AN EVALUATION OF TAX COMPLIANCE BEHAVIOUR OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE ACCRA METROPOLIS

The study “examined the factors that influence tax compliance behavior of SMEs in the Accra Metropolis. The study employed the descriptive survey design underpinned by a quantitative approach to research. The main instrument for data collection was the questionnaire which was administered to a sample of 150 owner-managers of SMEs in the Accra Metropolis who were selected using the convenience sampling technique. The results of the study were analyzed using percentages and mean scores. The study revealed that the major acts of tax non-compliance committed by SMEs included non-payment of required taxes, failure to file tax returns, and failure to pay taxes on time. It emerged that since the majority of SMEs do not keep proper books of accounts, they tend to underestimate their income when filing their tax returns with the aim of paying fewer taxes. Also, it was revealed that the majority of managers of SMEs had very little or no knowledge of taxation. The major factors that influence the tax compliance behavior of SMEs included tax rates, income level, perceived corruption in the public sector, ease of tax evasion, tax knowledge, tax morale, the influence of reference groups, enforcement of tax laws, and tax education. In terms of measures for enhancing tax compliance among SMEs, it was suggested that the prevailing tax rates should be reduced and the tax filing process made simple while tax education and enforcement of tax laws are enhanced. The study concluded that SMEs engage in various forms of tax non-compliance due to their limited knowledge of taxation and the seeming weaknesses in the tax administration system in terms of strict enforcement of tax laws and effective tax education. It is recommended that the GRA should heighten its tax education and awareness campaigns with the aim of encouraging positive tax morale among taxpayers and also ensure strict enforcement of tax laws with heavy fines and penalties for tax defaulters and evaders.”