Effectiveness of taxpayer’s education on tax compliance among SMEs in Moshi municipality, Tanzania

Abstract

The overall objective of the study was to assess the effects of taxpayer’s education on tax compliance among the SMEs in Moshi Municipality, Tanzania. The study specifically aimed to examine taxpayer’s education level among the SMEs, determine the means of acquiring tax education, and examine the number of SMEs which comply to pay tax in Moshi Municipality. The study adopted descriptive research design and data was corrected once at a time. The sample size of the study was 121 respondents. Stratified sampling procedure was used to obtain the respondents. Data was collected using a questionnaire and were analysed using descriptive statistics of which frequency and percentage was computed and Pearson Correlation coefficient to determine the relationship between variables. The study found that SMEs owners lacks tax education which enhance low tax compliance behaviour, the study went further and found that methods used by Tanzania Revenue Authority (TRA) to increase tax compliance behaviour among SMEs is ineffective, lastly the study revealed that there is a positive relationship (r = 0.725) between taxpayers’ education and compliance behaviour. Basing on the research findings the study concludes that Taxpayer education is essential in improving voluntary tax compliance behaviour. It’s essential for the taxpayers to understand his/her rights, obligations, and the procedures of paying taxes. The study recommends that taxation education should be taught at all levels of education, with an emphasis of promoting voluntary tax compliance behaviour to individuals in the country.