Tax System and Small Business Compliance: The Case of the Republic of Seychelles

The purpose of this study was to identify whether the tax system is influencing the level of small business compliance with tax laws in the Republic of Seychelles. Four variables were identified under the tax system, namely the tax rates, record keeping, tax audits and tax penalties. 360 small businesses from twelve different sectors were randomly selected to take part in this study through self-administered questionnaires. The SPSS 20.0 was used to test the strength of the relationship between the tax system and compliance levels, using the Pearson Correlation Coefficient method. The results proved that the tax rates, record keeping, tax audits and tax penalties all have a strong positive relationship with tax compliance. This implies that improvement in these variables will surely lead to improved compliance amongst small businesses. Keywords: Seychelles tax system, small business tax complianc