes in BIR
regulations 4.71 Highly Aware
It must be the company’s accountant who calculates and
disseminates tax information regarding the company’s tax
liability 4.64 Highly Aware
The business must pay monthly and quarterly tax return 4.69 Highly Aware
This indicates that the respondents are highly aware at an average of 4.71 that the
business must always pay its tax liability upon the date of filing of the tax return. At an
average of 4.76, the respondents are highly aware that the amount of the tax liability
explicitly written in the tax return must rarely in disagreement with the assessed amount
of the BIR Commissioner. The table also indicates that at an average of 4.71, the
respondents are highly aware that the business as a taxpayer must be keen to changes
in BIR regulations. The respondents are highly aware that it must be the company’s
accountant who calculates and disseminates tax information regarding the company’s tax
liability at an average of 4.64. An average of 4.69 of the respondents are highly aware
that the business must pay monthly and quarterly tax return. The overall weighted mean
of 4.7 indicates that the respondents are highly aware as to payment of taxes.
Table 28
Level of Awareness of the Organization's Management People
on Business Tax Management in the Aspects of Civil Penalties and
Surcharges
Weighted Verbal
Civil Penalties and Surcharges Mean Interpretation
The business must not neglect the filing of the tax return and
payment of the tax due to avoid surcharges 4.64 Highly Aware
The business must never been involved in filing a fraudulent tax
return 4.67 Highly Aware
The business must pay the penalties and surcharges demanded
by the BIR in case of failure to file and pay the correct amount of
the tax duly 4.64 Highly Aware
the business must not neglect the filing of the tax return and payment of the tax due to
avoid surcharges. At an average of 4.67, the respondents are highly aware that business
must never been involved in filing a fraudulent tax return. The table also indicates that at
an average of 4.64, the respondents are highly aware that the business must pay the
penalties and surcharges demanded by the BIR in case of failure to file and pay the
correct amount of the tax duly. The overall weighted mean of 4.65 indicates that the
respondents are highly aware as to civil penalties and surcharges.

4. level of effectiveness in terms of:
4.1. Registration
Table 29
Level of Effectiveness of the Organization's Management People on Business
Tax Management in the Aspects of Registration
Table 30
Tax Management in the Aspects of Record Keeping
Table 31
Tax Management in the Aspects of Issuing Official Receipt and Sales Invoice
Table 32
Tax Management in the Aspects of Filing of Tax Return
4.5. Paying the Tax
Table 33
Tax Management in the Aspects of Paying Tax
Table 34
Tax Management in the Aspects of Civil Pelanties and Surcharges
5. Significant Differences between the level of Awareness and Respondent’s Profile
5.1.1. Age
Table 35
Significant Difference between the Level of Awareness and Profiles
When Grouped According to Age
Indicator Age Mean F-value p-value Decision Remarks
20-25 years old 4.38
Registration 31-35 years old 5.00 1.862 0.138 Accept Ho Not Significant
41 years old and above 5.00
Keeping of Accounting
31-35 years old 4.96 0.922 0.461 Accept Ho Not Significant
Record or Books
Issuance of Sales 26-30 years old 4.86
Invoices and Official 31-35 years old 5.00 2.092 0.102 Accept Ho Not Significant
Receipts 36-40 years old 5.00
Filing of Tax Returns 31-35 years old 5.00 1.059 0.391 Accept Ho Not Significant
Payment of Taxes 31-35 years old 4.90 1.329 0.277 Accept Ho Not Significant
Civil Penalties and
Surcharges
Overall 31-35 years old 4.98 1.808 0.148 Accept Ho Not Significant
This portrays the significant difference between the awareness and profiles when
grouped according to age. In terms of registration the computed p-test value of .138
higher than the level significance of .05. Thus, the hypothesis is accepted. Moreover, as
to keeping of accounting records and books, p-test value of .461 doesn’t attain the
required value of significance. Therefore, the hypothesis is accepted. Issuance of sales
invoice and official receipts has the P-test value of .102 and doesn’t meet the required
value of significance resulting to an accepted hypothesis. Filing of tax returns has the P-
test value of .391 thus the hypothesis is accepted. Likewise, in terms of payment of taxes
and civil penalties and surcharges have the P-test value of .227 and .086, respectively.
Thus, both variables don’t attain the required value of significance and the hypothesis is
accepted.
5.1.2. Sex
Table 36
When Grouped According to Sex
Indicator Sex Mean F-value p-value Decision Remarks

