2 research outputs found
The relationship between tax knowledge and tax compliance : a survey of small and medium-sized enterprises in Durban
No full textSubmitted in fulfillment of the requirements of the degree of Master of Accounting, Durban University of Technology, Durban, South Africa, 2022.The self-assessment tax system has become a popular system in most developing and developed
countries. It was introduced in South Africa in 2001 through SARS filing with the aim to improve
the level of tax compliance and to increase tax collection by the South African Revenue Service
(SARS). This system allows taxpayers to calculate and pay their own taxes without the intervention
of tax officials. Appropriate enforcements include levying penalties and interest as provided by
the law against non-compliant taxpayers. The study focuses on small and medium-sized enterprises
(SMEs) in the Durban area. SMEs are key contributors to tax revenue and eventually to economic
growth in South Africa. SMEs also play a critical role in creating job opportunities. This study
examines the relationship between tax knowledge and tax compliance in the self-assessment
system (SAS). A quantitative research methodology was applied. Questionnaires were issued to
the SMEs registered in Durban. Data was collected through a survey resulting in 93 responses.
The study found that the majority of the respondents were compliant; however, there is still more
work to be done to improve the level of compliance. The use of tax practitioners and improvement
in the tax knowledge through training and mentoring programs may assist in improving the level
of tax compliance.
The results also revealed that most taxpayers have good knowledge on taxpayer responsibilities
and value-added tax (VAT) and poor knowledge on turnover tax and payroll taxes. Turnover tax
is one of the incentives implemented by government to reduce the tax burden of SMEs. The reason
for poor knowledge on turnover tax was that the majority of taxpayers are not aware that turnover
tax exists. Poor knowledge on payroll taxes negatively affects the business operations as payroll
taxes are withheld by employers from the gross salary to be paid to SARS. This results in an
incorrect declaration on the EMP201 and income tax returns which creates unnecessary audits and
imposition of penalties by SARS. The use of efiling is still an issue as some of taxpayers prefer to
join the queues at a SARS branch to submit their returns instead of using efiling.
Tax complexity was found to be a barrier to tax knowledge because of frequent changes to tax
laws which requires taxpayers to update their knowledge frequently. It was recommended that to
address the barriers to tax knowledge, public awareness campaigns by SARS on the importance of
taxation, more use of social media platforms by SARS on the importance of taxation, and the
introduction of tax education in secondary schools should be implemented. The study did not find a statistically significant relationships between the components of tax
knowledge which were tested and tax compliance. However, it does indicate to tax administrators
the relative importance of tax knowledge in assisting with the design of tax education programmes,
simplifying tax systems and developing an understanding of taxpayers' behaviour.
Small and Medium-sized Enterprises’ perspectives on the relationship of tax knowledge to tax compliance: An exploratory study in a developing country
Get PDFThe aim of this study is to assess the relationship between SMEs tax knowledge and tax compliance in Durban, South Africa. The self-assessment system was introduced in 2001 by the South African Revenue System sought to make is easier for individuals and organisations to file their declarations and pay their taxes, without the interactions with tax authorities which were seen as inefficient. However, non-compliance among businesses continues to be high, particularly among SMEs, with numerous factors such as a lack of professional guidance, knowledge, and resources cited as a key factor contributing to poor compliance. This research study adopted a quantitative approach, using survey questionnaires to collect data from SME managers and owners. A total of 93 responses were collected and analysed to identify trends in tax knowledge and compliance behavior among these enterprises. The results showed that although SMEs have a good knowledge of taxpayer responsibilities and value-added tax, they have poor knowledge about turnover and payroll tax. Moreover, there were no statistically significant relationships were found between their level of tax knowledge and tax compliance. The findings suggest a need for targeted education and training programs to improve tax knowledge among SMEs. Simplifying tax processes and enhancing the accessibility of tax information could lead to higher compliance rates, thereby benefiting the South African economy through improved tax revenue. This study contributes to the existing body of tax literature by highlighting the importance of tax knowledge in ensuring compliance among SMEs. It provides practical recommendations for policymakers and tax authorities to enhance SME tax compliance through improved education and simplified tax systems
