Tax Competences, Tax Penalties and Tax Compliance Among SMEs in Kampala, Uganda

Abstract

The study examined the relationship between tax competences, tax penalties, and tax compliance among SMEs in Kampala, Uganda. Adopting a research design and a quantitative approach, the study examined the influence of tax competences and tax penalties on tax compliance among SMEs in Kampala, Uganda. The study focused on three objectives, which include examining the relationship between tax competences and tax compliance among SMEs in Kampala, Uganda, examining the relationship between tax penalties and tax compliance among SMEs in Kampala, Uganda, and also examining the predictive potential of tax competencies and tax penalties on tax compliance among SME's in Kampala, Uganda. The study examined a study population of 495,000 SMEs. However, a sample of 384 SMEs was determined and used in this study. The data used in this study was mainly obtained from primary sources using a self-administered questionnaire anchored on a five-Likert scale ranging from 1-5. All study variables obtained Cronbach alpha coefficients of above .7. Statistical Package for Social Sciences software tool (SPSS v25.0) was used to analyze descriptive and inferential statistics. The study ensured the anonymity and confidentiality of data collected from the respondents. The findings of this study indicated a significant positive association between all the study variables, namely, tax competences and tax penalties, which were the independent variables, and tax compliance as the dependent variable. The findings further indicated a significant positive contribution of the predictors to the dependent variable. The study recommends that SMEs prioritize tax competencies, which are the highest predictor in the model. For SMEs to operate smoothly without tax issues with tax collection bodies, they need to ensure that their tax technical staff have Tax Knowledge, Tax Skills, and Tax Abilities