Male 4.85
Registration 0.631 0.532 Accept Ho Not Significant
Female 4.72
Keeping of Male 4.54
Accounting Record -0.204 0.839 Accept Ho Not Significant
Female 4.58
or Books
Issuance of Sales Male 4.81
Invoices and 0.796 0.431 Accept Ho Not Significant
Female 4.63
Official Receipts
Filing of Tax Male 4.74
0.264 0.793 Accept Ho Not Significant
Returns Female 4.68
Male 4.81
Payment of Taxes 0.805 0.425 Accept Ho Not Significant
Female 4.63
Civil Penalties and Male 4.72
Surcharges Female 4.60
Overall Male 4.75 0.527 0.601 Accept Ho Not Significant
This table depicts the significant difference in the respondents’ perception
of the organization’s level of awareness when they are grouped according to their sex. In
terms of registration the computed 0.532 p-value is higher than the level significance of
.05 thus, the hypothesis is accepted. Moreover, keeping of accounting record or books
the computed 0.839 p-value is higher than the level of significance of .05 thus, the
hypothesis is accepted. Issuance of sales invoices and Official Receipts, Payment of
Taxes, Civil Penalties and Surcharges got a p-value of 0.431, 0.793, 0.425, and 0.614
respectively, which is higher than the level of significance thus the hypothesis is accepted.
Overall, there is no significant difference in the respondents’ perception of the
organization’s level of awareness when they are grouped according to their sex and the
decision is to accept the hypothesis.
Table 37
When Grouped According to Position on the Business
Indicator Position of the Employee Mean F-value p-value Decision Remarks
Owner 5.00
Manager 4.88
Registration 17.788 0.000 Reject Ho Significant
Supervisor 4.96
Staff 3.45
Owner 4.79
Keeping of Accounting Manager 4.67
6.493 0.001 Reject Ho Significant
Record or Books Supervisor 4.46
Staff 3.60
Owner 5.00
Issuance of Sales
Manager 4.81
Invoices and Official 14.970 0.000 Reject Ho Significant
Supervisor 4.71
Receipts
Staff 3.30
Owner 5.00
Manager 4.85
Filing of Tax Returns 24.759 0.000 Reject Ho Significant
Supervisor 4.83
Staff 3.12
Owner 4.98
Manager 4.90
Payment of Taxes 30.887 0.000 Reject Ho Significant
Supervisor 4.83
Staff 3.04
Owner 4.98
Civil Penalties and Manager 4.86
Surcharges Supervisor 4.67
Staff 2.87
Owner 4.96
Manager 4.83
Overall 33.347 0.000 Reject Ho Significant
Supervisor 4.74
Staff 3.23
This shows the significant difference between the level of awareness and profiles
when grouped according to position on the business. In terms of registration, keeping of
accounting records and book, issuance of sales invoices and official receipts, fillng of tax
returns, payment of taxes, and civil penalties and surcharges, the computed P-test values
are 0.000, 0.001, 0.000, 0.000, 0.000, and 0.000 respectively which lower than the level
significance of .05 Hence, all variables under perception of the store owner to
its staff on their level of compliance with Business Tax provisions attain the required value
of significance. The hypothesis on all variables is rejected.
Table 38
Significant Difference between the Level of Awareness and Profiles When
Grouped According to Length of Service
Length of
3. Indicator Mean F-value p-value Decision Remarks
Service
1-5 years 4.85
6-10 years 4.72
Keeping of 1-5 years 4.54
Accounting Record or -0.204 0.839 Accept Ho Not Significant
6-10 years 4.58
Books
Issuance of Sales 1-5 years 4.81
Invoices and Official 0.796 0.431 Accept Ho Not Significant
6-10 years 4.63
Receipts
1-5 years 4.74
Filing of Tax Returns 0.264 0.793 Accept Ho Not Significant
6-10 years 4.68
1-5 years 4.81
6-10 years 4.63
Civil Penalties and 1-5 years 4.72
Surcharges 6-10 years 4.60
1-5 years 4.75
Overall 0.527 0.601 Accept Ho Not Significant
6-10 years 4.64
This table depicts the significant difference in the respondents’ perception of the
organization’s level of awareness when they are grouped according to their length of
service. In terms of registration the computed p-value is higher than the level significance
of .05 thus, the hypothesis is accepted. Moreover, keeping of accounting record or books
the computed p-value is higher than the level of significance of .05 thus, the hypothesis
is accepted. . Issuance of sales invoices and Official Receipts, Filing of Tax Returns,
Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.431, 0.793, 0.425,
and 0.614 respectively, which is higher than the level of significance thus the hypothesis
is accepted. Overall, there is no significant difference in the respondents’ perception of
the organization’s level of awareness when they are grouped according to length of
service and the decision is to accept the hypothesis.

5.1.5. Highest Educational Attainment
Table 39
Grouped According to Highest Educational Attainment
Highest Educational
Indicator Mean F-value p-value Decision Remarks
Attainment
High School Undergraduate 4.38
Master’s Degree 5.00
High School Graduate 4.00
Vocational 4.67
College Undergraduate 4.92
College Graduate 4.81
Keeping of Accounting High School Graduate 5.00
Record or Books Vocational 4.25
Issuance of Sales
Vocational 5.00
Receipts
Vocational 4.67
Vocational 4.67
Civil Penalties and High School Graduate 4.67
Surcharges Vocational 4.00
Vocational 4.54
This shows the significant difference between the Level of Awareness and profiles
when grouped according to highest educational attainment. In terms of registration, the
computed F- test of 0.777 does not attain the required value of significance. Hence, the
hypothesis is accepted. Moreover, as to keeping of accounting records and books, P-test

