Abstract:
This study assessed the effect of tax laws awareness of small and medium enterprises (SMEs) on tax compliance.
The survey was guided by four predicting variables tested on tax compliance namely education, information
availability, penalty and interests; and tax returns. Causal relationship testing was conducted to foster information
gathering process with the facts being collected from the sample of 97 respondents using primary data through
structured questionnaire. The collected facts were computed in SPSS to generate statistical measurements to
present the results. Inferential analysis through multiple regression was used to describe the relationship between
study variables. The findings revealed that all four predicting variables have positive effect with significant effect
statistically on tax compliance p<0.05. The implication is that tax compliance on awareness in tax laws among
small and medium enterprises (SMEs) in Tanzania is affected with education, information availability, penalty
and interests; and tax returns. This study recommends that, tax authority to increase coverage on tax education
and further studies should be done on SMEs in other regions either considered to be more advanced or less
advanced than of Arusha in order to have a holistic conclusion on the issue of awareness of small and medium
business enterprises on tax compliance.
