Asian Journal of Education and Social Studies

Aims: To study correlates the level of tax knowledge—including awareness of sanctions, knowledge of tax rights and responsibilities, and knowledge of business income—with the degree of tax compliance among business owners in Cateel, Davao Oriental, and to identify which knowledge areas most strongly influence compliance behavior.

Study Design: The research utilized Descriptive-correlational study. The correlational component aimed to identify the degree of association between tax knowledge and compliance behaviors. This design is appropriate for identifying relationships without manipulating the variables, aligning with methods described by (Devi et al., 2023).

Place and Duration of Study: The study was conducted at Cateel, Davao Oriental, Philippines. Data collection was conducted between March and April 2025.

Methodology: A total of 139 registered business owners were selected using stratified random sampling from various sectors (trading, services, manufacturing). A structured questionnaire adapted from Twum et al. (2020) was used to collect data on demographic profiles, tax knowledge (rights, business income, and sanctions), and self-reported compliance behavior. Responses were measured using a 5-point Likert scale. Data were analyzed using descriptive statistics, ANOVA, and Pearson’s correlation coefficient to test relationships between knowledge dimensions and compliance.

Results: The findings showed that business owners had extensive tax knowledge (x̄ = 4.46) and high levels of compliance (x̄ = 4.84). Pearson correlation revealed a weak but statistically significant relationship between tax compliance and awareness of sanctions (r = 0.22, p = 0.01), and tax rights and responsibilities (r = 0.15, p = 0.08). It aligns to the researched by Smulders, C., and Evans, C., (2017) that emphasized individuals who are well informed about their tax rights and obligations are more likely to comply with tax laws. Additionally, Mas’ud et al., (2019) showed that perceived enforcements serve as powerful deterrent against evasion. However, knowledge of business income was not significantly associated with compliance (r = 0.13, p = 0.13). No significant differences were observed in tax knowledge or compliance based on age, business size/type, education level, or years of operation (p > 0.05).

Conclusion: Specific components of tax knowledge particularly awareness of sanctions and understanding of tax rights are modest predictors of compliance behavior. These findings support the need for targeted taxpayer education programs that emphasize legal responsibilities and consequences of non-compliance. By focusing on these areas, government agencies may enhance voluntary compliance and improve revenue collection efficiency.

Implication: This study contributes to the limited literature on rural tax behavior by identifying the knowledge gaps that hinder compliance and suggesting areas for improved tax education and policy focus.