TAX NONCOMPLIANCE AMONG SMALL and MEDIUM ...

The results of this study also show that financial liquidity did not exert a positive effect on tax
noncompliance. Companies with a strong financial liquidity also tend to engage in
noncompliance. Notably, 90% of the SMEs examined were profit making companies; just 10%
were loss-making companies. This results differ from the studies by Spathis (2002) and Rohaya
et al. (2009), as well as the conventional belief. Conventionally, there is a general belief that a
loss-making company is more likely to be non compliance and as stated by Thanneermalai and
Farah (2010), a loss-making company is more likely to attract the tax authority during the
selection of cases for a tax audit However, an analysis of SMEs selected for tax audit in 2011 did
not support this. Based on the finding, H₃ is not supported. Table 5 also shows that H₄ is not
accepted. There is no significant relationship between foreign ownership and tax noncompliance.
The results show no difference from the aspect of tax noncompliance between companies with
foreign ownership and without foreign ownership. This finding did not support Hanlon et al.
(2007) who found that the foreign-controlled companies tend to engage in tax noncompliance.
As for company size, the regression coefficient is negative and statistically significant at p