value is 0.820 and it doesn’t attain the required value of significance. Therefore, the
hypothesis is accepted. Furthermore, in terms as to issuance of sales invoice and official
receipts, the P-test value of 0.749 and doesn’t meet the required value of significance
resulting to an accepted hypothesis. A filing of tax returns has the P-test value of 0.027
and meets the required value of significance. Thus, the hypothesis is rejected. Likewise,
in terms of payment of taxes, the P-test value is 0.494, thus, variable attained the required
value of significance and the hypothesis is rejected. And in terms of civil penalties and
surcharges has the P-test value of 0.424, respectively. Thus, all variable except filing of
tax return doesn`t attained the required value of significance and the hypothesis is
accepted.
5.1.6. Form of Business
Table 40
when Grouped According to Form of Business
Forms of F- p-
Indicator Mean Decision Remarks
business value value
Sole
4.95
Proprietorhip Accept Not
Registration 2.137 0.132
Partnership 4.55 Ho Significant
Corporation 4.50
Keeping of Sole
4.63
Accounting Proprietorhip Accept Not
0.413 0.665
Record or Partnership 4.45 Ho Significant
Books Corporation 4.75
Issuance of Sole
4.86
Sales Proprietorhip
Reject
Invoices Partnership 4.63 4.798 0.014 Significant
Ho
and Official
Receipts Corporation 3.38
Sole
4.89
Filing of Tax Proprietorhip Accept Not
1.800 0.179
Returns Partnership 4.46 Ho Significant
Corporation 4.50
Sole
4.87
Payment of Proprietorhip Accept Not
2.873 0.069
Taxes Partnership 4.59 Ho Significant
Corporation 3.70
Civil Sole
4.79
Penalties Proprietorhip Accept Not
2.847 0.070
and Partnership 4.58 Ho Significant
Surcharges Corporation 3.50
Sole
4.83
Proprietorhip Accept Not
Overall 2.078 0.139
Partnership 4.54 Ho Significant
Corporation 4.05
This shows the significant difference between the Level of Awareness and profiles
when grouped according to form of business. In terms of registration, the computed F-
test of 0.132 does not attain the required value of significance. Hence, the hypothesis is
accepted. Moreover, as to keeping of accounting records and books, P-test value is 0.665
and it doesn’t attain the required value of significance. Therefore, the hypothesis is
accepted. Furthermore, in terms as to issuance of sales invoice and official receipts, the
P-test value of 0.014 and does meet the required value of significance resulting to rejected
hypothesis. A filing of tax returns has the P-test value of 0.179 and doesn’t meet the
required value of significance. Thus, the hypothesis is accepted. Likewise, in terms of
payment of taxes, the P-test value is 0.069, thus, variable doesn’t attain the required value
of significance and the hypothesis is accepted. And in terms of civil penalties and
surcharges has the P-test value of 0.070, respectively. Thus, all variable except issuance
of sales invoice and official receipts doesn`t attained the required value of significance
and the hypothesis is accepted.

5.1.7. Years of Operation
Table 41
When Grouped According to Years of Operation
Years of
Operation
5 years
4.79
Registration and below 0.889 0.379 Accept Ho Not Significant
6-10 years 4.38
Keeping of 5 years
4.59
Accounting and below
Record or
6-10 years 4.13
Books
Issuance of 5 years
4.71
Sales Invoices and below
and Official
6-10 years 4.50
Receipts
5 years
Filing of Tax 4.78
and below 2.797 0.008 Reject Ho Significant
Returns
6-10 years 3.40
5 years
Payment of 4.73
and below 0.991 0.328 Accept Ho Not Significant
Taxes
6-10 years 4.20
Civil Penalties 5 years
4.67
and and below 0.583 0.563 Accept Ho Not Significant
5 years
4.71
Overall and below 1.199 0.238 Accept Ho Not Significant
6-10 years 4.16
organization’s level of awareness when they are grouped according to their years of
operation. In terms of registration the computed 0.379 p-value is higher than the level
significance of .05 thus, the hypothesis is accepted. Moreover, keeping of accounting
record or books the computed 0.330 p-value is higher than the level of significance of .05
thus, the hypothesis is accepted. Issuance of sales invoices and Official Receipts,
Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.691, 0.328, and
0.563, respectively, which is higher than the level of significance thus the hypothesis is
accepted. However, in Filling of Tax Return the computed .008 p –value is lower than the
level significance thus the hypothesis is rejected. Overall, there is no significant difference
in the respondents’ perception of the organization’s level of awareness when they are
grouped according to their sex and the decision is to accept the hypothesis.
Table 42
When Grouped According to Capitalization
Indicator Capitalization Mean F-value p-value Decision Remarks

Loan 4.88
Investment from owners 4.78
Registration Partly loan and partly 1.612 0.203 Accept Ho Not Significant
5.00
investment from owners
Others 3.88
Loan 4.13
Partly loan and partly 0.660 0.582 Accept Ho Not Significant
Record or Books 4.83
Others 4.63
Loan 4.75
Issuance of Sales Investment from owners 4.67
Invoices and Official Partly loan and partly 0.235 0.872 Accept Ho Not Significant
4.92
Receipts investment from owners
Others 4.50
Loan 4.50
Filing of Tax Returns Partly loan and partly 2.878 0.049 Reject Ho Significant
5.00
Others 3.40
Loan 5.00
Payment of Taxes Partly loan and partly 0.760 0.524 Accept Ho Not Significant
5.00
Others 4.20
Loan 4.83
Civil Penalties and
Surcharges 5.00
Others 4.17
Loan 4.68
Overall Partly loan and partly 0.861 0.470 Accept Ho Not Significant
4.96
Others 4.13
This portrays the significant difference in the respondents’ perception of the
organization’s level of awareness when they are grouped according to Capitalization. In
Registration, Keeping of Accounting Record or Books, Issuance of Sales Invoices and
Official Receipts, Payment of Taxes and Civil Penalties and Surcharges got a p-value of
0.203, 0.582, 0.872, 0.524 and 0.551 respectively, which is higher than the level of
significance of 0.05 thus the hypothesis is accepted. However, in Filing of Tax Return the
computed 0.049 is lower than the level of significance thus, the hypothesis is rejected.
organization’s level of effectiveness when they are grouped according to highest
educational attainment and the decision is to accept the hypothesis.
5.1.9. Number of Employee
Table 43
Grouped According to Number of Employees
Indicator Number of Employees Mean F-value p-value Decision Remarks

