EVALUATING THE AWARENESS OF TAX LAWS AND COMPLIANCE BY SMALL AND MEDIUM SIZE ENTERPRISE IN THE GHANAIAN ECONOMY USING BUSINESSES IN TAMALE METROPOLIS AS A CASE STUDY

Abstract

This research was aimed at evaluating the awareness of tax laws and compliance by Small and Medium size Enterprise in the Ghanaian economy using businesses in Tamale Metropolis as a case study. This study was conducted with the following as its objectives; Ascertain the level of awareness and knowledge of tax laws and regulations by SMEs, Examine factors affecting compliance with tax laws among SMEs and lastly to Evaluate tax agencies effort to ensure compliance. Employing the use of descriptive survey to describe the situation, phenomenon, attitudes, behavior, beliefs as well as opinions of people on the subject matter. A cross-sectional design was also used to guide in focusing on a snapshot to explore, describe and explain the situation of SMEs and compliance to tax laws. Through the analysis of data obtained using the above stated methodology, the following were revealed; Taxes paid by respondents include; income tax, TMA levy, VAT and property tax, majority of the respondents pay their taxes regularly despite not receiving any major form of tax education for the past one year, most respondents ranked the taxes they pay as high. A large proportion also indicated the amount paid including compliance cost as the major constraints to tax compliance, the majority of respondents were of the opinion that a reduction in the taxable amount, coupled with the use of taxes for the intended purposes, as well as penalty enforcement on non-compliance would promote tax compliance. Based on the findings of the study it can be concluded that most of the respondents are aware that tax compliance is mandatory and non-compliance is punishable by law. The study recommends that efforts must be made toward stamping out corruption among the officialdom in addition to publishing such practices on television and newspapers, among others. Tax agencies also need to intensify education on tax laws so as to meet revenue target for economic growth and development