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Moderating influence of religiosity on the causality between taxpaying

attitudes and tax compliance behaviour of entrepreneurial firms in Nigeria

Article in International Journal of Ethics and Systems · January 2022

DOI: 10.1108/IJOES-07-2021-0152

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Moderating
Moderating influence of religiosity influence of
on the causality between religiosity

taxpaying attitudes and tax

compliance behaviour of
entrepreneurial firms in Nigeria Received 27 July 2021
Revised 22 November 2021
13 December 2021
Lateef Ayodele Agbetunde Accepted 15 December 2021
Department of Accountancy, Yaba College of Technology, Yaba, Nigeria
Lukman Raimi
Department of Business (Entrepreneurship), Universiti Brunei Darussalam,
Bandar Seri Begawan, Brunei Darussalam, and
Olalekan Oladipo Akinrinola
Department of Accounting, Finance and Taxation, Caleb University, Lagos, Nigeria

Abstract
Purpose – This paper aims to investigate the moderating influence of religiosity on the effect of taxpaying
attitudes on the tax compliance behaviour of entrepreneurial firms in Nigeria.
Design/methodology/approach – Using a cross-sectional survey design, we collected primary data
from 368 owner managers of entrepreneurial firms in Southwest Nigeria using structured questionnaires.
Respondents were purposefully selected based on the purposive sampling technique. The data collected with
the structured questionnaires were analysed using descriptive and inferential statistics. Two linear regression
models were compared.
Findings – Estimations in Models 1 and 2 suggest that taxpayers’ attitudes and religiosity (intra- and
interreligiosity) have significant effects on the tax compliance behaviour of firms, but the influence of
intrareligiosity is insignificant. Estimations in Model 3 suggest that taxpaying attitudes without the
moderating influence of religiosity exerted a significant effect on tax compliance behaviour by 13%,
while taxpaying attitudes with the moderating influence of religiosity exerted 17%. Estimations in
Model 4 suggest that taxpaying attitudes with the moderating influence of the interreligiosity
dimension had a more significant contribution to the changes in tax compliance behaviour than the
intrareligious dimension.
Research limitations/implications – From the findings, the following policy implications can be
deduced: (i) if taxpayers’ attitudes improved and religiosity was leveraged by the tax authorities, tax
compliance behaviour of entrepreneurial firms would be induced in Nigeria; (ii) the consistent positive
influence is a strong indication that religious values are critical elements of tax compliance
interventions that should be considered by policymakers when designing public policies on tax evasion
and avoidance in developing countries.
Originality/value – We bridge the gaps in the literature because our study affirmed that taxes are
religiously driven. In addition, the study validates the applicability of theory of planned behaviour in
investigating the moderating influence of religiosity on the causality between taxpaying attitude and tax
compliance in the developing context.
International Journal of Ethics and
Keywords Entrepreneurial firms, Religiosity, Tax compliance behaviour, Taxpaying attitudes Systems
© Emerald Publishing Limited
2514-9369
Paper type Research paper DOI 10.1108/IJOES-07-2021-0152
IJOES 1. Introduction and motivation
Globally, the tax compliance behaviour of individuals and corporate organisations is a
frontline issue in academia (Ramona-Anca and Larissa-Margareta, 2013; Eiya et al., 2016;
Mohdali et al., 2017). From the fiscal policy viewpoint, public authorities desire positive tax
compliance in the tax collection system because tax proceedings are one of the basic
elements of public financing in developed, developing and emerging nations (Mohdali et al.,
2017). It is argued that as governments continue to collect taxes, citizens will naturally be
making efforts to hide their growing incomes from the government’s searchlight (Williams
and Krasniqi, 2017). Tax compliance is an important policy issue for governments across the
world because public revenue that accrues from taxes is required to deliver public goods to
citizens and finance social programmes and infrastructural facilities (Armah-Attoh and
Awal, 2013; Ibrahim et al., 2015; Musimenta et al., 2017). Tax compliance in developing
countries is affected by several factors ranging from the effectiveness of tax mobilisation,
trust, the threat of sanctions, peers’ opinions/social influence, citizens’ expectations from
government, the extent of rigidity of flexibility of the tax law and isomorphic forces such as
coercive, normative and mimetic pressures (DiMaggio and Powell, 1983; Sutinen and
Kuperan, 1999; Moromisato, 2014; Musimenta et al., 2017). In particular, Musimenta et al.
(2017) explained that tax fairness, isomorphic forces (coercive, normative and mimetic
pressures) and strategic responses are plausible predictors of the tax compliance of small
and medium enterprises (SMEs). More recently, Musimenta (2020) stated that knowledge
requirements (understanding of tax essentials) and tax complexity (the degree of difficulty
of the tax system) are potential factors that may influence tax compliance in a developing
context.
In addition, classical economists identified audit probability, tax rates and penalties as
reasons why people and corporate entities evade taxes. However, emerging pieces of
evidence refute this perspective, especially where some studies establish that deterrence and
punitive measures are insufficient to improve taxpayers’ compliance (Devos, 2013; Andriani
et al., 2020). Persuasive measures that emphasise the use of motivational factors have
functionally proven to improve tax compliance behaviour among taxpayers (Devos, 2014).
Consequently, policymakers are looking beyond economic factors to improve tax
compliance behaviour, while researchers complement economic factors with sociological
and psychological factors to develop a more comprehensive tax compliance model (Chau
and Leung, 2009; Batrancea et al., 2012; Jayawardane, 2015). A comprehensive tax
compliance model looks at the issue of tax compliance more broadly from the perspective of
tax morality, a phenomenon described as an individual’s intrinsic motivation to pay taxes
(Torgler and Schneider, 2007; Andriani et al., 2020). Tax morale has long been neglected for
decades in the tax literature (Andreoni et al., 1998) but suddenly became a topical issue in
most empirical studies examining tax compliance in recent times (Lago-Peñas and Lago-
Peñas, 2010).
The foregoing behavioural approach to tax compliance behaviour incorporates
institutional elements such as culture and religion, which old and contemporary scholars
argue collectively shape human behaviour in society directly or indirectly (Geertz and
Banton, 1966; Saroglou and Cohen, 2011; Stavrova and Siegers, 2014; Saroglou, 2019).
Religion particularly holds great power over minds and bodies, cultures and societies; it has
also shadowed and illuminated human lives in primitive times and has always shaped the
world views of people across cultures among isolated tribes and vast empires (Jensen, 2014).
A number of studies have established the influence of religion as a mediator of human
behaviour in different contexts. For instance, the work of Kaawaase and Nalukwago (2017)
found that religiosity has a significant and positive influence on the intention to patronize
Islamic banking and that religiosity mediates the relationship between attitude, subjective Moderating
norms and intention to patronize Islamic banking in Uganda. A study conducted in Pakistan influence of
found that there is a significant and positive relationship between religiosity and new
product adoption (Rehman and Shabbir, 2010). Moreover, Bananuka et al. (2020) found that
religiosity
religiosity has a significant and positive influence on the intention to adopt Islamic banking
in Uganda. In other words, a positive change in people’s religious ideology and religious
experience leads to a positive change in the intention to adopt Islamic banking.
With regard to culture, a number of studies have established that tax compliance
behaviour is culturally driven (Torgler and Schneider, 2004; Barone and Mocetti, 2011;
Andriani et al., 2020), but few studies have explored the tax-religious nexus (Torgler, 2006;
Mohdali and Pope, 2010). Religion is part of human life, and since tax payment is a human
activity, there is a likelihood of tax compliance being influenced by religiosity. The work of
Holdcroft (2006) has drawn attention to the positive effect of religiosity on human life. The
insights from recent studies are mixed: religiosity does not explain tax compliance in Ghana
(Carsamer and Abbam, 2020); religiosity does not explain tax compliance in Indonesia
(Budiarto et al., 2018); religiosity has minimal impact on voluntary tax compliance in
Malaysia (Mohdali and Pope, 2014); and religiosity impacts tax compliance in Malaysia and
Turkey (Mohdali et al., 2017).
Some studies asserted that religiosity is influential on all individuals across all
demographic groups. Other studies found a positive relationship between religiosity and
several aspects of human life. Altruistic prosocial behaviour, such as compliance with norm
rules/regulations and laws, is also linked to the level of religiosity (Holdcroft, 2006).
Following from the above, it could be argued that religiosity instils in individuals a
commitment towards social values such as attitude to compliance through socialisation and
moral development processes. The focus on entrepreneurial firms in Nigeria is expedient
and imperative in light of the presumption that the tax compliance behaviour of small
business enterprises in developing countries is to a large extent different from that of large
enterprises because of attitude and other environmental factors. A number of findings have
emerged on this presumption. In Uganda, the study of Night et al. (2019) found that attitude
towards electronic tax systems, adoption of electronic tax systems and isomorphic forces
(particularly coercive, normative and mimetic forces) have significantly influenced tax
compliance to 57.4%. However, the three isomorphic forces have a high predictive power for
tax compliance when compared with attitudes towards electronic tax systems. Ameyaw
et al. (2016) found that micro, small and medium entrepreneurs in Ghana have low tax
compliance behaviour because they are not officially registered with the tax authorities, and
their incomes are not officially reported because of the lack of an effective tax monitoring
system in the country. Other scholars explained that low tax compliance behaviour
worsened because these entrepreneurial firms had been neglected by public authorities for
so long (Schneider et al., 2010; Ameyaw et al., 2016; Agbetunde et al., 2020). In several
countries, small and medium enterprises have been described as non-tax compliant despite
the far-reaching tax reforms initiated by their tax authorities (Terkper, 2003). However,
Ahmed and Braithwaite (2005) described SMEs as notorious for paying less than the
required taxes because of less traceability by tax administration. Inefficient tax collection
systems that exclude potential taxpaying individuals and organisations leading to low tax
compliance behaviour have been reported in other developing countries (Beale and Wyatt,
2017; Kira, 2017). However, studies in developed countries by Chau and Leung (2009) and
Loo et al. (2010) suggested that there is no consensus of opinions on tax compliance as a
phenomenon or on its determinants, thereby providing further justification for further
investigation. Similarly, Mckerchar, Bloomquist and Pope (2013) argued that there is little or
IJOES no consensus on the nature of the relationship that exists between taxpayers’ attitudes and
behaviour. However, Khlif and Achek (2015) lamented the use of numerous approaches for
measuring taxpayers’ attitudes, which resulted in insufficient and inconsistent pieces of
evidence.
Moreover, Al-Ttaffi and Abdul-Jabbar (2015), Baron and Kenny (1986) and Kirchler
(2007) suggested the need for the introduction of moderating variables to better explain the
controversy in the findings on the subject. Among the suggested moderators is religiosity,
either at an affiliation or commitment level. MohdAli and Pope (2012) noted that despite the
acknowledgement of the relevance of religiosity on human behaviour, studies on the
influence of religiosity on human behaviour have not given direct or consistent results.
However, Rest (1986) has long observed that moral judgement based on religious education
may not automatically lead to moral behaviour that is in concordance with the judgement.
Rest argued that the impact of religious education on behaviour depends strongly on the
quality of such education. Likewise, the success of religious education in the promotion of
moral judgement of an individual depends on the interplay of such an individual’s character
and educational environment.
Based on the foregoing arguments, we aim to bridge the gaps in the literature by
investigating whether the causality between taxpaying attitude and tax compliance
behaviour of entrepreneurial firms is religiously driven. We hypothesised that
understanding the influence of religiosity on the relationship between taxpayers’ attitudes
and tax compliance behaviour could assist tax authorities in developing policies and
strategies that would induce favourable attitudes towards tax compliance and ultimately
enhance tax payments in the developing context of Nigeria.
Apart from the introduction (Section 1) above, there are 8 sections in this paper. Section 2
reviews the literature to provide insights into conceptual, theoretical and empirical
frameworks to situate the study within the body of knowledge. Section 3 explains the
methodology for the study. Section 4 presents the results and discussions of the findings.
Section 5 concludes with a contextualisation of the findings, policy/managerial implications,
limitations and recommendations.

