The Effects of Economic Factors on Tax Compliance by Small and Medium Enterprises of Tamale Metropolis in Ghana

Abstract

In a case study on Small and Medium Enterprises (SMEs) in the Tamale Metropolis, researcher looked at the economic factors that influence tax compliance with the review of adequate literature. Regression technique and correlation were employed for the analysis in the determination of the relationship between the variables of study. The study found that tax rates have positive and insignificant effect on tax compliance by the SMEs; that income levels have positive and significant effect on tax compliance by the SMEs; and that fines/penalties exert positive and significant influence on tax compliance by the SMEs in Ghana. The study recommended that government should formulate and implement policies on enacting high tax rates, imposition of fines & penalties, and enhancing incomes to improve upon the overall tax compliance of SMEs in the republic of Ghana.