Abstract
The study investigated the impacts of tax payers’ knowledge and penalties on tax compliance amongst small and medium enterprises in Nigeria using a survey research design. The data obtained from questionnaire were analyzed using the Ordinary Least Square regression method. The results showed that tax knowledge had a positive significant impact on tax compliance while tax penalty had insignificant positive impact on tax compliance. Thus, the study shows that tax knowledge has a higher tendency to promote tax compliance than tax penalty. Government should therefore do everything possible to increase public knowledge on tax matters and tax education should be included in school curricula at all times. Small and medium scale business owners should also seek to advance their tax knowledge and awareness for the mutual benefits of the governments and taxpayers.
Highlights
Taxes and tax system are essential in nation building
The part A of the questionnaire is on the demographic characteristics of the respondents while part B of the questionnaire is on the research questions on the research variables namely, tax compliance, tax knowledge and tax penalty
The second part presents the results of the descriptive statistical analysis of the research variables of tax compliance, tax knowledge and tax penalty under study
Summary
Taxes and tax system are essential in nation building. They are required for state capacity building for meaningful economic development [1]. Taxpayers are not always willing and ready to comply when it comes to the obligations imposed on them by law. Tax compliance is the ability and willingness of taxpayers to comply with tax laws, declare the correct incomes in each year and pay the right amount of taxes on time [2]. Reference [3] considered tax compliance as the taxpayers’ willingness to obey tax laws in order to attain economic development and goal. Tax compliance requires a degree of honesty, adequate tax know-
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