Abstract:
Taxpayer satisfaction is vital for sustaining compliance and revenue in Sri Lanka,
where income tax is a major fiscal source. Inland Revenue reform in 2022, including
increased rates and a broader tax base, has intensified concerns over fairness,
transparency, and efficiency. However, limited empirical research has explored
taxpayer satisfaction in this context, particularly regarding the role of tax awareness
and knowledge. This study investigated how fairness and transparency, simplicity of
the tax system, income tax rates, and the quality of the e-tax system influence on the
taxpayer satisfaction with tax awareness and knowledge serving as a moderating
factor. A quantitative design was employed with data obtained from 384 individual
income taxpayers in Sri Lanka through a structured questionnaire. Convenience
sampling was utilized as the most appropriate method due to its practicality in
addressing time, cost, and accessibility constraints. Multiple regression and
moderation analysis were performed using SPSS. Results revealed that fairness and
transparency and income tax rates significantly influence on the taxpayer satisfaction,
while simplicity and e-tax system quality had an insignificant influence. Tax
awareness and knowledge significantly moderated the relationship between fairness
and transparency and taxpayer satisfaction. The study concludes that improving
perceptions of fairness and transparency and maintaining equitable tax rates are
critical for strengthening satisfaction. Moreover, strengthening tax awareness can
foster greater compliance and trust, offering policymakers and tax authorities
practical guidance to refine Sri Lanka’s tax administration.