2. Literature Review
2.1 Conceptual framework
Three overlapping concepts that underpin this study are taxpayer attitudes, tax compliance
and religiosity. Taxpayers’ attitudes have long received growing attention from scholars
because attitudes largely shape the actual behaviour of humans (Song and Yarbrough, 1978;
Chang, Nichols and Schultz, 1987; Eriksen and Fallan, 1996; Helhel and Ahmed, 2014). Using
the words of Justice Holmes, the two opposing taxpayers’ attitudes are that some segments
of society perceive taxes as a mark of the privilege of citizenship in a civilized society, while
others view taxes as an unwelcomed burden to be endured (Song and Yarbrough, 1978).
Ahmed and Kedir (2015) defined attitudes as “[. . .] positive and negative evaluation an
individual has about objects, concept or living thing”. Other scholars view attitude as a
phenomenon that induces individuals to act in certain ways. In other words, attitude, along
with subjective norms and perceived behavioural control, predicts the behavioural intention
of individuals, which in turn predicts their behaviours (Ajzen, 1991; Ajzen and Fishbein,
1980; Chau and Leung, 2009). More importantly, attitude is an important phenomenon that
mediates social and economic relationships (Bananuka et al., 2020).
Tax compliance strongly connects with taxpaying attitudes. Tax compliance
conceptually connotes accurate tax base disclosure, proper calculation of tax liability,
prompt filing of return and prompt payment of tax due to relevant authority (Franzoni,
1999). It is “[. . .] a situation whereby taxpayer has made due registration with relevant tax Moderating
authority, timely filed his tax return, disclosed all his income sources, reported all income influence of
from each income source, claimed all and only entitled reliefs and allowances, correctly
computed his tax liability and timely paid his tax due to the appropriate authorities”
religiosity
(Agbetunde, 2019). Noncompliance therefore implies failure to meet any of these broad
categories of taxpayers’ obligations in line with the provisions of the laws (Eiya et al., 2016;
OECD, 2003; Serkan et al., 2016). Noncompliance may result from unintentional error and
even deliberate fraud. A taxpayer may technically meet his obligations, while compliance is
fouled due to wrong interpretation of law, which may even lead to overpayment.
The concept of religiosity refers to “the application of religious values, beliefs and rituals
in a person’s daily life (Worthington et al., 2003). It functionally reflects an individual’s
commitment to religious affairs and extends to beliefs in the existence and power of a
supernatural entity. Considering the complexity of the notion of religiosity, it is used
interchangeably and synonymously with nuances such as religiousness, holiness,
orthodoxy, faith, belief, devotion and piousness (Holdcroft, 2006). Religiosity is potent and
powerful, as most religions prescribe how their adherents behave within a social context.
For instance, Hardy and Carlo (2005) found that religiosity is a significant predictor of
kindness and equally promotes altruistic prosocial behaviour. In addition, it has been
established that members of a religious group that share similar beliefs tend to cooperate
with one another and experience a greater degree of cooperation from society (Levy and
Razin, 2006). Moreover, religiosity manifests in human behaviour and attitude in what has
been described as “the five dimensions of religiosity”, namely, public practice, private
practice, religious experience, ideology (ideological worldview) and intellectual life (Huber
and Huber, 2012). Several other studies measured religiosity using dimensions such as
affiliation, history, organisational, private practices, public practice, support, coping beliefs
and values, spiritual experience, forgiveness, intensity and commitment (Hill and Hood,
1999; Huber and Huber, 2012; Holdcroft, 2006; Chida et al., 2009). The foregoing insights
therefore suggest a strong link between religiosity and human behaviours on the one hand
and human attitude on the other. As an attitudinal and behavioural study, the current study
considers religiosity in commitment domains (Figure 1).

