Determinants of Personal Income Tax Payment Compliance for Small Business Owners in Mbeya City, Tanzania.

Bryson, Benjamin (2025) Determinants of Personal Income Tax Payment Compliance for Small Business Owners in Mbeya City, Tanzania. Masters thesis, The Open University of Tanzania.

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Abstract

This study examined the factors influencing the compliance of small business owners with income tax in Mbeya city. The specific objectives of the study were: to determine the influence of the level of tax payment education, to ascertain the influence of the income level of taxpayers, to examine the influence of tax aversion attitude, and to analyze the influence of tax rate on income tax payment compliance among small business taxpayers in Mbeya city. The study employed the stratified and simple random sampling technique to select 375 small business owners for the survey. The sample size was calculated using the Cochran formula, and the data were collected using structured questionnaires. The data were cleaned before being entered into SPSS version 27 for analysis. The data analysis was conducted using descriptive and Ordinary Least squares methods. The findings from the regression analysis indicated that tax education and the income level of small business owners positively and significantly promoted income tax payment compliance. However, the findings indicated that tax aversion attitudes and tax rates negatively and significantly influenced tax payment compliance. The study concludes that tax education, taxpayers' income levels, tax aversion attitudes, and tax rates are important determinants of tax compliance. The study recommends the TRA to provide comprehensive tax education to promote awareness of tax compliance. Moreover, policymakers should promote favorable tax rates to sustain tax compliance attitudes. Keywords: Determinants of Personal Income Tax, Tax Payment Compliance, Small Business Owners, Mbeya City, Tanzania

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