Tax Compliance Costs and the use of e-filing by SMMEs
Tax Compliance Costs and the use of e-filing by SMMEs
Keywords:
Tax Compliance, e-filing, Taxpayer, Technology Acceptance Model (TAM), Value-Added Tax (VAT), Compliance CostsAbstract
This study investigated the costs associated with tax compliance for the small business taxpayer and the factors that motivate them to use the e-filing tax system in Ugu district municipality. The study employed a qualitative research method where semi-structured face-to-face interviews were used as a data collection technique. The purposive sampling strategy was used because the research specifically targeted candidates who are owners of small business. The sample size comprised ten candidates and a thematic analysis was deemed a suitable data analysis method. The findings of the study revealed that the tax compliance costs incurred by taxpayers were mainly monetary cost (practitioners’ fees, lawyers’ fees and cost of travelling to the tax office) and time costs (time spent travelling to the tax office, waiting in the queue to be served and preparing documents for tax submission). In addition, taxpayers pointed out that ease of use of e-filing and demographic factors such as access to the internet and end-user computer knowledge are factors that influence the use of the e-filing tax system. The findings of the study will be of value for the South African revenue services (SARS) and small businesses to become aware of the costs associated with tax compliance and educate them on the necessity of complying with tax law. The research recommends that SARS provide sub-stations or mobile units for rural taxpayers to access the e-filing system and provide the necessary training to the public.
References
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ARIFF ISMAIL LOH, M., ZUBAIDAH, ALFRED LC 1997. Compliance costs of corporate income taxation in Singapore. Journal of Business Finance & Accounting, 24, 1253-1268.
AZMI, A., SAPIEI, N. S., MUSTAPHA, M. Z. & ABDULLAH, M. 2016. SMEs' tax compliance costs and IT adoption: the case of a value-added tax. International Journal of Accounting Information Systems, 23, 1-13.
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CHAOUALI, W., YAHIA, I. B., CHARFEDDINE, L. & TRIKI, A. 2016. Understanding citizens' adoption of e-filing in developing countries: An empirical investigation. The Journal of High Technology Management Research, 27, 161-176.
CHOY, L. T. 2014. The strengths and weaknesses of research methodology: Comparison and complimentary between qualitative and quantitative approaches. IOSR Journal of Humanities and Social Science, 19, 99-104.
COOLIDGE, J., ILIC, D. & KISUNKO, G. 2009. Small businesses in South Africa: who outsources tax compliance work and why?, The World Bank.
CUCCIA, A. D. & CARNES, G. A. 2001. A closer look at the relation between tax complexity and tax equity perceptions. Journal of Economic Psychology, 22, 113-140.
DJANKOV, S., GANSER, T., MCLIESH, C., RAMALHO, R. & SHLEIFER, A. 2010. The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2, 31-64.
EICHFELDER, S. & VAILLANCOURT, F. 2014. Tax compliance costs: A review of cost burdens and cost structures.
ENGSTRÖM, P., NORDBLOM, K., OHLSSON, H. & PERSSON, A. 2015. Tax compliance and loss aversion. American Economic Journal: Economic Policy, 7, 132-64.
ERAGBHE, E. & MODUGU, K. P. 2014. Tax compliance costs of small and medium scale enterprises in Nigeria. International Journal of Accounting and Taxation, 2, 63-87.
ERAGBHE, E. & OMOYE, A. 2014. SME characteristics and value added tax compliance costs in Nigeria. Mediterranean Journal of Social Sciences, 5, 614.
ETIKAN, I., MUSA, S. A. & ALKASSIM, R. S. 2016. Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5, 1-4.
EVANS, C., HANSFORD, A., HASSELDINE, J., LIGNIER, P., SMULDERS, S. & VAILLANCOURT, F. 2014. Small business and tax compliance costs: A cross-country study of managerial benefits and tax concessions. eJournal of Tax Research, 12, 453.
EVANS, C. & TRAN-NAM, B. 2014. Tax compliance costs in New Zealand: An international comparative evaluation. Tax Administration for the 21st Century Working Papers, 2.
FARIDY, N., FREUDENBERG, B., SARKER, T. & COPP, R. 2016. The hidden compliance cost of VAT: An exploration of psychological and corruption costs of VAT in a developing country.
HAO, W. & TRAN-NAM, B. 2017. Estimating aggregate tax compliance costs: a new approach using a state space model. Australian Tax Forum, 32, 197-224.
