The effect of tax education on tax compliance of small and medium enterprises in Tororo tax district

Abstract

The Small and Medium Enterprise sector is a leading driving force for economic activity and growth in most nations. With the increase in the number of small and medium enterprises being opened and established throughout, URA identified increase in avoidance of taxes imposed on these businesses. The study therefore investigates the effect of tax education on tax compliance of Small and Medium Enterprises in Tororo Tax District. The main objective of the study was to establish the relationship between tax education and tax compliance. Tax education was varied in terms of different approaches of tax seminars, tax clinics and media campaigns where as tax compliance by small and medium enterprises was varied in terms of frequency of filing returns, accuracy of returns filed, voluntary registration and timely filing of returns. The researcher used a survey research design using a quantitative approach and a simple random sampling technique where samples were randomly selected from a population of 61 SMEs from which a sample size of 56 was used. The data collection method used was questionnaires. The collected data was analyzed using SPSS version 16.0 to affirm the effect of tax education on tax compliance of small and medium enterprises. The findings of the study indicated that it is highly essential for the URA to invest in tax education in order to increase tax compliance levels among SMEs making it a critical study. The study recommends that the government should impart tax knowledge to individuals not only in the current business community but to the potential business community including at all levels of education, starting from primary schools to secondary schools, up to university level, with an emphasis of promoting voluntary tax compliance.