5 employees and below 4.52
Registration 6-10 employees 4.82 1.560 0.223 Accept Ho Not Significant
10 employees and above 5.00
6-10 employees 4.68 0.740 0.483 Accept Ho Not Significant
Record or Books
Issuance of Sales 5 employees and below 4.58
Invoices and Official 6-10 employees 4.68 0.554 0.579 Accept Ho Not Significant
Receipts 10 employees and above 4.92
Filing of Tax Returns 6-10 employees 4.73 1.095 0.345 Accept Ho Not Significant
Payment of Taxes 6-10 employees 4.70 1.195 0.314 Accept Ho Not Significant
Civil Penalties and
Surcharges
Overall 6-10 employees 4.71 1.112 0.339 Accept Ho Not Significant
This depicts the significant difference in the respondents’ perception of the
organization’s level of awareness when they are grouped according to number of
employees. In terms of registration the computed 0.223 p-value is higher than the level
record or books the computed 0.483p-value is higher than the level of significance of .05
thus, the hypothesis is accepted. . Issuance of sales invoices and Official Receipts, Filing
of Tax Returns, Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.579,
0.345, 0.314, and 0.242, respectively, which is higher than the level of significance of 0.05
thus the hypothesis is accepted. Overall, there is no significant difference in the
respondents’ perception of the organization’s level of effectiveness when they are
5.2.1 Tax Filed And Paid
Table 44
Grouped According to Tax Filed and Paid
Frequency of
Indicator tax filing and Mean F-value p-value Decision Remarks
payment
Monthly 4.73
Registration Quarterly 4.96 0.380 0.687 Accept Ho Not Significant
Annually 4.80
Keeping of Monthly 4.53
Accounting Quarterly 4.75
Record or
Annually 4.55
Books
Issuance of Monthly 4.64
Sales Invoices Quarterly 4.89
and Official
Annually 4.80
Receipts
Monthly 4.68
Filing of Tax
Quarterly 4.86 0.163 0.850 Accept Ho Not Significant
Returns
Annually 4.68
Monthly 4.66
Payment of
Taxes
Annually 4.68
Civil Penalties Monthly 4.62
and Quarterly 4.95 0.789 0.462 Accept Ho Not Significant
Surcharges Annually 4.40
Monthly 4.64
Overall Quarterly 4.89 0.411 0.666 Accept Ho Not Significant
Annually 4.65
organization’s level of awareness when they are grouped according to their frequency of
tax filing and payment. In terms of registration the computed 0.687 p-value is higher than
the level significance of .05 thus, the hypothesis is accepted. Moreover, keeping of
accounting record or books the computed 0.718 p-value is higher than the level of
significance of .05 thus, the hypothesis is accepted. Issuance of sales invoices and
Official Receipts, Filing of Tax Returns, Payment of Taxes, Civil Penalties and Surcharges
got a p-value of 0.686, 0.850, 0.722, and 0.462 respectively, which is higher than the level
of significance thus the hypothesis is accepted. Overall, there is no significant difference
in the respondents’ perception of the organization’s level of awareness when they are
grouped according to their frequency of tax filing and payment, and the decision is to
accept the hypothesis.

5.2.2 Frequency of Tax Filing
Table 45
Grouped According to Frequency of Tax Filing
Indicator Tax Filing Mean F-value p-value Decision Remarks

Owner 4.85
Manager 4.58
Accountant 4.75
External Accountant 4.88
Owner 4.75
Record or Books Accountant 4.46
Owner 4.92
Issuance of Sales
Manager 3.83
Accountant 4.68
Receipts
Owner 4.85
Manager 4.33
Accountant 4.66
Owner 4.78
Manager 4.13
Accountant 4.71
Owner 4.69
Surcharges Accountant 4.73
Owner 4.81
Manager 4.25
Accountant 4.67
5.2.3 Frequency of tax payment
Table 46
Grouped According to Frequency of Tax Payment
5.2.4 Duties and responsibilities
Table 47
Grouped According to Duties and Reponsibility
statement
Owner 4.85
Manager 4.58
Accountant 4.68
Owner 4.65
Owner 4.83
Issuance of Sales
Manager 3.50
Accountant 4.70
Receipts
Owner 4.86
Manager 4.07
Accountant 4.60
Owner 4.88
Manager 3.80
Accountant 4.65
Owner 4.72
Owner 4.80
Manager 4.00
Accountant 4.63
organization’s level of awareness when they are grouped according to their preparation
of financial statements. In terms of registration the computed 0.723 p-value is higher than
significance of .05 thus, the hypothesis is accepted. On the other hand, Issuance of sales
invoices and Official Receipts and Filing of Tax Returns got a p-value of 0.014 and 0.225
respectively, which is lower than the level of significance of .05 thus, the hypothesis is
rejected. Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.114 and
0.082 respectively, which is higher than the level of significance thus the hypothesis is
accepted. Overall, there is no significant difference in the respondents’ perception of the
organization’s level of awareness when they are grouped according to their preparation
of financial statements, and the decision is to accept the hypothesis.
5.2.5 Use of computer
Table 48
Grouped According to Use of Computer
5.2.6 Frequency of tax review
Table 49
Grouped According to Frequency of Tax Review
Indicator Frequency of tax review Mean F-value p-value Decision Remarks