2.2 Theoretical framework

This study adopted the theory of planned behaviour (TPB), which is one of the most
effective and widely used behavioural theories for investigating the prosocial behaviour of
individuals and organisations (Armitage and Conner, 2001; Ajzen, 2011). The theory of
reasoned action (TRA) is also useful, but we preferred TBA because researchers explained
that the inclusion of perceived behavioural control into latter made it better than the former

Figure 1.
The conceptual
framework depicts
the effects of
taxpayers’ attitudes
on tax compliance
moderated by
religiosity
IJOES in predicting behavioural intention in research (Madden et al., 1992; Chang, 1998). In a more
recent discussion, Ajzen (2020) explained that in the TPB, perceived behavioural control is
designed to moderate the influence of attitude and subjective norms on intention, while
actual behavioural control is designed to moderate the effect of intention on behaviour. A
favourable attitude and a supportive subjective norm would collaboratively stimulate the
formation of favourable behavioural intentions up to the level people believe that they are
capable of performing the behaviour in question (Sniehotta et al., 2014). The TPB is
embedded in three mediation hypotheses:
(1) the effect of attitude and subjective norms on behaviour is fully mediated by
intention, but the effect of attitude and subjective norms on perceived behavioural
control (PBC) is partially mediated by intention;
(2) the effects of behavioural, normative and control beliefs on intention and behaviour are
mediated through attitude, subjective norms and PBC, respectively; and
(3) the effect of biological, social, environmental, economic, medical and cultural
influences are mediated by the TPB (Ajzen, 1985; Sutton, 2002; Sniehotta et al.,
2014; Ajzen, 2020).

When applied to the field of taxation, the TPB suggests that taxpayers’ intentions directly
predict their behaviours, and these intentions also depend on the attitudes towards the
behaviours and perception of subjective norms that reflect “individuals’ beliefs of referents’
approval” of their behaviour. These referents here in this study include religious leaders and
members whom individuals compare themselves with or refer to. Subjective norms could
therefore serve as social pressures on the taxpayer to either comply or evade taxes.
This study, therefore, hypothesises that taxpayers’ attitudes, subjective norms with regard
to religious belief and values and perceived behavioural control moderated by the level of
religious commitment influence tax compliance intention. This, in turn, influences tax
compliance behaviour. Attitudes are opinions of the individual actor about compliance
behaviour, while subjective norms are opinions of significant others in religious setting about
the behaviour; and the perceived behavioural control refers to the self-efficacy of the individual
actor towards the behaviour based on their level and status in the religious setting.

2.3 Empirical review

Several studies based on the TPB have established that taxpayers’ behaviour is directly
predicted by their attitudes towards perceived behavioural control plus subjective norms.
Examples of such are Ajzen and Fishbein (1980), Ajzen (1991), Fischer et al. (1992), Chau and
Leung (2009), Ramona-Anca and Larissa-Margareta (2013) and Tjondro (2018). Studies such
as Ramona-Anca and Larissa-Margareta (2013) and Tjondro (2018) also provide evidence
that readiness to comply is related to taxpayers’ inner attitude towards honesty and social
stigma. A positive attitude towards taxes would be ensured, as much as individuals perceive
tax compliance to be a social norm (Alm et al., 1992). Torgler and Schneider (2007) also
found among Austrian citizens that attitude influences tax compliance. If humans perceive
certain actions to be highly beneficial and less risky, they will develop a positive attitude
towards such actions and vice versa (Alhakami and Slovic, 1994; Finucane et al., 2000).
Furthermore, the empirical work of Bananuka et al. (2020) explored the raging question of
“whether attitude mediates the relationship between subjective norm, religiosity and
intention to adopt Islamic banking in Uganda”. Two far-reaching findings emerged. First, it
was found that attitude is a significant mediator of the relationship between subjective
norms and the intention to adopt Islamic banking. Second, attitude significantly mediates Moderating
the relationship between religiosity and intention to adopt Islamic banking. influence of
Furthermore, the perceived benefit–risk nexus was also empirically validated by Sharma
et al. (2011), who investigated taxpayers’ attitudes towards e-return filing in India and found
religiosity
that taxpayers’ attitudes towards e-return were significantly influenced by perceived ease of
use, perceived usefulness, perceived credibility and computer awareness. Not all the studies
established taxpayer attitudes and tax compliance behaviour in developing countries. In
Botswana, Nkwe (2013) found that the taxpayer attitudes of SMEs do not influence tax
compliance behaviour. In Yemen, there was a negative relationship between taxpayers’
attitudes and tax compliance behaviour because of a number of demotivating internal and
external factors, such as high tax rates, unfair tax systems, insufficient tax auditing, little
deterrent effects of tax penalties, tax amnesties, insufficient tax officers, frequent tax code
changes and lack of reciprocity of tax benefits as public goods and services. In Ethiopia,
Assfaw and Sebhat (2019) found that tax compliance is very low in the country because of
taxpayers’ attitudes and other multifaceted factors, such as the education level of taxpayers,
tax knowledge awareness of taxpayers, degree of simplicity of the tax system, attitude of
taxpayers towards taxes, perceived role of government expenditure and rewarding scheme
for loyal taxpayers.
The influence of three interrelated concepts of tax morale, compliance costs and tax
compliance on the tax system of developing countries has continued to be investigated. In
Uganda, it was found that the three concepts positively contribute to the tax system. In
particular, tax morale and compliance costs have both contributed 20.6% of the variance
in tax compliance of the sampled financial services firms. Consequently, tax morale and tax
compliance are positively and significantly associated. Additionally, compliance costs and
tax compliance are positively and significantly associated. The dimensions of tax morale
(national pride and trust in government and legal systems) are significantly associated with
tax compliance. Similarly, the dimensions of compliance costs (administration costs and
specialist costs) are found to be significantly associated with tax compliance.
Regarding whether the adoption of electronic tax systems could moderate the attitude
towards electronic tax system tax compliance in developing countries, the recent study of Night
and Bananuka (2020) found that the adoption of electronic tax systems and attitudes towards
electronic tax systems in Uganda both have a significant relationship with tax compliance.
In summary, the reviewed studies have established a nexus between taxpayers’ attitudes
and tax compliance; however, what has not been clearly articulated in the literature is how
taxpayers’ religious beliefs and attitudes connect to ultimately influence compliance
decisions (Ali et al., 2013). This critical issue calls for further investigations.
Al-Ttaffi and Abdul-Jabbar (2015), Phillips (2011) and Torgler and Schneider (2007)
argued that there is a need for more studies to provide a clearer understanding in this
direction. Ali et al. (2013) established that although recent research incorporated
noneconomic factors into the tax compliance model, no significant consensus has been
reached on the topic. To provide a clearer understanding, Al-Ttaffi and Abdul-Jabbar (2015),
Baron and Kenny (1986) and Kirchler (2007) suggested that moderators could be introduced
to better explain how taxpayers’ religious beliefs and attitudes connect to ultimately
influence tax compliance decisions. Torgler (2006), Mohdali and Pope (2012) and McKerchar
et al. (2013) also support incorporating religious values as a noneconomic tax compliance
factor. After the works of Holdcroft (2006), there has been growth in the number of academic
studies exploring the influence of religiosity on different economic activities, including the
relationship between taxpayers’ attitudes and tax compliance.
IJOES Religiosity is considered influential on all individuals across demographic groups.
Measuring religiosity with empathy and altruism, several studies confirmed the existence of a
significant relationship between religiosity and human behaviour. Some studies found a
positive relationship between religiosity and happiness (Bergan and McConatha, 2001),
religiosity and general life satisfaction as well as a sense of belonging and living a purposeful
life (Dezutter et al., 2006; Holdcroft, 2006). In addition, Walker (2003) highlighted many aspects
of religiosity that influence morality. Similarly, Roccas (2005) established a strong correlation
of religiosity with value systems, such as volunteering work/working for the poor. Moreover,
religiosity is found to be correlated with moral development and value systems (Walker, 2003;
Roccas, 2005). Altruistic prosocial behaviour, especially compliance with social norms, rules/
regulations and laws, was found to correlate with the level of religiosity by Holdcroft (2006).
With a specific focus on tax compliance, Benk et al. (2016) examined religiosity’s influence on
tax compliance among Turkish and found that there is a significant effect of religiosity on tax
compliance among Turkish. Other studies such as Pope and Mohdali (2010) in Australia,
Salim (2008) in Saudi Arabia and Stack and Kposowa (2006) in the United States found that
there exists a correlation between religiosity and tax compliance. On the strength of the
insights from previous empirical findings explicated above, it could be hypothesised that:

