THE EFFECT OF SUBSIDY REMOVAL, POLITICAL INSTABILITY AND INCOME INEQUALITY ON TAX COMPLIANCE AMONG MANUFACTURING COMPANIES IN YEMEN

Worldwide, tax compliance remain one of the most disturbing phenomenon that threaten the integrity of different tax system from developed to developing nations. This study is to examine the effect ofsubsidy removal, political instability and income inequality on tax compliance among manufacturing firms in Yemen. The study adopts a survey research design using selfadministered questionnaire to collect data from owner-managers of manufacturing firms in Yemen. The Population of the study is 27,797 firms registered with the Yeminis Tax Authority YTA out of which 490 firms were selected as sample size. The collected data were analyzed using SPSS and PLS softwares. The findings revealed a positive significant association between government subsidy removal and political instability with tax compliance among manufacturing firms in Yemen. Whereas incone inequality shows an insignificant effect with tax compliance among these firms. Therefore, the study recommed that governemnt could emphasize on the significance of paying tax for the national development by committing the collected taxes to populace infrastructure development which inturns can improve the MSMLEs ownesr-managers tax compliance behaviour.