<![CDATA[This study examines the relationship between tax compliance costs and the compliance of micro, small, and medium enterprises (MSMEs) in Sukoharjo Regency, Indonesia. Between 2023 and 2025, registered MSME taxpayers rose by 56%, while the share filing returns fell from 99% to 49%. That decline calls for identifying the factors behind it, and prior studies treat compliance costs as relevant even though the direction remains inconsistent. Transaction cost theory frames compliance costs as real transaction costs borne by taxpayers. The hypothesis was therefore nondirectional and tested two-tailed. Survey data from 100 purposively selected MSME taxpayers were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with 5,000 bootstrap subsamples, with legal form, location, turnover, and length of registration as controls. After the psychological indicator was removed, the cost construct covered only monetary and time indicators. The results show a significant positive association between perceived compliance costs and compliance (β = 0.2296; p = 0.0095; f² = 0.056), which stays positive in the initial model before the psychological and arrears indicators were removed. This pattern may reflect costs incurred through active compliance, not evidence that higher costs increase compliance. The study contributes evidence on reported compliance behavior, rather than intention, in a region with a sharp compliance decline during the Coretax transition. Improving MSME compliance calls for simpler procedures and assistance, not cost levels alone]]>
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