H1. Taxpayers’ attitudes and religiosity have significant effects on the tax compliance
behaviour of firms in Nigeria.
H2. Taxpayers’ attitudes with the moderating influence of religiosity have a significant
effect on the tax compliance behaviour of firms in Nigeria.
Additionally, religiosity is able to influence tax compliance for several reasons. Religious
teachings are believed to inculcate empathy in individuals and motivate them to care for the
less privileged and contribute to assisting society (Torgler, 2006; Mckerchar et al., 2013).
Religious values are effective in creating the required social integration that helps prevent
deviant behaviours such as crime, fraud and curb other social ills (Stack and Kposowa,
2006). Another claim is that belonging to a “supra-kinship” institution that major world
religions offer to members entrenches a set of norms and values that govern
interrelationships among unrelated persons (Mckerchar et al., 2013). It is appropriate to
explain that the research context is Nigeria, which is globally considered a multi-religious
country with a large population of potential taxpayers with different attitudes and levels of
compliance. We therefore examine the moderating influence of religiosity on the causality
between taxpaying attitudes and the tax compliance behaviour of entrepreneurial firms in
Nigeria. On the strength of the foregoing, it could be hypothesised that:

H3. Taxpayers’ attitudes with the moderating influence of the intrareligiosity dimension
have a significant effect on the tax compliance behaviour of firms in Nigeria.
H4. Taxpayers’ attitudes with the moderating influence of the interreligiosity
dimension on taxpayers’ attitudes have a significantly positive effect on tax
compliance behaviour than the intrareligious dimension.

3. Methodology
3.1 Research design, population and sample
Leveraging the TPB, the study adopted a quantitative research method and descriptive
survey research design to validate the formulated hypotheses. The population consisted of
73,021 SMEs (entrepreneurial firms) from Lagos, Oyo and Osun in Southwest Nigeria, from
which a sample of 500 firms was determined using Taro Yamane’s (1967) formula for Moderating
sampling a finite population. According to the National Bureau of Statistics/NBS (2019), the influence of
total number of enterprises in Nigeria was estimated at 41,543,028 (41.5 million), which are
unevenly spread across the 36 states in the country. Of the 41.5 million enterprises, 99.8%
religiosity
(41.4 million) were microenterprises, 71,228 (0.17%) were small businesses and 1,793
enterprises were medium-sized enterprises. Cumulatively, the total number of SMEs in
Nigeria is 73,021 enterprises (Adesoji, 2019; NBS, 2019). In the three southwestern states in
Nigeria, Lagos has the highest SMEs, with a total of 8,395 (11.5%) in the country, followed
by Oyo with 6,131 (8.4%) and Osun with 3,007 (4.1%).
The owner of the SME was the unit of inquiry. The required primary data were therefore
collected from the 500 owner managers of SMEs using structured questionnaires. The
purposive sampling technique was used to select the SMEs because not all the SMEs in the
sample locations are sufficiently knowledgeable about the phenomenon being investigated.
The questionnaire instrument was adapted from several sources. The Religious
Commitment Inventory (RCI-10) measure of Worthington et al. (2012) was adapted. The RCI-
10 measured two aspects of religiosity, namely, intrapersonal and interpersonal. The
interpersonal religiosity (INTER-REL) items measured individuals’ relationships with other
people based on their religiosity, while intrapersonal religiosity (INTRA-REL) measured the
respondent’s religious belief and dealing with the supernatural being. Taxpayers’ attitudes
and tax compliance behaviour were measured using the items extracted from the constructs
of Agbetunde (2019) and Agbetunde et al. (2020). At the end of the data-gathering phase, a
total of 428 usable questionnaires were received, which corresponds to a response rate of
81.8%. The data collected were analysed using descriptive and inferential statistics.
Specifically, frequency tables and percentages were used to report the demographics, while
linear regression analysis was used to test the hypotheses.

