JultikaUniversity of Oulu repository

Abstract

Many countries, including Ghana, depend on taxation as a means of generating the required resources to meet their expenditure requirements. Unrelentingly low levels of tax compliance can cause the government’s failure to achieve the necessary targets for financing the county’s budgetary allocation. Unless addressed, continued tax non-compliance may lead to a national crisis. This paper assesses tax compliance among SMEs in Ghana, focusing on the role of tax awareness and tax knowledge. To establish the theoretical foundation of this research, theories such as Economic Deterrence Theory, Fiscal and Psychology Theories as well as the Theory of Planned Behaviour have been reviewed to put the study into appropriate context.

This study is quantitative in nature where the descriptive survey method of data collection is adopted to gather the necessary data through questionnaire administration to the target research participants. The data to be collected would be analyzed descriptively using descriptive statistical tools such as frequency distribution tables and percentages as well as mean and standard deviation, to achieve the main objective of the study. In addition, regression analysis would be conducted to determine the effects of tax awareness and tax knowledge on tax compliance among SMEs in Ghana.

Concerning the factors that influence tax compliance among SMEs in Ghana, the results show that majority of the sampled SMEs’ tax compliance level is mostly affected by government spending priorities, tax service quality, fairness, and regular tax audit exercises by GRA. Besides, the findings also revealed that being aware of taxable income and paying it at due dates help to promote tax compliance among small businesses in Ghana and that having good knowledge and calculating the right amount of taxes would encourage a high tax compliance level among the SMEs in Ghana. The results of the study further revealed that adequate tax knowledge increases SMEs’ ability to understand tax laws and regulations, which promotes a high compliance level, and that the SMEs have Account staff who are knowledgeable of tax laws and procedures hence high compliance. Moreover, the findings suggest that there exists a strong positive relationship between tax awareness & knowledge and tax compliance among SMEs in the Greater Accra region of Ghana. The study’s results also indicate that tax awareness and knowledge have a positive effect on the tax compliance level among SMEs in Ghana. The study recommends that SMEs in Ghana should continue to organize seminars and workshops for their staff on tax-related issues as doing so would help enhance their knowledge of tax laws and regulations and hence promote high tax compliance.