Faith, Morality, and Compliance: Examining Tax Morale and Zakat Obligation in Pakistan’s Hospitality Construction Sector: Evidence from Lahore

Abstract

Tax compliance remains a major concern in developing economies where informal practices often influence reporting behaviour. This study examines how faith-based obligations and moral considerations affect compliance behaviour in Pakistan’s hospitality construction sector. Specifically, the research investigates the role of tax morale and perceived zakat obligation in shaping compliance behaviour among contractors and developers involved in hospitality construction projects in Lahore. A quantitative research design was adopted, and primary data were collected through a structured questionnaire from 200 respondents including builders, contractors, and project supervisors working on hospitality-related construction projects. Data analysis was conducted using SmartPLS (Partial Least Squares Structural Equation Modelling) to evaluate the relationships between the variables. The findings indicate that both tax morale and zakat obligation positively influence compliance behaviour. The results highlight the importance of ethical and faith-based motivations in encouraging voluntary compliance within the construction industry. The study provides practical insights for policymakers to integrate moral and religious awareness into tax compliance strategies in Pakistan.