Monthly 4.73
Quarterly 4.96
Semiannually 5.00
Annually 4.75
Monthly 4.52
Keeping of Accounting Quarterly 4.79
Record or Books Semiannually 5.00
Annually 4.44
Monthly 4.65
Issuance of Sales
Quarterly 4.92
Semiannually 5.00
Receipts
Annually 4.75
Monthly 4.69
Quarterly 4.83
Semiannually 5.00
Annually 4.60
Monthly 4.67
Quarterly 4.90
Semiannually 5.00
Annually 4.60
Monthly 4.63
Civil Penalties and Quarterly 4.94
Surcharges Semiannually 5.00
Annually 4.25
Monthly 4.65
Quarterly 4.89
Semiannually 5.00
Annually 4.56
organization’s level of awareness when they are grouped according to their frequency of
tax review. In terms of registration the computed 0.875 p-value is higher than the level
thus, the hypothesis is accepted. Issuance of sales invoices and Official Receipts, Filing
0.937, 0.876, and 0.566 respectively, which is higher than the level of significance thus
the hypothesis is accepted. Overall, there is no significant difference in the respondents’
perception of the organization’s level of awareness when they are grouped according to
their frequency of tax review, and the decision is to accept the hypothesis.
6. Significant Differences between the level of Effectiveness and Respondent’s Profile
6.1.1. Age
Table 50
Significant Difference between the Level of Effectiveness and Profiles
When Grouped According to Age
Indicator Age Mean F-value p-value Decision Remarks
Registration 31-35 years old 5.00 2.550 0.055 Accept Ho Not Significant
Record or Books
Issuance of Sales 26-30 years old 4.81
Invoices and Official 31-35 years old 5.00 1.474 0.230 Accept Ho Not Significant
Receipts 36-40 years old 5.00
Filing of Tax Returns 31-35 years old 5.00 2.370 0.070 Accept Ho Not Significant
Payment of Taxes 31-35 years old 4.93 1.491 0.225 Accept Ho Not Significant
Civil Penalties and
Surcharges
Overall 31-35 years old 4.96 2.091 0.102 Accept Ho Not Significant
organization’s level of effectiveness when they are grouped according to their sex. In
hypothesis is accepted. . Issuance of sales invoices and Official Receipts, Filing of Tax
Returns, Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.230, 0.070,
0.225, and 0.136, respectively, which is higher than the level of significance of 0.05 thus
perception of the organization’s level of effectiveness when they are grouped according
to their sex and the decision is to accept the hypothesis.
6.1.2. Sex
Table 51
When Grouped According to Sex
Indicator Sex Mean F-value p-value Decision Remarks

Male 4.93
Female 4.71
Keeping of Male 4.85
Accounting 2.015 0.052 Accept Ho Not Significant
Female 4.42
Record or Books
Issuance of Sales Male 4.78
Female 4.70
Official Receipts
Filing of Tax Male 4.80
Returns Female 4.60
Male 4.72
Female 4.59
Civil Penalties and Male 4.72
Surcharges Female 4.67
Male 4.80
Female 4.61
hypothesis is accepted. . Issuance of sales invoices and Official Receipts, Filing of Tax
Returns, Payment of Taxes, Civil Penalties and Surcharges got a p-value of 0.674, 0.405,
0.609, and 0.791, respectively, which is higher than the level of significance of 0.05 thus
perception of the organization’s level of effectiveness when they are grouped according
to their sex and the decision is to accept the hypothesis.
Table 52
When Grouped According to Position on the Business
Indicator Position of the Employee Mean F-value p-value Decision Remarks
Owner 5.00
Manager 4.90
Registration 16.169 0.000 Reject Ho Significant
Supervisor 4.88
Staff 3.75
Owner 4.84
Record or Books Supervisor 4.88
Staff 3.15
Owner 5.00
Issuance of Sales
Manager 4.79
Supervisor 4.83
Receipts
Staff 3.45
Owner 5.00
Manager 4.88
Supervisor 4.87
Staff 2.80
Owner 4.98
Manager 4.83
Supervisor 4.83
Staff 2.72
Owner 5.00
Surcharges Supervisor 4.67
Staff 3.20
Owner 4.97
Manager 4.82
Overall 50.546 0.000 Reject Ho Significant
Supervisor 4.83
Staff 3.18
organization’s level of effectiveness when they are grouped according to their position
on the business. In terms of registration the computed 0.000 p-value is lower than the
level significance of .05 thus, the hypothesis is rejected. Moreover, keeping of
accounting record or books the computed 0.000 p-value is lower than the level of
significance of .05 thus, the hypothesis is also rejected. Issuance of sales invoices and
Official Receipts, Payment of Taxes, Civil Penalties and Surcharges got a p-value of
0.000, 0.000, and 0.00, respectively, which is lesser than the level of significance thus
the hypothesis is rejected. Therefore, overall, there is significant difference in the
grouped according to their position on the business and the decision is to reject the
hypothesis
Table 53
Significant Difference between the Level of Effectiveness and Profiles When
Grouped According to Length of Service
Indicator Length of Service Mean F-value p-value Decision Remarks