3.2 Reliability, validity and measurement of variables

The reliability of the questionnaire (internal consistency and stability) was tested using
Cronbach’s alpha coefficient (Cronbach, 1951). The results of the reliability tests gave
Cronbach’s alpha of 0.925 for tax compliance measured with 16 items, 0.756 for attitude
measured with 5 items and 0.889 for religiosity measured with 10 items. Since each of the
values was greater than 0.700, each of the items was considered to be reliable. All three
constructs were found to be reliable. George and Mallery (2003) asserted that Cronbach’s
alpha reliability coefficient of > 0.9 is excellent, > 0.8 is good and > 0.7 is acceptable.
The validity of the instrument was ascertained using face and construct validity tests.
For face validity, the instrument was shared with colleagues for comments and criticisms,
and feedback was then incorporated. Exploratory factor analysis was employed to test the
construct validity. Using a threshold loading of 0.50 and eigenvalues greater than 1.0, the
factors with less than 0.50 loadings were dropped and removed following the opinion of
Field (2000). Overall, the research design is consistent with the best practice in management
science research methodology (Saunders, Lewis and Thornhill, 2016).
To determine the fitness of our predetermined factor model that seeks to investigate the
moderating influence of religiosity (RELGTY) on the causality between taxpaying attitude
(ATTD) and tax compliance behaviour (TAXCOM), we conducted a confirmatory factor
analysis (CFA). The fit statistics tested were the root mean square error of approximation
(RMSEA), comparative fit index (CFI) and Tucker–Lewis index (TLI) under normal-theory
maximum likelihood (ML) with continuous data. The results of the model fit indices
generated were as follows: CFI = 0.891, TLI = 0.877 and RMSEA = 0.0758 (see Appendix).
Two fit indices were satisfactory, and the third fit was marginal based on cut-off criteria of
IJOES CFA in the literature. It has been suggested that RMSEA values less than 0.05 are good,
values between 0.05 and 0.08 are acceptable, values between 0.08 and 0.1 are marginal and
values greater than 0.1 are poor (Fabrigar et al., 1999; Hair et al., 2017; Xia and Yang, 2019).
Therefore, our RMSEA value of 0.0758 indicated an acceptable fit. Similarly, the generated
CFI value of 0.891 is acceptable and falls within the acceptance threshold. According to Hu
and Bentler (1999) and Bentler (1990), a CFI value that is close to 0.9 is an indication of a
relatively good fit. However, the generated TLI value of 0.877 is less than the 0.9 cut-off
threshold for a good fit (Xia and Yang, 2019). Based on the explicated fit indices, we asserted
that the sample has an acceptable fit to the 3-factor model.
The questionnaire used in this study had four sections (A-D). Section A gathered data on
the demographics of the respondents. Section B gathered information on tax compliance
measured with 16 items. Section C gathered information on tax-paying attitudes measured
with 5 items. Section D gathered information on religiosity measured with 10 items. Apart
from Section A, the questionnaire items in all other sections were measured on a five-point
Likert scale, ranging from strongly disagree (1) to neutral (3) and to strongly agree (5).

4. Results/findings
The results/findings arising from this study are presented below under four (subsections),
namely, demographic statistics, descriptive statistics, correlation analysis and linear
regression analysis.

4.1 Demographic statistics

The entrepreneurial firms (owner managers) were the unit of inquiry. Regarding gender
status, there were 210 male respondents (corresponding to 57.1%) and 158 female
respondents (corresponding to 42.9%). This tend indicates that the majority of the
entrepreneurial firms in Nigeria are owned by men, but women have a very strong
comparative presence in the entrepreneurial ecosystem. From the demographics, all age
groups are well represented in the survey. However, the majority of the respondents fell
within 35–44 years (42.4%), 25–34 years (37.5%) and 45–54 years (19. 6%), while only 0.5%
were older than 55 years of age and above. The implication of this finding is that in Nigeria
(southwest), entrepreneurial firms are most owned by young entrepreneurs in their 40s.
With respect to ethnic representation, the majority of the respondents who participated
in this survey were 278 Yoruba (75.5%), followed by 74 Igbo entrepreneurs (20.1%) and 12
Hausa entrepreneurs (3.3%). The findings clearly showed that Yoruba entrepreneurs are the
most visible entrepreneurs in southwestern Nigeria. Regarding religious affiliation, 238
respondents were Christian (64.7%), and 130 respondents were Muslims (35.3%).
For monthly income level, 197 respondents (corresponding to 53.5%) made at least
N50,000 monthly, while 118 respondents (32.1%) made N50,000–200,000 monthly, 33
respondents (9.0%) earned N200,001–350,000 monthly, 11 respondents (3%) attracted a
monthly income of N350,001–500,000; and the remaining 9 respondents (2.4%) made above
N500,000 monthly.
Based on the trade group, 210 respondents (57.1%) belonged to retailing and trading
groups, and 158 respondents (42.9%) were professional craftsmen and technicians. The
findings showed that the activities of the surveyed entrepreneurial firms in southwestern
Nigeria covered both retailing and creative entrepreneurship (Table 1).

4.2 Descriptive statistics

In Table 2, we present the constructs descriptive statistics following the methodology of
Bananuka et al. (2020). Specifically, we generated means and standard deviations for
attitude (ATTD), religiosity (RELT), interreligiosity (INTRELT), intrareligiosity Moderating
(INTRARELT) and tax compliance (TAXCOM). This methodological procedure is influence of
necessary because the means provide a good summary of the data, while standard
deviations represent the data (Field, 2009).
religiosity
The mean score for the dependent variable (TAXCOM) is 3.5, while the standard
deviation is 1.031. This means that on average, entrepreneurial firms in Nigeria are largely
willing to be tax compliant. However, given that the dependent variable is measured on a
five-point Likert scale, the minimum score of 1.0 indicates that some entrepreneurial firms
are not willing to be tax compliant. The standard deviations for attitude, religiosity,
interreligiosity and intrareligiosity are small compared to their mean values, an indication
that the statistical means are a good fit of the observed data. Overall, the descriptive
analysis suggested that, on a scale of 5, entrepreneurial firms in Nigeria exhibited a high
compliance level (mean = 3.52). It was also found to be somewhat true that respondents had
a favourable attitude towards taxation (mean = 3.59), and it was somewhat true that they

Items Frequency (%)

Gender of respondents
Male 210 57.1
Female 158 42.9
Total 368 100
Age of respondents
25–34 years 138 37.5
35–44 years 156 42.4
45–54 years 72 19.6
55 years and above 2 0.5
Total 368 100
Ethnicity of respondents
Yoruba 278 75.5
Igbo 74 20.1
Hausa 12 3.3
Others 4 1.1
Total 368 100
Religion of respondents
Christianity 238 64.7
Islam 130 35.3
Total 368 100
Monthly Income Level
N50,000 197 53.5
N50,000–200,000 118 32.1
N200,001–350,000 33 9.0
N350,001–500,000 11 3.0
Above N500,000 9 2.4
Total 368 100
Trade Group
Retailing/Trading 210 57.1
Crafts/Technicians 158 42.9
Total 368 100 Table 1.
Demographic
Source: Authors’ Computation (2020) statistics
IJOES exhibited a high level of religiosity (mean = 3.88). The inferential statistics will provide more
clarity. The construct data used for this analysis are normally distributed because the p-
values of the Shapiro–Wilk test (Prob < W values) for all the constructs are greater than
0.05. However, negative skewness values indicate that the data are skewed to the left.

4.3 Correlation analysis results

In Table 3, the correlation analysis results are presented. Specifically, Pearson’s correlation
coefficient analysis was conducted to establish the relationships between the predictor
variables (attitude, religiosity, interreligiosity and intrareligiosity [INTRARELT]) and the
dependent variable (tax compliance). The intent of a correlation analysis is to determine the
strength and direction of the linear relationship between predictor variables and the dependent
variable (Frost, 2021), and there is a need to test for causality using regression analysis. Several
correlation analysis tests exist, but we adopted Pearson’s correlation coefficient (r) because it is
a widely used parametric statistic that requires interval data (Garson, 2012).

