Tax compliance of small and medium enterprises: a developing country perspective
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Date
2017
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Financial Regulation and Compliance
Abstract
The purpose of this paper is to establish the relationship between tax fairness, isomorphic forces,
strategic responses and tax compliance in Ugandan small and medium enterprises (SMEs).
Design/methodology/approach – This is a correlational and cross-sectional study using two
respondent types, the demand (represented by the tax collecting body respondents) and supply (represented
by SME respondents) sides of tax compliance, to examine perceived tax compliance in Uganda’s SMEs.
Findings – Tax fairness, isomorphic forces and strategic responses have a predictive force on tax
compliance. Significant mediation effects of tax fairness and also strategic responses are found. The two
respondent types perceive the study variables differently – providing an understanding of why the tax
compliance puzzle has remained a burgeoning concern. For example, the tax-collecting body respondents
perceived more tax fairness than SME respondents, suggesting that perceived tax fairness depends on whose
“lenses” you look through.
Research limitations/implications – Rather than focussing only on the importance of the rational
analytical deliberation of tax fairness by taxpayers in influencing their tax compliance, the current paper
shows that in addition, isomorphic forces and strategic responses establish the basis for understanding
taxpayers’ compliance.
Originality/value – The methodology that enlists two respondent types, i.e. the supply side of tax
compliance and the demand side of tax compliance, probably offers a unique way of deriving better results
than previous studies.
Description
Keywords
Isomorphism, Small and medium enterprises, Tax compliance, Strategic responses
Citation
Musimenta, D., Nkundabanyanga, SK, Muhwezi, M., Akankunda, B., & Nalukenge, I. (2017). Tax compliance of small and medium enterprises: a developing country perspective. Journal of Financial Regulation and Compliance. DOI 10.1108/JFRC-08-2016-0065