Tax Compliance Costs for SMEs: A Survey of Tax Professionals in Ghana
DOI:
https://doi.org/10.18096/TMP.2023.02.01Keywords:
Small and Medium Enterprises; Tax compliance costs; External tax compliance costs; Tax professionals; GhanaAbstract
The study sought to ascertain the magnitude of the external tax compliance costs incurred by SMEs in Ghana from the perspective of the tax professionals who provide the service. Tax professional firms were selected from the Institute of Chartered Accountants and the Chartered Institute of Taxation for the study. The study distinguished between the average annual costs for small, medium and larger firms to compute and file returns, deal with tax authorities, implement changes in tax laws, and maintain records for tax purposes on behalf of their clients. The cost was found to be regressive in nature, indicating that the burden was relatively higher for small businesses.
References
Abdul-Jabbar, H. & Pope, J. (2008). Exploring the relationship between tax compliance costs and compliance issues in Malaysia. Journal of Applied Law and Policy, 1(1), 1–20.
Abdul-Jabbar, H. (2009). Income tax non-compliance of small and medium enterprises in Malaysia: Determinants and tax compliance costs. PhD thesis, Curtin University of Technology, Australia.
Ariff, M. & Pope, J. (2002). Taxation and Compliance Cost in Asia Pacific Economies. Malaysia: Penerbit.
Aryeetey, E. (2001). Priority research issues relating to regulation and competition in Ghana. Center on Regulation and Competition. Working paper series, no. 30619, University of Manchester. http://dx.doi.org/10.22004/ag.econ.30619
Blaufus, K. & Hoffmann, F. (2020). The effect of simplified cash accounting on tax and financial accounting compliance costs. Journal of Business Economics, 90(2), 173–205. https://doi.org/10.1007/s11573-019-00943-4
Blaufus, K., Hechtner, F. & Jarzembski, J. K. (2019). The income tax compliance costs of private households: empirical evidence from Germany. Public Finance Review, 47(5), 925–966. https://doi.org/10.1177/1091142119866147
Bruce-Twum, E & Schutte, D. P. (2021). Tax compliance cost: A review of methodologies of recent studies. Academy of Accounting and Financial Studies Journal, 25(4), 1–10. https://doi.org/10.32602/jafas.2021.031
Chattopadhyay, S. & Das-Gupta, A. (2002). The income-tax compliance cost of Indian corporations. New Delhi: National Institute of Public Finance and Policy. https://doi.org/10.2139/ssrn.466041
Dlamini, B. & Schutte, D. P. (2021). An exploratory study on the usage of Management Accounting Practices among Small and Medium Enterprises in Zimbabwe, The Journal of Accounting and Management, 11(2), 116–128. https://doi.org/10.31124/advance.12124341.v1
Domingo, R. (2017). Small business and entrepreneurship: Their role in economic and social development. Entrepreneurship & Regional Development, 29(2), 1–3. https://doi.org/10.1080/08985626.2016.1255438
Eichfelder, S. & Hechtner, F. (2018). Tax compliance costs: Cost burden and cost reliability. Public Finance Review, 46(5), 764–792. https://doi.org/10.1177/1091142117691603
Eichfelder, S. & Vaillancourt, F. (2014). Tax Compliance Costs: A review of cost burdens and cost structures. Review of Public Economics, 210(3), 111–148. https://doi.org/10.2139/ssrn.2535664 https://doi.org/10.7866/HPE-RPE.14.3.5
Evans, C. (2003). Studying the studies: An overview of recent research into taxation operating cost. eJournal of Tax Research, 1(1), 64–92.
Evans, C. (2008). Taxation compliance and administrative costs: An overview. In Lang, M., Obermair, C., Schuch, J., Staringer, C., Weninger, P. (Eds.), Tax Compliance Costs for Companies in an Enlarged European Community (pp. 447-470). The Netherlands: Kluwer Law International.
IBES. (2016). Integrated Business Establishment Survey (IBES) report. Statistical Service Ghana.
Hansford, A. & Hasseldine, J. (2012). Tax compliance costs for small and medium-sized enterprises (SMEs): The case of the UK. eJournal of Tax Research, 10(2), 288–303.