4.4 Effects of taxpayers’ attitudes and religiosity on tax compliance behaviour

Displayed in Table 4 are the results from inferential analyses conducted through linear
regression analysis. Here, taxpayers’ attitudes and religiosity were treated as independent
variables, and their effects on tax compliance behaviour were estimated.
The result of the regression of tax compliance against the taxpayers’ attitude and religiosity
in Table 4 [R2 = 0.162, Adj. R2 = 0.158, F (2,382) =36.804, p < 0.05] suggest that taxpayers’
attitudes and religiosity collectively exerted a significant effect on the tax compliance

Skewness Kurtosis Shapiro–Wilk

N Mean SD Min Max Skewness SE Kurtosis SE W p

ATTD 368 3.58 1.019 1 5 0.432 0.127 0.314 0.254 0.893 < 0.001
RELTY 368 3.83 0.959 1 5 0.403 0.127 0.475 0.254 0.869 < 0.001
INTRELT 368 3.86 1.052 1 5 0.582 0.127 0.523 0.254 0.86 < 0.001
INTRRELT 368 3.91 0.985 1 5 0.611 0.127 0.125 0.254 0.854 < 0.001
TAXCOM 368 3.5 1.031 1 5 0.248 0.127 0.435 0.254 0.898 < 0.001
Table 2.
Descriptive statistics Source: Authors’ Computation (2020)

ATTD RELGTY TAX_COMPL INT_REL INTR_REL

ATTD Pearson’s r –
p value –
RELGTY Pearson’s r 0.539*** –
p value < 0.001 –
TAX_COMPL Pearson’s r 0.364*** 0.347*** –
p value < 0.001 < 0.001 –
INT_REL Pearson’s r 0.48*** 0.89*** 0.333*** –
p value < 0.001 < 0.001 < 0.001 –
INTR_REL Pearson’s r 0.53*** 0.858*** 0.342*** 0.714*** –
p value < 0.001 < 0.001 < 0.001 < 0.001 –
Table 3. Note: ***p < 0.001
Correlation matrix Source: Authors’ Computation (2020)
behaviour of entrepreneurial firms in Nigeria. When the magnitude and direction of the effect is Moderating
considered, the results show that a positive effect of 16.2% (15.8% when adjusted for error) is influence of
exerted on the tax compliance behaviour of taxpayers. In particular, taxpayers’ attitudes
contributed 27.3% to the change in tax compliance behaviour (that is, ATTD: b = 0.273, p <
religiosity
0.05), while religiosity contributed 18.5% to the change in tax compliance behaviour (that is,
REL: b = 0.185, p < 0.05).
Following Goel et al. (2020), the study deconstructs religiosity into two sub constructs:
intra (an inner interpretive understanding) and inter (an outer demonstrative action of the
essence of religious values and obligations). The outcomes of religiosity deconstruction in
Table 5 [R2 = 0.166, Adj. R2 = 0.159, F (3,383) = 25.138, p < 0.05] suggest that taxpayers’
attitudes and their intra- and interreligiosity subconstructs collectively exerted a
significant effect on the tax compliance behaviour of entrepreneurial firms in Nigeria.
When the magnitude and direction of the effect is considered, the results show that a
positive effect of 16.6% (15.9% when adjusted) is exerted on the tax compliance
behaviour of taxpayers. In terms of each subconstructs contribution, taxpayers’ attitudes
contributed 25.1% to the change in tax compliance behaviour (ATTD: b = 0.251, p <
0.05); the interreligiosity dimension contributed 13.2% to the change in tax compliance
behaviour (interreligiosity: b = 0.132, p < 0.05); and the intrareligiosity dimension had a
marginal contribution of 6.5% to the change in tax compliance behaviour
(intrareligiosity: b = 0.065, p < 0.05).

4.5 Moderating role of religiosity on the effect of taxpayers’ attitudes on compliance

Table 6 displays the results of the linear regression analysis. Here, the moderating influence
of religiosity on the causality between taxpayers’ attitudes and tax compliance behaviour
was estimated.

Model 1 R R2 Adj. R2 Std. Err. df1/df2 F Sig.

0.402 0.162 0.158 0.885 2/381 36.804 0.000
Model 1 Unstzd Coeffs Stdzd Coeffs t Sig.
B Std. Error Beta Table 4.
(Constant) 1.914 0.198 9.682 0.000
Attitude 0.256 0.052 0.273 4.952 0.000
Effects of taxpayers’
Religiosity 0.182 0.054 0.185 3.360 0.001 attitude and
religiosity on tax
Source: Authors’ Computation (2020) compliance

Model 2 R R2 Adj. R2 Std. Err. df1/df2 F Sig.

0.407 0.166 0.159 0.884 3/383 25.138 0.000
Unstzd Coeffs Stdzd Coeffs t Sig.
B Std. Error Beta Table 5.
(Constant) 1.865 0.202 9.219 0.000 Effects of taxpayers’
Attitude 0.251 0.052 0.268 4.823 0.000
Interreligiosity 0.132 0.065 0.142 2.038 0.042
attitude and
Intrareligiosity 0.065 0.070 0.067 0.932 0.352 religiosity
subconstructs on tax
Source: Authors’ Computation (2020) compliance
IJOES From the above, the linear regression estimations in Model 1 [R2 = 0.137, Adj. R2 = 0.135, F
(1,382) =60.686, p < 0.05; ATTD: b = 0.347, p < 0.05] suggest that taxpaying attitude
(without moderating influence of religiosity) exerted a significant effect on the tax
compliance behaviour of entrepreneurial firms. When the magnitude and direction of the
effect is considered, the estimation shows that taxpaying attitude explains 13.7% (13.5%
when adjusted for error) of the change in tax compliance.
However, the estimations in Model 2 [R2 = 0.171, Adj. R2 = 0.166, with R2 change = 0.034, F
(2,381) = 39.241, p < 0.05; ATTD: b = 0.031, p > 0.05, Relgy  Attd: b = 0.058, p < 0.05]
suggest that taxpaying attitude with the moderating influence of religiosity exerted a significant
effect on the tax compliance of the behaviour of entrepreneurial firms. With regard to the
magnitude and direction of the effect, tax paying attitude and religiosity have both increased
firms’ tax compliance behaviour to 17.1% compared to the earlier 13.7% compliance level.
Analysis of the influence of the two religiosity dimensions of intra- and interreligiosity
revealed further findings, as presented in Table 6.
The results of intra- and interreligiosity in Model 2 [R2 = 0.173, Adj. R2 = 0.167, with R2
change = 0.036, F(2,380) = 26.515, p < 0.05; ATTTD: b = 0.023, p > 0.05, Inter-Rel  Attd:
b = 0.048, p < 0.05, Intra-Rel  Attd: b = 0.013, p > 0.05], as presented in Table 7, suggests
that taxpaying attitude with the moderating influence of intra- and interreligiosity exerted a
significant effect on the tax compliance of entrepreneurial firms. However, the interreligiosity
dimension had a more significant contribution to the changes in tax compliance behaviour
than the intrareligious dimension. In terms of each construct’s contribution, interreligiosity
has a significant influence on taxpayers’ attitudes that led to changes in tax compliance
behaviour (p < 0.05), but the intrareligiosity dimension has no significant influence on
taxpayers’ attitudes that led to changes in tax compliance behaviour (p > 0.05).

4.6 Discussion of findings

Overall, three results clearly emerged from the four model estimations. According to the results,
religiousness (subjective norm) moderates the relationship between taxpayers’ attitudes and
the tax compliance intention of entrepreneurial firms in Nigeria. Let us examine each result.
First, it was found that taxpayers’ attitudes and religiosity have a significant effect on the tax
compliance behaviour of entrepreneurial firms in Nigeria. This result aligns with the extant
literature that behavioural, normative and control beliefs have mediating and moderating
influences on intention and attitude (Sniehotta et al., 2014; Ajzen, 2020).

