Tax Knowledge, Compliance Behavior, and Tax Minimization Approaches among SMES in Cabuyao City, Laguna

HRMARS - Small and Medium Enterprises (SMEs) contribute significantly to economic development through employment generation, business growth, and tax contributions. However, many SMEs experience difficulties in complying with tax regulations due to limited tax knowledge and the complexity of taxation procedures. This study aimed to determine the relationship among tax knowledge, compliance behavior, and tax minimization approaches among SMEs in Cabuyao City, Laguna. The study utilized a descriptive-correlational research design using a researcher-made questionnaire administered to 250 registered manufacturing SMEs selected through total enumeration sampling. Weighted Mean and Pearson r Correlation Coefficient were used in analyzing the data. The findings revealed that SMEs demonstrated a high level of tax knowledge and compliant tax behavior. Tax deadlines and penalties obtained the highest rating among the dimensions of tax knowledge, while tax filing procedures and computation ranked lowest. SMEs also practiced legal tax minimization approaches, particularly in utilizing allowable deductions and incentives. Furthermore, significant relationships were found among tax knowledge, compliance behavior, and tax minimization approaches. The study concluded that SMEs with higher tax knowledge are more likely to demonstrate responsible compliance behavior and adopt effective tax minimization strategies within legal boundaries.