HUNG, S.-Y., CHANG, C.-M. & YU, T.-J. 2006. Determinants of user acceptance of the e-Government services: The case of online tax filing and payment system. Government Information Quarterly, 23, 97-122.
IBRAHIM, I. 2015. The profile of tax e-filing users and non-users: The case of Malaysia. International Conference on Accounting Studies. Johor Bahru, Malaysia.
ISLAM, M. A., MUHD YUSUF, D. & BASHAR BHUIYAN, A. 2015. Taxpayers’ Satisfaction in Using E-Filing System in Malaysia: Demographic Perspective.
JAMES, S. & ALLEY, C. 2002. Tax compliance, self-assessment and tax administration.
KASIPILLAI, J. 2010. A practical guide to self-assessment system. Kuala Lumpur: McGraw-Hill.
LAI, M.-L. & CHOONG, K.-F. 2010. Motivators, barriers and concerns in adoption of electronic filing system: survey evidence from Malaysian professional accountants. American journal of applied sciences, 7, 562-567.
LALLMAHOMED, M. Z. I., LALLMAHOMED, N. & LALLMAHOMED, G. M. 2017. Factors influencing the adoption of e-Government services in Mauritius. Telematics and Informatics, 34, 57-72.
LEGRIS, P., INGHAM, J. & COLLERETTE, P. 2003. Why do people use information technology? A critical review of the technology acceptance model. Information & management, 40, 191-204.
LIGNIER, P., EVANS, C. & TRAN-NAM, B. 2014. Tangled up in tape: The continuing tax compliance plight of the small and medium enterprise business sector. Austl. Tax F., 29, 217.
MAHMOOD, M., OSMANI, M. & SIVARAJAH, U. 2014. The role of trust in e-government adoption: A systematic literature review.
MAILLET, É., MATHIEU, L. & SICOTTE, C. 2015. Modeling factors explaining the acceptance, actual use and satisfaction of nurses using an Electronic Patient Record in acute care settings: An extension of the UTAUT. International Journal of Medical Informatics, 84, 36-47.
MAJI, S. K. & PAL, K. 2017. Factors Affecting the Adoption of e-Filing of Income Tax Returns in India: A Survey. IUP Journal of Accounting Research & Audit Practices, 16, 46-66.
MANSOR, H. A. & HANEFAH, M. M. 2008. Tax compliance costs of Bumiputera small and medium enterprises in Northern Malaysia. International Journal of Management Studies, 15, 21-42.
MPINGANJIRA, M. 2015. Perceived ease of use: examining its influence on personal use of the tax e-filing system. International Journal of Innovation and Technology Management, 12, 1550003.
MUÑOZ-LEIVA, F., CLIMENT-CLIMENT, S. & LIÉBANA-CABANILLAS, F. 2017. Determinants of intention to use the mobile banking apps: An extension of the classic TAM model. Spanish Journal of Marketing - ESIC, 21, 25-38.
MUTURI, H. M. & KIARIE, N. 2015. Effects of online tax system on tax compliance among small taxpayers in Meru County, Kenya. International Journal of Economics, Commerce and Management. United Kingdom Vol. III, 12, 280.
NAICKER, Y. & RAJARAM, R. 2019. Factors that Influence Tax Compliance of SMEs in South Africa. Vol 10, 94-111.
OBERT, S., RODGERS, K., TENDAI, M. J. & DESDERIO, C. 2018. Effect of e-tax filing on tax compliance: A case of clients in Harare, Zimbabwe. African Journal of Business Management, 12, 338-342.
PAVEL, J. & VÍTEK, L. 2014. Tax Compliance Costs: Selected Post-transitional Countries and the Czech Republic. Procedia Economics and Finance, 12, 508-515.
PITCHAY MUTHU CHELLIAH, P., THURASAMY, R., ALZAHRANI, A. I., ALFARRAJ, O. & ALALWAN, N. 2016. E-Government service delivery by a local government agency: The case of E-Licensing. Telematics and Informatics, 33, 925-935.
SANDFORD, C. T., GODWIN, M. & HARDWICK, P. 1989. Administrative and compliance costs of taxation, Fiscal publ. Bath.
SANDHU, K., ALOMARI, M. K. & WOODS, P. 2014. Exploring citizen perceptions of barriers to e-government adoption in a developing country. Transforming Government: People, Process and Policy, 8, 131-150.
