# **6 Result Interpretation**

Overall, we find that the distribution of POS in West Manggarai and Gorontalo has partially led to rises in tax compliance among hotels and restaurants. In West Manggarai, assigning TMD and WS worked better with tax-paying restaurants. As for hotels, WS did not prove to have significant effect. Meanwhile in Gorontalo, RPOS-Grab worked only subtly in boosting tax compliance among restaurants while no POS types seemed to increase hotel tax payment. The only POS type with consistent statistically insignificant impact on tax receipts in both districts is regular POS (RPOS). We now discuss the main explanations for the findings.

First, it is crucial to always keep in mind that POS units are distributed in an accommodative manner. Targeted tax-paying restaurants were handed the POS type most suitable to their existing operation and the stage of technological adoption. Recall that RPOS were typically given to businesses with either no previous experience in using electronic payment devices (entirely manual) or a very basic sales point tool without extensive and detailed sales and tax records. For such types of restaurants, adopting a novel technology might have been a hassle at first, thus requiring time for familiarization.

Furthermore, the adoption of POS for these restaurants does not give any personal benefit to them. On the contrary, the targeted restaurants need to reallocate their resources to accommodate the POS (such as allocating manpower dedicated to the POS machine, providing electricity, space, and sacrificing time efficiency for the POS usage). Added by fees risks for cashless payments, cash and unrecorded transactions were much preferable (Visa, 2016). After all, their businesses were doing well before the POS adoption. In such instance, we may expect their reported tax receipts to be lower than actual—either because of unintentional errors or deliberate noncompliance. Either way, those in turn deducted the supposedly positive effect of RPOS distribution on tax receipts. It is important to note that, adverse attitude toward electronic payment systems—such as deliberate tampering with POS units to evade tax, in our case—is a strong predictor of low compliance, as pointed out in Night and Bananuka (2020). Low uptake of RPOS, if it is really the case, may be an indication of inherently low tax morale among the businesses which may necessitate a whole new strategy beyond distributing POS. Given these possibilities, perhaps RPOS could work when combined with better enforcement or regular spot checks.

On the other hand, despite its weak robustness, RPOS-Grab’ had a relatively higher impact on restaurant tax payment in Gorontalo. This might signal the importance of third-party’s access to transaction information in improving compliance. While RPOSGrab users did self-select into utilizing the direct connection to Grab’s application, they were probably aware of the possibility that their transaction records could be revealed to tax authority by the counterpart in case audit happens. Whether or not the third-party crosscheck really takes place, such an awareness eventually deters underreporting and even increases the tax paid.

Second, TMD and WS were allocated for restaurants that already have a bookkeeping system in place. Adopting TMD and WS did not disrupt their usual business routine, 28