LAUSR

This research presents empirical results about the importance of tax morale in the probability of tax compliance in social businesses. It highlights the relevance of increasing the intrinsic value to the social business owner on paying taxes, instead of the traditional approach of increasing punishment, to reduce non-compliance. The paper suggests changing the focus question from “Why don’t they pay taxes?” to “Why, despite the low probability of being punished for not paying taxes, do some social business owners comply with their tax contribution?”. The main results of the research point out that factors such as public expenditure in economic development increases the probability of tax compliance in social businesses, whereas public expenditure in social programs decreases this probability.