An evaluation of tax compliance among small businesses

Abstract

Purpose: The purpose of this study was to evaluate the tax compliance behaviour of small business owners in order to propose strategies to improve tax compliance for this sector.

Motivation: Despite efforts introduced by revenue authorities to improve tax compliance, research demonstrates that small businesses still contribute a fair share to the state revenue gap. Therefore, understanding the tax compliance behaviour of small business owners is an important step towards improving compliance in this sector.

Design/Methodology/Approach: The study employed semi-structured interviews to investigate the day-to-day, authentic tax compliance lived experiences of small business owners and tax practitioners in Gauteng, South Africa. Main findings: Three important strategies emerged out of the interpretation of the findings. First, the government must make it easy for small businesses to comply. Second, the deterrence measures ought to be administered in a personalised and systematic manner. Thirdly, the government has a duty to make tax compliance appealing and socially acceptable to the majority of the small business owner community. Practical implications/Managerial impact: The implementation of the three strategies may help improve the day-to-day experiences of small business owners regarding tax compliance, resulting in more voluntary compliance.

Novelty/Contribution: The results of this study add to the body of knowledge in the area of small business taxation and illuminate opportunities for future research and debate on this topic.