Change Statistics
Model 3 R R2 Adj. R2 Std. Err. R2 Change F Change df1/df2 F Sig.
Without Moderator 0.370 0.137 0.135 0.896 0.137 60.686 1/382 60.686 0.000
With Moderator 0.413 0.171 0.166 0.880 0.034 15.493 1/381 39.241 0.000
Unstzd Coeffs Stdzd Coeffs
Model 3 B Std. Error Beta t Sig.
Table 6. (Constant) 2.286 0.166 13.773 0.000
Moderating role of Attitude 0.347 0.045 0.370 7.790 0.000
religiosity on the (Constant) 2.582 0.179 14.390 0.000
effect of taxpayers’ Attitude 0.031 0.091 0.033 0.338 0.735
Religiosity  Attitude 0.058 0.015 0.384 3.936 0.000
attitude on
compliance Source: Authors’ Computation (2020)
Second, the study found that taxpaying attitudes without the moderating influence of Moderating
religiosity exerted a significant effect on tax compliance behaviour by 13%, while taxpaying influence of
attitudes with the moderating influence of religiosity exerted 17%. This finding is also
consistent with studies of Sa Martins and Gomes (2015) that found that Portuguese taxpayers¨
religiosity
tax morale is influenced by taxpayers’ religiosity and by societal behavior (trust in others). In
Turkey, Bilgin (2014) found that religion and national pride positively affect tax morale. The
empirical study of Lago-Peñas and Lago-Peñas (2010) also found that tax morale is positively
related to age, religion, income, satisfaction with democracy, trust in politicians and agreement
with redistribution in European countries such as Austria, Belgium, Switzerland, the Czech
Republic, Germany, Denmark, Estonia, Spain, Finland, the United Kingdom, Greece,
Luxembourg, Norway, Poland, Portugal, Sweden and Slovenia. However, Eiya et al. (2016)
found that religious values in Nigeria do not significantly influence the tax compliance
behaviour of taxpayers, but the threat of punishment employed by the tax authority has a
significant influence on the tax compliance behaviour of taxpayers.
Third, it was found that taxpaying attitude with the moderating influence of the
interreligiosity dimension had a more significant contribution to the changes in tax
compliance behaviour than the intrareligious dimension. The above finding supports the a
priori expectation that people’s relationship with larger segments of society influences their
attitude and behaviour. In particular, Haji and Lalonde (2012) encouraged interreligious
contact between different religious groups for stronger interreligious communication
because there is compelling evidence that such a relationship has a positive effect on
intergroup attitudes. Overall, all the findings are consistent with previous studies, such as
Agbetunde et al. (2020), Ajzen and Fishbein (1980), Ajzen (1991), Fischer et al. (1992), Chau
and Leung (2009), Ramona-Anca and Larissa-Margareta (2013) and Tjondro (2018), who
argued, based on the theory of planned behaviour, that taxpayers’ behaviour is directly
predicted by their attitudes towards behaviour (here, tax compliance) as well as the
perception of subjective norms (here, religious norms). The implication of this new insight
from Nigeria is that religious values cannot alone elicit positive tax compliance behaviour in
a developing country context of Nigeria, although people are religious.
Our affirmation in this study that religiosity has proven to be a useful tool for changing
taxpayers’ attitudes, thereby enhancing tax compliance, is consistent with the long-
established view that deterrence and punitive measures are insufficient to improve
taxpayers’ compliance (Devos, 2013; Andriani et al., 2020). Using moral suasion, education,
sensitisation, encouragement and persuasion leveraging the influence of referents are far

Change Statistics
Model 4 R R2 Adj. R2 Std. Error R2 Change F Change df1, df2 F Sig.
a
Without Moderator 0.370 0.137 0.135 0.896 0.137 60.686 1/382 60.686 0.000
With Moderator 0.416 0.173 0.167 0.880 0.036 8.274 2/380 26.515 0.000
Unstdzd Coefficients Stdzd Coeffs.
B Std. Error Beta t Sig.
(Constant) 2.286 0.166 13.773 0.000 Table 7.
Attitude 0.347 0.045 0.370 7.790 0.000 Moderating influence
(Constant) 2.573 0.182 14.158 0.000 of inter- and
Attitude 0.023 0.097 0.025 0.240 0.811 intrareligiosity on the
IntraRelgy  Attd 0.013 0.019 0.085 0.673 0.502 effect of taxpayers’
InterRelgy  Attd 0.048 0.017 0.316 2.745 0.006
attitude on
Source: Authors’ Computation (2020) compliance
IJOES more effective than punitive measures. Generally, Holdcroft (2006) explains that religiosity
has a positive effect on human life. Specifically, Devos (2014) explains that persuasive
measures have proven to be good motivation tools for improving tax compliance behaviour
among taxpayers (Devos, 2014). This is exactly the role of religion in human society.
Religion is able to evidently influence tax compliance because as an institutional element, it
controls minds and bodies, cultures and human societies and has always shaped the world
views of people across cultures (Jensen, 2014). To stimulate tax compliance by changing
taxpayers’ attitudes, policymakers should look beyond economic factors, as sociological,
institutional and psychological factors have been found to be very helpful in the
development of enduring and sustainable tax compliance behaviour (Chau and Leung, 2009;
Stavrova and Siegers, 2014; Saroglou, 2019).
Not all studies supported our findings on the nexus of religiosity and tax compliance.
The study of Budiarto et al. (2018) found that religiosity does not explain tax compliance in
Indonesia. This finding is particularly important and instructive because Indonesia has a
large Muslim population in the world, yet religiosity cannot stimulate tax compliance. In
another Muslim majority nation of Malaysia, Mohdali and Pope (2014) found that religiosity
has a minimal impact on voluntary tax compliance. However, another more recent study in
two highly religious countries, Malaysia and Turkey, found that religiosity impacts tax
compliance (Mohdali et al., 2017). The insight to be drawn from previous studies with mixed
findings on the influence of religiosity on tax compliance behaviour is that the influential
role of religiosity must be strengthened and reinforced by economic, sociological,
institutional and psychological factors within the tax value chain. No one size fits all.

5. Conclusion, implications, limitations and future research directions

The study examined the moderating influence of religiosity on the effect of taxpayers’ attitudes
on the tax compliance behaviour of entrepreneurial firms in Nigeria. The study based on its
findings concludes that taxpayers’ attitudes, moderated by religiosity, exerted a significant
effect on the tax compliance behaviour of entrepreneurial firms in Nigeria. Specifically, the
interreligiosity subconstruct, explaining individuals’ fulfilment of the religion’s imposed
obligations towards other persons, contributed more significantly to the changes in tax
compliance behaviour of the sampled firms. On the other hand, intrareligiosity, explaining
individuals’ fulfilment of the religion’s imposed obligations towards God, did not have a
significant contribution to the changes in tax compliance behaviour among the sampled firms.
Overall, the findings of this study have important academic, theoretical and policy implications,
including limitations that are discussed hereunder.

5.1 Academic implication

For academics, the results from the four models support and reinforce previous studies that
taxpayers’ attitudes and religiosity have significant effects on the tax compliance behaviour of
people and firms. Our study extends the frontier by examining the moderating influence of
both intra- and interreligiosity on taxpaying attitudes. Interestingly, the findings suggest that
taxpaying attitudes with the moderating influence of the interreligiosity dimension had a more
significant contribution to the changes in tax compliance behaviour than the intrareligious
dimension in Nigeria. This indicates that the tax authorities need to focus more on the
interreligiosity dimension to boost taxpaying attitudes and tax compliance in Nigeria.