ITC (International Trade Centre). (2016). SME Competitiveness in Ghana. Geneva: Alliances for Action. https://doi.org/10.18356/b950ae91-en
Kasipillai, J. & Hanefah, M. M. (2000). Tax professionals’ views on the Self-Assessment system. Analisis, 7(1&2), 107–112.
Klofsten, M., MacEachen, E. & Stahl, C. (2021). New and small firms in a modern working life: how do we make entrepreneurship healthy? Small Business Economics, 57, 755-763. https://doi.org/10.1007/s11187-020-00380-6
Lignier, P. & Evans, C. 2012. The rise and rise of tax compliance costs for the small business sector in Australia. Australian Tax Forum, 27(3), 615-672.
Loo, C. (2006). The influence of the introduction of Self-Assessment on compliance behaviour of individual taxpayers in Malaysia. PhD thesis, University of Sydney, Australia.
Marshall, R., Smith, M. & Armstrong, R. (1997). Self-assessment and the tax audit lottery: The Australian experience. Managerial Auditing Journal, 12(1), 9–15. https://doi.org/10.1108/02686909710155957
McKerchar, M., Hodgson, H. & Walpole, M. (2009). Understanding Australian small businesses and the drivers of compliance costs: A grounded theory approach. Australian Tax Forum, 24, 151–178.
OECD. (2019). OECD SME and Entrepreneurship Outlook 2019, OECD Publishing, Paris. https://doi.org/10.1787/34907e9c-en Date of access: February 12, 2022.
Okello, A. (2014). Managing income tax compliance through self-assessment. IMF Working Paper, WP/14/41. https://doi.org/10.5089/9781475515237.001
Sapiei, S. N. (2012). Evaluation of corporate income tax compliance costs and compliance behaviour under the self-assessment system. PhD Thesis, Monash University, Australia.
Schoonjans, B., Van Cauwenberge, P., Reekmans, C., & Simoens, G. (2011). A Survey of Tax Compliance Costs of Flemish SMEs: Magnitude and Determinants. Environment and Planning C: Government and Policy, 29(4), 605–621. https://doi.org/10.1068/c10177b
Schutte, D. & Van der Zwan, P. (2019). Turnover tax relief in South Africa: Evidence from the SARS-NT panel. Advances in Taxation, 26, 135–148. https://doi.org/10.1108/S1058-749720190000026008
Shaw, J., Slemrod, J. & Whiting, J. (2008). Administration & compliance. Prepared for reforming the tax system for the 21st Century: The Mirrlees Review. http://www.ifs.org.uk/mirrleesreview Date of access: July 13, 2022.
Smulders, A. S. (2013). An evaluation of tax compliance cost and concessions for small businesses in South Africa – establishing a baseline. PhD thesis, University of Pretoria, South Africa.
Smulders, S. & Stiglingh, M. (2008). Annual tax compliance costs for small businesses: a survey of tax practitioners in South Africa. South African Journal of Economic and Management Sciences, 11(3), 354–371. https://doi.org/10.4102/sajems.v11i3.464
Smulders, S., Stiglingh, M., Franzsen, R. & Fletcher, L. (2012). Tax compliance costs for the small business sector in South Africa: Establishing a baseline. eJournal of Tax Research, 10(2), 184–226.
Tran-Nam, B., Evans, C., Walpole, M. & Ritchie, K. (2000). Tax compliance cost: Research methodology and empirical evidence from Australia. National Tax Journal, 53(2), 229–252. https://doi.org/10.17310/ntj.2000.2.04
World Bank. (2020). World development indicators, World Bank publications, www.datatopics.worldbank.org/worlddevelopment.indicators/themes/economy Date of access: June 15, 2021.
Yehuda, B. & Holtom, C. B. (2008). Survey response rate levels and trends in organizational research. Human Relations, 61(8), 1139-1160. https://doi.org/10.1177/0018726708094863
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Ernest Bruce-Twum, Daniel Schutte, Banele Dlamini
This work is licensed under a Creative Commons Attribution 4.0 International License.
