Tax Literacy and Compliance
Explore the importance of tax literacy and compliance in the Philippines for 2025. Understand the key factors that influence tax obligations and learn how to enhance your tax knowledge for better financial management.
QUANTITATIVE RESEARCH
Realyn Manalo
3/28/20253 min read
The Bureau of Internal Revenue (BIR) recently launched a new initiative aimed at improving tax compliance among businesses across the Philippines. Known as the Friendly Tax Compliance Verification Drive (TCVD), this campaign, which runs from February 10 to 14, focuses on educating taxpayers about their responsibilities and providing guidance on how to correct common compliance errors. Unlike traditional inspections that often result in penalties, the TCVD is designed to foster voluntary compliance through education and direct engagement with businesses.
During the drive, BIR officers visit establishments nationwide to address issues such as improper business registration, missing books of accounts, and failure to issue mandatory sales invoices. By simplifying tax compliance and making support more accessible, the BIR seeks to create a transparent, cooperative environment between businesses and tax authorities. This effort aligns with the government’s broader goal of enhancing the ease of doing business, supporting micro, small, and medium enterprises (MSMEs), and boosting national revenue collections. Through continuous tax education, the BIR aims to empower taxpayers to comply confidently and contribute meaningfully to the country's economic development.
Who Can Use These Topics
This research is ideal for students and professionals pursuing the following courses or strands:
College Programs:
BS Accountancy
BSBA Major in Financial Management
BS Economics
BSBA Major in Business Economics
BS in Public Administration
BS Entrepreneurship
Senior High School Strands:
Accountancy, Business, and Management (ABM)
Humanities and Social Sciences (HUMSS)
General Academic Strand (GAS)
Why This Topic Needs Research
Understanding how tax literacy influences tax compliance remains a critical gap in creating effective, sustainable tax policies. Several important research gaps have emerged:
Interaction Between Tax Literacy and Trust-Building Measures: Although tax literacy and knowledge were identified as important, their impact on compliance may require integration with trust-building efforts to be truly effective (Wibowo et al., 2025).
Psychological and Motivational Mediators: While tax literacy improved digital tax compliance among e-commerce traders, psychological factors such as taxpayer morale were not sufficiently explored as mediators (Lusala et al., 2025).
Broader Psychological and Behavioral Variables: Tax literacy’s interaction with broader factors like trust and morale, beyond perceived fairness, needs deeper investigation to enhance tax compliance outcomes (Anisykurlillah et al., 2024).
Digital Platforms and Tax Education Initiatives: There is limited research on how digital technologies, taxpayer attitudes, and targeted education programs can collectively boost tax literacy and compliance across different socioeconomic sectors (Umali, 2024).
Behavioral Traits as Moderators: Studies rarely examine how personality traits and psychological profiles may influence the relationship between tax literacy and consumption tax compliance (Okoth et al., 2024).
Technological Literacy in Agribusiness Tax Compliance: How the digitalization of tax systems and technological skills could strengthen tax compliance outcomes, especially among agribusinesses, remains underexplored (Flores et al., 2025).
Industry-Specific Tax Literacy Programs: Research has yet to thoroughly investigate how customized tax literacy initiatives for specific industries, like PEZA-registered firms, could improve legal compliance and audit outcomes (Salazar & Serrano, 2024).
Feasibility & Challenges by Target Group
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References
Anisykurlillah, I., Sugiyat, J., & Mukhibad, H. (2024). The Power of Tax Authority and Tax Compliance: Does Tax Literacy Matter?. Jurnal Dinamika Akuntansi, 16(1).
Flores, J. M. N., Barbosa, H. M. J., Galo, C. M. G., & Paig, P. C. G. (2025). Tax Knowledge, Tax Enforcement Efforts, and Tax Compliance among Agribusinesses in Tagum City. International Journal of Multidisciplinary: Applied Business and Education Research, 6(3), 1127-1141.
Lusala, B. A., Ogaga, B., & Tarus, J. K. (2025). Effect of Tax Literacy on Digital Income Tax Compliance among E-Commerce Traders in Nairobi, Kenya. Journal of Finance and Accounting, 5(1), 12-21.
Okoth, E. I., Olweny, T., & Kirui, D. (2024). Effect of Tax Literacy on Consumption Taxes Compliance among Retailers in Starehe Sub County Nairobi, Kenya. Journal of Finance and Accounting, 4(6), 15-25.
UMALI, O. S. (2024). Tax Literacy and Tax Compliance of the Selected Micro Business in Cabuyao City. Educational Research (IJMCER), 6(3), 333-363.
Salazar, J. G., & Serrano Jr, E. A. (2024). Tax Planning Competencies, Legal Compliance, and Impact of Tax Audit Examinations Among Philippine Economic Zone Authority Registered Entities. Research Studies, 4(9), 1041-1049.
Wibowo, B. P., Larasati, M., & Saad, R. A. J. (2025). Understanding tax compliance in indonesian smes: a structural equation modeling approach to tax literacy, knowledge, fairness, power, and trust. Salud, Ciencia y Tecnología-Serie de Conferencias, (4), 1364.