Tax Knowledge and Tax Compliance of Hospitality Firms in Cape Coast

Abstract

This study investigated the correlation between tax knowledge and the tax compliance of small and medium-scale enterprises operating in the hospitality industry in Cape Coast. The primary data was collected from 113 small and medium-scale enterprises owners, managers and employees in Cape Cost. The study adopted a quantitative approach and utilized a questionnaire as the primary data collection tool. Partial Least Square estimation was employed for data analysis and an explanatory research design was utilized. The finding of the study demonstrated a significant and positive relationship between knowledge of tax rights and responsibilities and tax compliance. Further, the study unveiled a significant and negative association between knowledge of business income and tax compliance. Additionally, the study revealed a positive and statistically significant correlation between awareness of sanctions and tax compliance. In light of these findings, it is recommended that small and medium-scale enterprises owners and managers should invest in tax education programs for their employees with a specific focus on ensuring that those involved in financial related issues are well-versed in tax rights and responsibilities. Also, small and medium-scale enterprises should consider seeking guidance from tax professionals who specialize in their industry as these experts can offer valuable insights into optimizing tax compliance strategies. Finally, it is crucial for small and medium-scale enterprises managers to effectively communicate the potential sanctions and consequences of non-compliance to their employees and stay informed about any changes in tax regulations and sanctions