This paper examines whether tax knowledge, tax fairness and trust affect voluntary tax compliance among small and medium enterprises (SMEs). Given the growing budget deficits and debt levels of developing economies, we contend that an understanding of the factors associated with voluntary tax compliance among SMEs could enhance tax revenue mobilization. Although the majority of businesses are SMEs, questions about their tax compliance have become topical among stakeholders due to perceived low levels of compliance, hence, an investigation into the factors underlying their tax compliance behavior is critical for stakeholders, particularly governments and tax authorities. We used a survey-based approach to sample 341 SMEs operating within Ghana’s oil city of Secondi-Takoradi. We employed the structural equation modeling (SEM) technique to analyze the retrieved data. Generally, our empirical results indicate that social factors and behavioral motivations are key determinants of voluntary tax compliance among SMEs in Ghana. Specifically, our results suggest that SMEs’ perception of tax fairness, knowledge about the tax system, and trust in government are significant predictors of voluntary tax compliance. Additionally, we find a significant mediating role of tax fairness in the relationship between tax knowledge and voluntary tax compliance. As governments seek to raise tax revenues and manage public debt, our results provide important insights into social and behavioral factors that could aid in enhancing tax compliance.
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