5.2 Theoretical implication

The study modestly validates the theory of planned behaviour in the area of providing
empirical evidence to confirm some of the propositions of the theory. Generally, the study was
able to provide empirical evidence establishing the influence of the taxpaying attitude of Moderating
entrepreneurial firms on their compliance behaviour in Nigeria. Specifically, the study suggests influence of
that taxpayers’ attitudes and religiosity (intra- and interreligiosity) largely influence the tax
compliance behaviour of firms, but the influence of intrareligiosity is less significant. Moreover,
religiosity
the study affirmed the positive influence of a moderator variable, as it suggests that the
taxpaying attitudes of firms without the moderating influence of religiosity exerted a 13%
effect on tax compliance behaviour, while taxpaying attitudes with the moderating influence of
religiosity exerted 17%. Overall, the dissection of religiosity into interreligiosity and
intrareligiosity dimensions has particularly theoretically enhanced the TPB on the one hand
and the tax literature on the other. Furthermore, the study provides empirical evidence that
supports the proposition that subjective norms of religious groups actually influence the
compliance behaviour of their members because religious ideals and morals serve as a social
pressure for eliciting positive compliance behaviour from members that are taxpayers. In
addition, the interreligiosity and intrareligiosity dimensions influence the perception of
members of subjective norms because they shape “individuals’ beliefs about approval or
disapproval of referents”, which consequently affect their compliance behaviour. In other
words, the beliefs and opinions held by the referents pass on to the members. The referents in
this study are religious leaders that members of the congregation imitate, look up to and whose
opinions on socio-economic issues are respected. More importantly, the study contributes to
theory by confirming that religious beliefs and expectations are “perceived behavioural
controls” that influence the tax compliance intention of entrepreneurs by prescribing the
expected standard level of behaviour for members of religious groups.

5.3 Policy implications

Policymakers and managers in charge of tax administration need to see taxpayers’ attitudes
as a critical factor to be accorded importance when formulating and implementing tax
policies. Policymakers and other government agencies, while working hard to avert tax
evasion and tax avoidance, need to consider the influence of taxpayers’ perceptions and
attitudes, as both factors, if ignored, could negatively influence the compliance level of
taxpayers. Additionally, the study underscored the role of religion as a major factor
influencing the compliance behaviour of entrepreneurial firms in Nigeria. Therefore,
religious leaders should be taken as major stakeholders to be considered during tax policy
formulation, implementation and evaluation in Nigeria and, by extension, in other contexts
where religious beliefs, norms and values strongly influence and shape public opinions. The
implication of the far-reaching findings in this study suggests that leaders of religious
groups need to educate, sensitise and motivate their members to fulfil their tax obligations
to government. Similarly, teaching and preaching on the intrareligiosity dimension should
be given more focus than the interreligiosity dimension. Tax authorities and other relevant
government agencies should collaborate with religious groups more on the interreligiosity
dimension to collectively and collaboratively boost taxpaying attitudes and tax compliance
in the developing religious-oriented context of Nigeria. In particular, tax authorities should
intensify efforts on tax enlightenment, education and campaigns using religious leaders as
tax ambassadors, promoters and campaigners in Nigeria.

5.4 Limitations
Despite the laudable implications explicated above, the current study, like other studies, has
few limitations. First, the study used evidence from 382 owner-managed SMEs
(entrepreneurial firms) in Lagos, Oyo and Osun in Southwest Nigeria. The 382 owner-
managed SMEs may be inadequate and unrepresentative of entrepreneurial firms in
IJOES Nigeria. Second, the use of the purposive sampling technique is another limitation because it
is a non-random sampling seen as subjective. It was used in this study because the target
population is very large, and we need SMEs that are sufficiently knowledgeable about the
phenomenon being investigated. Third, this study adopted a cross-sectional survey carried
out in 2020, which means that changes in the behaviour of owner-managed SMEs in the
selected location in Nigeria over time are not taken into consideration. Finally, this study
used quantitative data collected through questionnaires. This positivist paradigm is
scientific but sometimes misses certain information and limits the respondent’s opinions on
the issues being investigated.
Overall, the study is unique because it empirically opens the space for further studies on
the moderating influence of religiosity on the effect of taxpayers’ attitudes on the tax
compliance behaviour of entrepreneurial firms in Nigeria. Future research may consider
replicating this study in other settings in South-South, South-East and Northern Nigeria to
confirm and extend the frontier of the present study findings. Additionally, future research
should increase the sample size to aid generalisation and prediction of research outcomes.
Future research may consider adopting a mixed-methods design.

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Further reading
Fetzer Institute (2003), “Multidimensional measurement of religiousness, spirituality for use in health
research”, A Report of the Fetzer Institute/National Institute on Aging Working Group, Fetzer
Institute, Kalamazoo, MI.
Musimenta, D., Naigaga, S., Bananuka, J. and Najjuma, M.S. (2019), “Tax compliance of financial
services firms: a developing economy perspective”, Journal of Money Laundering Control,
Vol. 22 No. 1, pp. 14-31.

Corresponding author
Lukman Raimi can be contacted at: luq_man2001@yahoo.com
IJOES Appendix

Factor Loadings
Factor Indicator Estimate SE Z p Stand. Estimate
ATTD ATD1 5.503 0.151 36.44 < 0.001 1.138
ATD2 0.944 0.0593 15.91 < 0.001 0.684
ATD3 0.794 0.0575 13.81 < 0.001 0.589
ATD4 0.835 0.0563 14.83 < 0.001 0.634
ATD5 0.813 0.0582 13.98 < 0.001 0.595
RELGTY REL1 0.926 0.0654 14.17 < 0.001 0.679
REL2 0.904 0.0585 15.45 < 0.001 0.725
REL3 0.813 0.0606 13.42 < 0.001 0.651
REL4 0.933 0.0613 15.23 < 0.001 0.716
REL5 0.721 0.0725 9.94 < 0.001 0.509
REL6 0.813 0.0566 14.35 < 0.001 0.686
REL7 0.818 0.0605 13.51 < 0.001 0.655
REL8 0.879 0.0677 12.99 < 0.001 0.636
REL9 0.871 0.059 14.77 < 0.001 0.701
REL10 0.907 0.0652 13.9 < 0.001 0.669
TAXCOM TC1 1.02 0.0703 14.5 < 0.001 0.715
TC2 1.031 0.0699 14.74 < 0.001 0.724
TC3 0.844 0.0691 12.21 < 0.001 0.62
TC4 0.869 0.0726 11.96 < 0.001 0.613
TC5 0.858 0.0708 12.12 < 0.001 0.623
TC6 0.837 0.0642 13.04 < 0.001 0.657
TC7 0.828 0.072 11.5 < 0.001 0.59
Factor Estimates
Factor Covariances
Estimate SE Z p Stand. Estimate
ATTD ATTD 1
RELGTY 0.334 0.0397 8.43 < 0.001 0.334
TAXCOM 0.265 0.0396 6.7 < 0.001 0.265
RELGTY RELGTY 1
TAXCOM 0.448 0.0502 8.92 < 0.001 0.448
TAXCOMa TAXCOM 1
Model Fit
Test for Exact Fit
x2 df p
642 206 < 0.001
Fit Measures
CFI TLI RMSEA Lower Upper
Table A1. 0.891 0.877 0.0758 0.0692 0.0825
Confirmatory factor
analysis Note: a Fixed parameter
 Moderating
influence of
religiosity

Figure A1.
Path Diagram: CFA

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