<![CDATA[This study estimates the magnitude and composition of the tax compliance costs borne by micro, small and medium enterprises (MSMEs) in Cirebon City and Cirebon Regency, Indonesia, and examines whether these costs are associated with tax compliance. Transaction Cost Theory provides the explanatory lens, and the framework of Sandford et al. (1989) defines compliance cost through explicit, implicit (time) and psychological components. Survey data were collected from 106 registered MSME taxpayers for tax year 2025. For the descriptive analysis, interval answers were converted into rupiah, with psychological cost taken as a single self-assessed rupiah value of strain. For the association test, tax compliance cost was specified as a reflective-formative higher-order construct, with psychological cost measured as a frequency-based stress scale, and estimated with the embedded two-stage approach in PLS-SEM, controlling for business size, legal form, location and registration tenure. The non-directional hypothesis was tested two-tailed. The mean annual compliance cost was IDR 5.23 million (median IDR 2.81 million), of which 56.8% was the self-valued psychological component, 29.7% time and 13.5% cash outlays; 91.5% of respondents reported no cash outlay. Because the psychological share is sensitive to its valuation, the robust finding is that the burden is mainly non-monetary. Tax compliance cost was positively associated with self-reported compliance (β = 0.274, p < 0.001, 95% CI 0.162 to 0.438), but the effect was small (f² = 0.092), the model explained 26.9% of the variance, and the result held when Stage 1 was re-estimated in Mode B. The psychological dimension carried the largest weight, which does not imply that heavier strain improves compliance. As the data are cross-sectional, the association may reflect resources sacrificed in more intensive compliance rather than an effect of cost. The results support reducing compliance time and uncertainty, not raising compliance costs]]>
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