Abstract:
This research aimed to analyze the factors influencing tax compliance among Small and
Medium-sized Enterprises (SMEs) in the Tanga Region. The study focused on gaining insights
into the perspectives of taxpayers regarding factors affecting both tax compliance and non compliance. The specific objectives included assessing the level of knowledge of tax
compliance laws and regulations among SME owners in the study area, identifying socio economic factors influencing tax compliance and non-compliance in Tanzania, and examining
the roles of tax administration in promoting compliance and preventing tax evasion in the
country. The study surveyed 334 SMEs out of a population of 2000 in Tanga Region, utilizing
descriptive statistics to portray the knowledge level of tax compliance laws, examining tax
morale, and identifying socio-economic factors influencing compliance. Quantitative research
approach was employed to analyze the factors influencing tax compliance and non tax
compliance among SMEs’ owners. The findings revealed that the majority of businesses in the
study area were small-sized, predominantly led by males aged between 45 and 60 years.
Additionally, it highlighted a lack of taxpayer education among many SMEs in the region. The
analysis indicated a generally high morale to pay taxes, with medium-sized business owners
displaying a more favorable attitude towards tax administration compared to their counterparts
in small businesses. Factors influencing compliance included the impact of perceived equity
and fairness of the tax system, perceived loopholes for tax evasion,changes to current
government policies,Government spending perceptions of tax compliance,Tax audit in
voluntary tax compliance , Tax awareness and knowledge were identified as positive
contributors to tax compliance. The study recommends that the Tanzania Revenue Authority
(TRA) enhances taxpayer education to boost compliance, improve tax collection methods to
reduce associated costs, and address existing loopholes that may encourage non-compliance.
Strengthening enforcement and conducting seminars on proper record-keeping related to
income, expenditure, and tax filing were also suggested to enhance compliance