1-5 years 4.93
6-10 years 4.71
Keeping of Accounting 1-5 years 4.85
Record or Books 6-10 years 4.42
Issuance of Sales 1-5 years 4.78
Invoices and Official 6-10 years 4.70
1-5 years 4.80
6-10 years 4.60
1-5 years 4.72
6-10 years 4.59
Civil Penalties and 1-5 years 4.72
1-5 years 4.80
6-10 years 4.61
organization’s level of effectiveness when they are grouped according to their length of
service. In terms of registration the computed 0.134 p-value is higher than the level
grouped according to their length of service and the decision is to accept the hypothesis.
6.1.5. Highest Educational Attainment

Table 54
Grouped According to Highest Educational Attainment
Highest Educational
Attainment
Vocational 4.50
Keeping of Accounting High School Graduate 5.00
Record or Books Vocational 4.33
Issuance of Sales
Vocational 4.67
Receipts
Vocational 4.33
Vocational 4.40
Civil Penalties and High School Graduate 5.00
Surcharges Vocational 4.00
Vocational 4.37
This portrays the significant difference in the respondents’ perception of the
organization’s level of effectiveness when they are grouped according to Highest
Educational Attainment. In terms of registration the computed 0.813 p-value is higher than
Official Receipts, Filing of Tax Returns, Payment of Taxes got a p-value of 0.086, 0.471,
and 078, respectively, which is higher than the level of significance of 0.05 thus the
hypothesis is accepted. However, in Civil Penalties and Surcharges the computed 0.033
is lower than the level of significance thus, the hypothesis is rejected. Overall, there is no
significant difference in the respondents’ perception of the organization’s level of
effectiveness when they are grouped according to highest educational attainment and the
decision is to accept the hypothesis.

6.1.6. Form of Business
Table 55
when Grouped According to Form of Business
Indicator Forms of business Mean F-value p-value Decision Remarks

Sole Proprietorhip 4.90
Registration Partnership 4.70 0.985 0.383 Accept Ho Not Significant
Corporation 4.50
Partnership 4.53 2.107 0.135 Accept Ho Not Significant
Record or Books
Corporation 3.63
Issuance of Sales Sole Proprietorhip 4.88
Invoices and Official Partnership 4.55 1.653 0.205 Accept Ho Not Significant
Receipts Corporation 4.50
Filing of Tax Returns Partnership 4.60 3.395 0.044 Reject Ho Significant
Corporation 3.50
Payment of Taxes Partnership 4.54 3.511 0.040 Reject Ho Significant
Corporation 3.40
Civil Penalties and
Partnership 4.56 0.655 0.525 Accept Ho Not Significant
Surcharges
Corporation 4.50
Overall Partnership 4.58 2.058 0.141 Accept Ho Not Significant
Corporation 4.00
organization’s level of effectiveness when they are grouped according to their form of
business. In terms of registration the computed 0.383 p-value is higher than the level
thus, the hypothesis is accepted. . Issuance of sales invoices and Official Receipts got a
p-value of 0.205 which is higher than the level of significance of 0.05 thus the hypothesis
is accepted. While, filing of tax return and payment of taxes got a p-value of 0.044 and
0.040 respectively, which is lower than the level of significance of 0.05 thus the hypothesis
is rejected. The hypothesis is accepted in Civil Penalties and Surcharges for it has a p-
value of 0.525 which is above the level of significance value. Overall, there is no
significant difference in the respondents’ perception of the organization’s level of
effectiveness when they are grouped according to their sex and the decision is to accept
the hypothesis.
6.1.7. Years of Operation
Table 56
When Grouped According to Years of Operation
Years of
Operation
5 years and
4.80
Registration below -0.194 0.847 Accept Ho Not Significant
6-10 years 4.88
Keeping of 5 years and
4.62
Accounting below
Record or
6-10 years 4.25
Books
Issuance of 5 years and
4.77
Sales below
Invoices 1.823 0.076 Accept Ho Not Significant
and Official 6-10 years 4.00
Receipts
Filing of 5 years and
4.72
Tax below 1.120 0.269 Accept Ho Not Significant
Returns 6-10 years 4.10
5 years and
Payment of 4.71
below 2.153 0.037 Reject Ho Significant
Taxes
6-10 years 3.50
Civil 5 years and
4.73
Penalties below
and
6-10 years 4.00
Surcharges
5 years and
4.72
Overall below 1.318 0.195 Accept Ho Not Significant
6-10 years 4.12
hypothesis is accepted. Issuance of sales invoices and Official Receipts, Filing of Tax
Returns, Civil Penalties and Surcharges got a p-value of 0.076, 0.269, and 0131,
respectively, which is higher than the level of significance of 0.05 thus the hypothesis is
accepted. However, in Payment of Taxes the computed 0.037 is lower than the level of
significance thus, the hypothesis is rejected. Overall, there is no significant difference in
the respondents’ perception of the organization’s level of effectiveness when they are
Table 57
When Grouped According to Capitalization
Indicator Capitalization Mean F-value p-value Decision Remarks

