The Influence of Educational Background on Tax Compliance among SMEs in the Informal Sector of Ghana

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Fatimah Jibril Bawa

Abstract

Purpose: This study investigates the influence of educational background on tax compliance among SMEs in the informal sector of Ghana. It focuses on how SME owners' educational qualifications influence their filing tax compliance, payment tax compliance, and reporting tax compliance in the informal sector of Ghana.


Design/Methodology/Approach: This study used a quantitative survey research design to collect data from 1168 SME owners operating in the informal sector in Accra and Kumasi, Ghana, using the MANCOVA method of analysis.


Findings: The study found a statistically significant difference between educational background and filing tax compliance among SMEs in the informal sector in Ghana [F (3,1164),7.22, p=0.000] and a statistically significant difference between educational background and payment tax compliance among SMEs in the informal sector in Ghana [F (3,1164),5.17, p=0.001]. The study also discovered that SME owners with a high school certificate were more likely to pay and file taxes than SME owners with other educational credentials or degrees.


Implications/Research Limitation: The results of this study extend and add to the growing empirical studies on taxation and SME business. However, the study was limited to only SMEs in the informal sector of Ghana.


Practical Implication: The study results have the prospect of encouraging Ghanaian policymakers to understand the significance of targeted educational programmes or support for SMEs in the informal sector in improving tax compliance.


Originality/Value: This study is the first to directly investigate how educational qualification can influence tax filing, payment and reporting compliance in Ghana. Nonetheless, this study varies from previous empirical research in terms of methodology and context.

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How to Cite
Fatimah Jibril Bawa. (2024). The Influence of Educational Background on Tax Compliance among SMEs in the Informal Sector of Ghana. The International Journal of Business & Management, 12(4). https://doi.org/10.24940/theijbm/2024/v12/i4/BM2404-011 (Original work published April 30, 2024)