Abstract:
This study investigates the factors influencing electronic tax compliance among Small and
Medium Enterprises (SMEs) in Mbeya City Council, Tanzania. The research aims to
assess the impact of taxpayers' attitudes, institutional factors, and technological factors on
the compliance behavior of SMEs. Previous research shows that things like how complex
the tax system is and how taxpayers view the tax process affect whether businesses follow
tax rules. However, there isn’t much research specifically on electronic tax compliance in
Mbeya. A cross-sectional survey design was employed, involving a sample of 333 SMEs.
Data were collected using questionnaires and documentary reviews, and analyzed using
descriptive and inferential statistics, including regression models. A cross-sectional
survey research design was utilized. Descriptive statistics, including frequencies and
percentages, were used to summarize the data, while multiple regression analysis was
conducted to test the relationships between the independent variables (taxpayer attitudes,
institutional factors, and technological factors) and the dependent variable (electronic tax
compliance). The findings show that attitudes like taxpayer knowledge and perceptions of
the tax system significantly affect compliance. Institutional factors, such as clear tax laws
and compliance costs, also shape SME behaviors, while technological challenges, like
limited computer skills and the cost of online filing, further influence compliance
decisions. However, widespread adoption of electronic tax systems is hindered by low
awareness, limited technology access, and high costs for SMEs. Based on these insights,
the study recommends enhancing tax education programs to boost awareness, simplifying
compliance processes, and increasing access to affordable technology. It concludes that
improving tax education, lowering compliance costs, and providing technology access are
essential for boosting electronic tax compliance among SMEs. The study suggests that the
Tanzania Revenue Authority (TRA) should target these areas to support SME adoption of
digital tax systems.
