Assessing the Impact of Non-Formal Tax Education on Payment Compliance: The Mediating Role of Procedural Tax Knowledge within the Informal Sector of Ghana

Abstract

The study assessed the impact of non-formal tax education on payment compliance, mediated by procedural tax knowledge. The study employed Social Learning Theory (SLT) as the guidance in its investigation. It utilized a quantitative method and descriptive cross-sectional survey design. Data was sourced from informal sector registered SMEs within the Ghana Enterprises Agency located in the Greater Accra region of Ghana using a 14-item questionnaire developed through literature. A sample size of 1,152 was used in the study. The study employed the multistage sampling technique made up of simple random sampling and snowball sampling. Data was analyzed using partial least squares (PLS) through SMART-PLUS software. The study found that non-formal tax education influences payment compliance significantly. In addition, non-formal tax education influences procedural tax knowledge significantly. Further, procedural tax knowledge influences payment compliance significantly. Moreover, it was found that procedural tax knowledge mediates the impact of non-formal tax education and payment compliance significantly. In conclusion, the findings show that enhancing procedural tax knowledge through important or vital educational interventions not only propels compliance but also strengthens the association between tax education and tax compliance.