Abstract:
This study investigated the effects of key determinants of tax morale on tax compliance of Small and Medium-sized Enterprises (SMEs) within the informal sector in the Ho West district of Ghana. The study specifically examined whether tax knowledge, tax rate, tax penalty and tax religiosity affect the tax compliance of the selected SMEs. The study was supported by the institutional theory and adopted the quantitative approach and explanatory research design. Primary data was gathered from 142 owner-managers of SMEs within the Ho West district via the structured questionnaires. The valid data of 114 was then processed using the IBM SPSS Statistics (v. 26) and SmartPLS. The data was finally analysed suing the PLS-SEM analytical tool and it was found that all the determinants of tax morale significantly affected tax compliance. Among these determinants, tax knowledge, tax penalty and tax religiosity had significant positive effects while tax rate had significant negative effect on tax compliance. The study concluded that the determinant of tax morale plays crucial roles in improving the tax compliance of the owner-managers of the SMEs studied. It was recommended that policy makers within the informal sector should devise measures to improve the determinants of tax morale in order to induce the owner/managers to comply with tax regulations.
