The Relationship Between Firm Characteristics and Tax Debt : Evidence from Small and Medium Enterprises (SMEs) in Hanoi

Abstract

This study investigates the relationship between firm-specific characteristics and tax debt among small and medium-sized enterprises (SMEs) in Hanoi, Vietnam, during 2022-2024. Employing Exploratory Factor Analysis and multiple linear regression on 285 valid responses from SMEs managers and accountants, the research identifies seven critical determinants influencing tax debt: firm size, corporate governance quality, asset structure, industry sector, debt level, psychological factors, and business performance. The validated model demonstrates robust explanatory power, with firm size emerging as the predominant determinant, followed by corporate governance quality. The findings reveal strong alignment between managerial perceptions and actual tax debt outcomes, indicating that resource constraints and structural limitations - rather than awareness deficits - constitute primary compliance barriers. The research extends firm characteristic theories from tax avoidance to tax debt phenomena in transitional economies, validating the Theory of Planned Behavior and liquidity constraint theories within the SMEs context. Practically, the study suggests differentiated compliance support mechanisms, capacity-building interventions targeting governance competencies, and sector-specific approaches rather than awareness campaigns, contributing evidence-based insights for tax policy formulation in emerging economies.