An Investigation into the Drivers of Tax Non-Compliance By Small and Medium-Sized Enterprises in Cameroon: Empirical Evidence From The North West Region

Author(s)

Fabien SUNDJO , Irene NEH CHE ,

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Volume 9 - January 2020 (01)

Abstract

This study investigated the key drivers of tax non-compliance in the North West Region of Cameroon.  Specifically, the study aimed at investigating the effects of the level of tax education of the managers of SMEs, turnover of SMEs, perception of the future tax penalties (cost), corruption and tax rate on tax non-compliance. To achieve these objectives, data was collected using questionnaires with a sample of 200 respondents from the business world. To ascertain the reliability of instruments used, pre-tests were conducted and a pilot test was conducted. Data were analyzed using both descriptive and inferential statistics. The Probit Regression Model was used to test the hypothesis of the study. The findings from the study revealed that a unit increase in tax education of the managers of SMEs would lead to a decrease in the likelihood for SMEs not to comply with tax payment. It was also observed that unit increase in turnover would lead to a decrease in the likelihood for the SMEs not to comply with the payment of taxes, a unit increase in future tax penalties (cost) will lead to an increase in the likelihood for the SMEs not to comply to tax payment and unit increase in corruption will lead to an increase in the likelihood for the SMEs not to comply with tax payment. From the test results, in order to improve on the situation of tax payment in Bamenda, taxpayer’s education need to be intensified, lowering the tax rates to enhance tax collections and implementing high penalty rates. The government should be more involved in making laws that will encourage compliance by improving the taxpayers’ attitude. Tax authorities should strive to give taxpayers high quality services as stipulated in the corporate plan and in the taxpayer’s charter.

Keywords

Tax, Tax Non-compliance, Small and Medium-Sized Enterprises and Probit Model

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Fabien SUNDJO, An Investigation into the Drivers of Tax Non-Compliance By Small and Medium-Sized Enterprises in Cameroon: Empirical Evidence From The North West Region, International Journal of Management Sciences and Business Research 01(2020):01-20 DOI: 10.5281/zenodo.3702057