Tax compliance behaviour of guest house owners

Abstract: Tax compliance behaviour is a matter of concern to tax authorities because evasion negatively influences the collection of taxes and the capacity of government to accomplish its fiscal and social welfare goals. The small business sector plays an important role in the economic and social development of a country. Their poor compliance with tax obligations poses a significant problem. In South Africa, SARS has identified small businesses as an area of priority because their compliance levels are generally very low. Researchers believe that understanding taxpayer behaviour is essential for effective tax administration. The present study therefore aims to add to the understanding of small business owners’ attitudes and perceptions on tax. This research investigates and identifies the behavioural factors of compliance and their effect on tax compliance. The study also reviews strategies from other countries and identifies the behavioural factors addressed by each strategy. The study attempts to understand SME owners’ perceptions towards tax compliance and their opinions on a proposed strategy to improve tax compliance. A mixed methods design is used whereby an in-depth review of the literature is first conducted to identify the behavioural factors of tax compliance. The effect of these factors on compliance is examined as well as strategies used by other tax authorities to encourage compliance. Thereafter, a survey is conducted on a sample of owners of guest houses in Soweto to elicit their perceptions of the behavioural factors of tax compliance and their opinions on the proposed strategy of improving tax compliance. The results are analysed statistically and thematically. A consolidated view is presented of the behavioural factors identified from the behavioural approaches to tax compliance. This is supported by evidence from multiple sources. Strategies from various countries are presented and linked to the...M.Com. (Taxation