The Effects of Compliance and Growth Opinions on SMEs Compliance Decisions: An Empirical Evidence from Ghana

Abstract

Generally, there has been an increase in the trend of interest of majority of people evaluating tax compliance decisions due to the fact that taxes help in funding public expenditures as well as boosting the expansion of most SME businesses. On the other hand, there has also been a sudden increase of interest in the development of Small and Medium Scale Enterprises (SMEs). In most developing and developed countries, SMEs are the spine of economic growth. Therefore, it is necessary that concentration is not only given to the generation of taxes but also the wellbeing of tax payers hence, SMEs. However, the current situation of Ghana shows an imbalance between these two major contributing factors. Due to such imbalance, the paper analyses the effects of perception and growth opinions on tax compliance decisions in Ghana. Specifically, the paper seeks to analyze respondents' subjective opinions on the growth of their businesses, how their growth opinions affect their perception on taxes and how those perceptions contributes to tax compliance. In analyzing SMEs compliance issues on taxes, a total of 840 questionnaires were submitted to registered SMEs across all the ten (10) regions of Ghana. The data was analyzed using Stata 12 and E-views 7.1 concurrently. The results of this research revealed that SMEs have negative subjective opinions on their growth thus having negative effect on their general perception towards taxes thereby posing a negative effect on SMEs compliance to taxes. The findings of the research will give an insight to the GRA (Ghana Revenue Authority) in formulating strategies on taxation and SMEs growth in an efficient and effective way.

Tax Administration, Tax Incentive and SMEs’ Growth: The Moderating Effect of Firms Size

“…The joint significant positive correlation between tax administration and SME growth contradicts the position of Atawodi and Ojeka (2012), that there is a negative relation between taxes and business growth. The positive significant impact of tax administration on SMEs' growth in this research contradicts some empirical claims (Ojeka, 2011;Mungaya, et al, 2012;Ameyaw, et al, 2016;Koranteng et al, 2017), which collectively found a negative impact of tax on SMEs' growth, but supports the position of other empirical studies (Adefeso, 2018;Tee, Boadi & Opoku, 2016).…”

Effects of Taxation on Social Innovation and Implications for Achieving Sustainable Development Goals in Developing Countries: A Literature Review

“…Siyanbola et al (2017) use data from sub-Saharan Africa to show that tax policy variables such as distorting taxes have a negative but insignificant effect on economic growth, while non-distorting taxes have a positive but insignificant effect on the economic growth rate. Koranteng et al(2017) analyze the relationship between entrepreneurs' subjective views, business growth, tax collection, and tax compliance in Ghana. Using primary data from a survey of 840 registered SMEs in the (then) 10 regions of Ghana, the authors show that SMEs have negative subjective views on their growth, which negatively affects their overall tax perception and compliance with established tax norms and regulations.…”

Re-engineering the Growth and Sustainability of Small to Medium Enterprises (SMEs) in the Agrarian Sector in Zimbabwe

“…According to a Finscope survey (2012), Zimbabwe has 2 748 890 SMEs, which are contributing 60% to the nation's GDP, and employing 2.9 million people. Despite this, the economic crisis, environmental changes and governance complexities, are aggressively forcing the Zimbabwean government to poorly implement SME policies, resulting in a growth 'miscarriage' of SMEs (Rurinda, Mapfumo, van Wijk, Mtambanengwe, Rufino, Chikowo & Giller, 2014, Chingwaru & Jarkata,2015).Traditionally, SMEs in the agricultural sector are always on the lookout for new solutions to address their management challenges (Koranteng, Osei-Bonsu, Ameyaw , Ameyaw , Agyeman, & Dankwa, 2017).Therefore SMEs in the agrarian sector in Zimbabwe need re-engineering since their growth will ensure food security through value-addition and increased productivity (Arudchelvan, 2015).…”