The Impact of Government Policy and Trust on Motivation and Tax Payment Compliance in The MSME Sector

The present study examines the impact of policy government and trusts on motivation and compliance with tax payments in the MSME sector. It applied the Structural Equation Modeling (SEM) method with the SmartPLS program version 3.0 to test seven proposed hypotheses. The results of the study show that the policy government’s influence positively and significantly on motivation to pay tax with a coefficient of 0.246 and p-value = 0.021. Trust in government also has a positive and significant impact on motivation to pay tax with a coefficient of 0.342 and p-value = 0.002. Besides, motivation to pay tax influences significantly compliance with a coefficient of 0.424 and p-value = 0.000. The mediation test shows that motivation partially mediates the influence of government policy and trust on compliance with tax payments with VAF values of 27.8\% and 23.8\% respectively. The study gives additional proof that policy government and trust have an important role in increasing motivation and compliance to pay taxes in the MSME sector. It is suggested that enhancement of socialization policy as well as trust development to increase obedience taxes.