SMEs Tax Compliance Behaviour in Emerging Economies: Do Tax Compliance Costs Matter? Evidence from Ghana


  • Ernest Bruce-Twum Department of Accounting Central University of Ghana, Accra, Ghana



Tax compliance, Tax compliance cost, Emerging economies, Ghana, SME


Purpose- Emerging nations are characterised by low-income levels. In spite of this, some of these nations, like Ghana, continue to experience gaps in their revenue targets. A key cause of this gap is the unethical behaviour of tax non-compliance by small and medium-sized enterprises (SMEs). SMEs represent about 99% of businesses in Ghana and are vital for the growth of the country. Some studies conducted in emerging nations have shown that the cost incurred by businesses to comply with tax regulations influences their tax compliance behaviour. However, very little is known of such a relationship in Ghana. This study investigated the connection between tax compliance costs and SMEs' tax compliance behaviour. Design/methodology/approach- Data was collected through a survey of SMEs. Tax compliance behaviour was measured by hypothetical case scenarios obtained from the literature. The tax compliance cost (TCC) was measured as the internal, external and incidental expenses paid by SMEs. A multiple regression analysis was utilised to examine the relationship between TCC and tax compliance behaviour. Findings- The study found that SMEs that incurred large compliance costs were less inclined to act in a non-compliant manner. The TCC was significantly inversely related to the tax compliance behaviour of SMEs. Originality/value- Although a few studies have been conducted in emerging economies, very little is known in the case of Ghana. The study thus adds to the literature on the tax compliance behaviour of SMEs in emerging economies. The study will be a benchmark against which future studies conducted in Ghana can be compared.




How to Cite

Bruce-Twum, E. (2023). SMEs Tax Compliance Behaviour in Emerging Economies: Do Tax Compliance Costs Matter? Evidence from Ghana. Journal of Accounting, Ethics & Public Policy, JAEPP, 24(2).