Data mining, fuzzy AHP and TOPSIS for optimizing taxpayer supervision

Abstract

The achievement of accepting optimal tax need effective and efficient tax supervision can be achieved by classifying taxpayer compliance to tax regulations. Considering this issue, this paper proposes the classification of taxpayer compliance using data mining algorithms; i.e. C4.5, Support Vector Machine, K-Nearest Neighbor, Naive Bayes, and Multilayer Perceptron based on the compliance of taxpayer data. The taxpayer compliance can be classified into four classes, which are (1) formal and material compliant taxpayers, (2) formal compliant taxpayers, (3) material compliant taxpayers, and (4) formal and material non-compliant taxpayers. Furthermore, the results of data mining algorithms are compared by using Fuzzy AHP and TOPSIS to determine the best performance classification based on the criteria of Accuracy, F-Score, and Time required. Selection of the taxpayer's priority for more detailed supervision at each level of taxpayer compliance is ranked using Fuzzy AHP and TOPSIS based on criteria of dataset variables. The results show that C4.5 is the best performance classification and achieves preference value of 0.998; whereas the MLP algorithm results from the lowest preference value of 0.131. Alternative taxpayer A233 is the top priority taxpayer with a preference value of 0.433; whereas alternative taxpayer A051 is the lowest priority taxpayer with a preference value of 0.036.