Loan 4.50
Registration Partly loan and partly 0.509 0.679 Accept Ho Not Significant
5.00
Others 4.88
Loan 4.63
Record or Books 4.92
Others 4.25
Loan 4.63
Issuance of Sales Investment from owners 4.73
Invoices and Official Partly loan and partly 1.470 0.238 Accept Ho Not Significant
5.00
Receipts investment from owners
Others 4.00
Loan 4.80
Filing of Tax Returns Partly loan and partly 0.755 0.526 Accept Ho Not Significant
5.00
Others 4.10
Loan 4.60
Payment of Taxes Partly loan and partly 1.846 0.155 Accept Ho Not Significant
5.00
Others 3.50
Loan 4.50
Civil Penalties and
Surcharges 5.00
Others 4.00
Loan 4.61
Overall Partly loan and partly 0.982 0.412 Accept Ho Not Significant
4.99
Others 4.12
This portrays the significant difference between the effectiveness and
profiles when grouped according to capitalization. In terms of registration the computed
p-test value of .679 higher than the level significance of .05. Thus, the hypothesis is
accepted. Moreover, as to keeping of accounting records and books, p-test value of .697
doesn’t attain the required value of significance. Therefore, the hypothesis is accepted.
Issuance of sales invoice and official receipts has the P-test value of .238 and doesn’t
meet the required value of significance resulting to an accepted hypothesis. Filing of tax
returns has the P-test value of .526 thus the hypothesis is accepted. Likewise, in terms
of payment of taxes and civil penalties and surcharges have the P-test value of .155 and
.306, respectively. Thus, both variables don’t attain the required value of significance and
the hypothesis is accepted.
6.1.9. Number of Employee
Table 58
Grouped According to Number of Employees
Indicator Number of Employees Mean F-value p-value Decision Remarks

Registration 6-10 employees 4.89 3.218 0.051 Accept Ho Not Significant
Record or Books
Issuance of Sales 5 employees and below 4.54
Invoices and Official 6-10 employees 4.76 1.066 0.354 Accept Ho Not Significant
Receipts 10 employees and above 4.92
Filing of Tax Returns 6-10 employees 4.69 1.370 0.266 Accept Ho Not Significant
Payment of Taxes 6-10 employees 4.59 1.172 0.320 Accept Ho Not Significant
Civil Penalties and
Surcharges
Overall 6-10 employees 4.72 2.047 0.143 Accept Ho Not Significant
organization’s level of effectiveness when they are grouped according to number of
employees. In terms of registration the computed 0.051 p-value is higher than the level

record or books the computed 0.065p-value is higher than the level of significance of .05
thus, the hypothesis is accepted. . Issuance of sales invoices and Official Receipts, Filing
6.1.10. Tax Filed And Paid
Table 59
Significant Difference between the Level of Effectivess and Profiles When
Grouped According to Tax Filed and Paid
Frequency
of tax filing
and
payment
Monthly 4.82
Registration Quarterly 4.86 0.247 0.782 Accept Ho Not Significant
Annually 4.65
Keeping of Monthly 4.63
Accounting Quarterly 4.64 0.291 0.749 Accept Ho Not Significant
Record or
Books Annually 4.35
Issuance of Monthly 4.72
Sales Quarterly 4.89
Official Annually 4.60
Receipts
Monthly 4.67
Filing of Tax
Returns
Annually 4.40
Monthly 4.63
Payment of
Taxes
Annually 4.44
Civil Monthly 4.70
Penalties and Quarterly 4.86 0.700 0.503 Accept Ho Not Significant
Surcharges Annually 4.40
Monthly 4.70
Overall Quarterly 4.84 0.478 0.623 Accept Ho Not Significant
Annually 4.47
organization’s level of effectiveness when they are grouped according to their frequency
of tax filing and payment. In terms of registration the computed 0.782 p-value is higher
than the level significance of .05 thus, the hypothesis is accepted. Moreover, keeping of
Official Receipts, Filing of Tax Returns, Payment of Taxes, Civil Penalties and Surcharges
got a p-value of 0.691, 0.480, 0.676, and 0.503 respectively, which is higher than the level
of significance thus the hypothesis is accepted. Overall, there is no significant difference
in the respondents’ perception of the organization’s level of effectiveness when they are
grouped according to their frequency of tax filing and payment, and the decision is to
accept the hypothesis.

