Assessment of Factors Influencing Tax Evasion by Small and Medium Enterprises: A Case Study of Bukombe District – Geita Region.

Cosmas, Peragius (2023) Assessment of Factors Influencing Tax Evasion by Small and Medium Enterprises: A Case Study of Bukombe District – Geita Region. Masters thesis, The Open University of Tanzania.

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Abstract

The study assessed the factors influencing tax evasion by small and medium enterprises in Bukombe District in Tanzania. It adopted the descriptive design for the cross-sectional data which was administered to the sampled population. It was guided by the question on how economic and non-economic factors influence tax evasion as well as the influence of taxpayers‟ perception of tax evasion in Bukombe. The population of the study was the small and medium business enterprises (SMEs), simple random sampling was employed to select a sample size of 100. The study used a structured questionnaire. The statistical package for social sciences was used for analysis and data were presented in figures and tables. The study objectives were tackled on the basis that economic factors, non-economic factors and taxpayers‟ perceptions were influencing tax evasion in the area by 61% from the regression analysis opening chances of other factors by 39%. The finding presents tax rate and size of the business to have significant influence on tax evasion in the area. The SMEs in Bukombe had a positive attitude on paying tax. Although it was concluded that higher tax rates and unequal tax rate ratio to their business income were influencing tax evasion as well as inadequate knowledge on tax modalities and laws. It was concluded that the factors assessed were influencing tax evasion in the area and higher penalties and frequent auditing were the means to reduce tax evasion. The study recommends the authorities to sensitize SMEs on tax knowledge to avoid tax evasion, to ensure a relative amount of tax rate ratio by suggesting more research to be done on the extent of tax evasion in the area and on the other factors influencing tax evasion than economic, non-economic and taxpayers‟ perceptions in the area. Keywords; Tax, Tax gap, Tax evasion, Small and Medium Enterprises.

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