Unlocking Tax Compliance: How Taxpayers’ Understanding Drives Digital System Success

Abstract

This study examines how the Core Tax Administration System (CTAS) influences compliance among 151 MSME taxpayers in Semarang, Indonesia. Using moderated regression analysis (WarpPLS), the results show that while CTAS implementation directly boosts compliance, system quality alone does not. Crucially, taxpayer understanding acts as a key moderator, transforming the non-significant effect of system quality into a positive one and strengthening the impact of implementation. This underscores that technological success in tax administration hinges not just on the system's features, but on the taxpayer's ability to use it effectively. Policymakers must therefore pair digital rollouts with comprehensive education.