5.2.7 Frequency of Tax Filing
Table 60
Grouped According to Frequency of Tax Filing
Indicator Tax Filing Mean F-value p-value Decision Remarks

Owner 4.81
Manager 4.33
Accountant 4.84
Owner 4.63
Owner 4.83
Issuance of Sales
Manager 4.42
Accountant 4.70
Receipts
Owner 4.77
Manager 3.87
Accountant 4.72
Owner 4.73
Manager 3.73
Accountant 4.69
Owner 4.75
Owner 4.75
Manager 4.18
Accountant 4.71
5.2.8 Frequency of tax payment
Table 61
Grouped According to Frequency of Tax Payment
Indicator Tax Payment Mean F-value p-value Decision Remarks

Owner 4.84
Manager 4.33
Accountant 4.83
Owner 4.55
Owner 4.86
Issuance of Sales
Manager 4.42
Accountant 4.67
Receipts
Owner 4.80
Manager 3.87
Accountant 4.70
Owner 4.76
Manager 3.73
Accountant 4.67
Owner 4.79
Owner 4.77
Manager 4.18
Accountant 4.70
5.2.9 Duties and responsibilities
Table 62
Grouped According to Duties and Reponsibility
statement
Owner 4.87
Manager 4.08
Accountant 4.80
Owner 4.54
Owner 4.85
Issuance of Sales
Manager 4.08
Accountant 4.66
Receipts
Owner 4.77
Manager 3.60
Accountant 4.68
Owner 4.78
Manager 3.40
Accountant 4.64
Owner 4.77
Owner 4.76
Manager 3.93
Accountant 4.67
organization’s level of effectiveness when they are grouped according to their preparation
of financial statements. In terms of registration the computed 0.075 p-value is higher than
Official Receipts, Filing of Tax Returns, Civil Penalties and Surcharges got a p-value of
0.124, 0.052, and 0.277 respectively, which is higher than the level of significance thus
the hypothesis is accepted. On the other hand, Payment of Taxes got a p-value of 0.030,
which is lower than the level of significance of .05 thus, the hypothesis is rejected. Overall,
there is no significant difference in the respondents’ perception of the organization’s level
of effectiveness when they are grouped according to their preparation of financial
statements, and the decision is to accept the hypothesis
5.2.10 Frequency of tax review
Table 49
Significant Difference between the Level of Effectviness and Profiles When
Grouped According to Frequency of Tax Review
Indicator Tax Review Mean F-value p-value Decision Remarks

Owner 4.84
Manager 4.00
Accountant 4.83
Owner 4.55
Owner 4.86
Issuance of Sales
Manager 4.13
Accountant 4.69
Receipts
Owner 4.80
Manager 3.30
Accountant 4.71
Owner 4.76
Manager 3.10
Accountant 4.68
Owner 4.79
Owner 4.77
Manager 3.78
Accountant 4.71
of tax review. In terms of registration the computed 0.168 p-value is higher than the level
of Tax Returns, Civil Penalties and Surcharges got a p-value of 0.371, 0.056, and 0.460
respectively, which is higher than the level of significance thus the hypothesis is accepted.
of tax review and the decision is to accept the hypothesis,except the Payment of Taxes
0.038 which lies below the required level of .05 therefore the hypothesis is rejected,

Taxation

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Taxation

Hochgeladen von

Copyright:

Verfügbare Formate

CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

the collection of taxes must keep going.

A business is described as trade or commercial activities which are “regularly

of which could be shifted on to the buyers.

Background of the Study

University of the Philippines (UP) Teacher’s Village, known as Maginhawa, is a

and worth buying.

In the case of developing countries like the Philippines, taxation is an important

effectiveness in one of the top food destinations in Manila.

Taxation is a means by which governments finance their expenditure by imposing

government to encourage or discourage certain economic decisions. Whereas, the

Bureau of Internal Revenue is the primary revenue-generating (body) in the country,

importance and value of taxes to the society.

In the Theory of Planned Behaviour by Ajzen’s (1991), human behaviour is guided

normative expectations of others and motivation to comply with these expectations

beliefs). In their respective aggregates, behavioural beliefs produce a favorable or

behavioural control, together shape an individual's behavioural intentions and behaviours.

normative expectations of others in paying taxes is caused by its normative beliefs. It

standards, and show stronger emotional responses to meeting or failing to meet a

expectations that he has developed throughout his life.

of the importance of complying with the requirements of the Tax Code.

INPUT PROCESS OUTPUT

 Survey  Policy Recommendation for:

Figure 1. Conceptual Paradigm

went through the process or operation and emerged as the output.

of business tax management of stores in UP Teachers Village. It includes personal profile

regarding its tax management and its proposed solutions.

variables by using surveys, conducting personal interview, and analyzation of data

obtained from the respondents.

the effectiveness and awareness of business tax management of stores in UP Teachers

improvement of the management with regards to their awareness and effectiveness of

business tax management.

input. It made the system continuous.

answers to the following questions:

1. What is the profile of the store in terms of

1.1. Personnel involved in the tax practices

1.1.3. Position in the store

1.1.4. Length of Service

1.1.5. Highest Educational Attaintment

1.1.6. Frequency of training attended about tax

1.2. Profile of the company

1.2.1. Form of the Business Organization

1.2.2. Years of Operations

1.2.4. Number of Employees

2. Profile of Business Tax practices

2.1. Taxes filed and paid

2.2. Frequency of tax filing

2.3. Frequency of tax payment

2.4. Duties and responsibilities

2.5. Use of computer

awareness in terms of:

3.2. Keeping the accounting books/records

3.3. Issuing official receipts and sales invoice

3.4. Filing of the Monthly Value-added Tax Declaration

3.5. Paying the Tax

3.6. Civil Penalties and Surcharges

effectiveness in terms of:

4.2. Keeping the accounting books/records

4.3. Issuing official receipts and sales invoice

4.4. Filing of the Monthly Value-added Tax Declaration

4.5. Paying the Tax

4.6. Civil Penalties and Surcharges