SANTHANAMERY, T. & RAMAYAH, T. 2014. Explaining the e-Government usage using expectation confirmation model: The case of electronic tax filing in Malaysia. Government e-Strategic Planning and Management. Springer.
SANTHANAMERY, T. & RAMAYAH, T. 2018. Trust in the System: The Mediating Effect of Perceived Usefulness of the E-Filing System. User Centric E-Government. Springer.
SINGH, D. P. 2014. Online shopping motivations, information search, and shopping intentions in an emerging economy. The East Asian Journal of Business Management, 4, 5-12.
SLEMROD, J. B. & VENKATESH, V. 2002. The income tax compliance cost of large and mid-size businesses. Ross School of Business Paper.
SMULDERS, S. & EVANS, C. 2017. Mitigating VAT compliance costs - a developing country perspective. Australian Tax Forum, 32, 283-316.
SMULDERS, S., STIGLINGH, M., FRANZSEN, R. & FLETCHER, L. 2016. Determinants of internal tax compliance costs: evidence from South Africa. Journal of Economic and Financial Sciences, 9, 714-729.
SMULDERS, S., STIGLINGH, M., FRANZSEN, R. & FLETCHER, L. 2017. Determinants of external tax compliance costs: Evidence from South Africa. South African Journal of Accounting Research, 31, 134-150.
SWISTAK, A. 2016. Tax penalties in SME tax compliance. Financial theory and practice, 40, 129-147.
TALLAHA, A. M., SHUKOR, Z. A. & HASSAN, N. S. A. 2014. Factors Influencing E-Filing Usage Among Malaysian Taxpayers: Does Tax Knowledge Matters? Jurnal Pengurusan (UKM Journal of Management), 40.
TRAN-NAM, B., EVANS, C. & LIGNIER, P. 2014. Personal taxpayer compliance costs: Recent evidence from Australia. Austl. Tax F., 29, 137.
TRAN-NAM, B. & WALPOLE, M. 2016. Tax disputes, litigation costs and access to tax justice. eJournal of Tax Research, 14, 319.
WADESANGO, N., MUTEMA, A., MHAKA, C. & WADESANGO, V. 2018. TAX COMPLIANCE OF SMALL AND MEDIUM ENTERPRISESTHROUGH THE SELF-ASSESSMENT SYSTEM: ISSUES AND CHALLENGES. Academy of Accounting and Financial Studies Journal, 22.
WEI, K.-M., TANG, Y.-T., KAO, Y.-C., TSENG, L.-C. & WU, H.-H. 2017. Using an updated Delone and McLean model to assess the success of implementing the ward cleaning logistics system in a medical center. Journal of Statistics and Management Systems, 20, 965-976.
AL-HUJRAN, O., AL-DEBEI, M. M., CHATFIELD, A. & MIGDADI, M. 2015. The imperative of influencing citizen attitude toward e-government adoption and use. Computers in human Behavior, 53, 189-203.
ALIBRAHEEM, M. H. & ABDUL-JABBAR, H. 2016. Electronic Tax Filing Adoption and its Impact on Tax Employees Performance in Jordan: A Proposed Framework. World Applied Sciences Journal, 34, 393-399.
ALLINGHAM, M. G. & SANDMO, A. 1972. Income tax evasion: A.
ARIFF ISMAIL LOH, M., ZUBAIDAH, ALFRED LC 1997. Compliance costs of corporate income taxation in Singapore. Journal of Business Finance & Accounting, 24, 1253-1268.
AZMI, A., SAPIEI, N. S., MUSTAPHA, M. Z. & ABDULLAH, M. 2016. SMEs' tax compliance costs and IT adoption: the case of a value-added tax. International Journal of Accounting Information Systems, 23, 1-13.
BRAUNERHJELM, P. & EKLUND, J. E. 2014. Taxes, tax administrative burdens and new firm formation. Kyklos, 67, 1-11.
CHAOUALI, W., YAHIA, I. B., CHARFEDDINE, L. & TRIKI, A. 2016. Understanding citizens' adoption of e-filing in developing countries: An empirical investigation. The Journal of High Technology Management Research, 27, 161-176.
CHOY, L. T. 2014. The strengths and weaknesses of research methodology: Comparison and complimentary between qualitative and quantitative approaches. IOSR Journal of Humanities and Social Science, 19, 99-104.
COOLIDGE, J., ILIC, D. & KISUNKO, G. 2009. Small businesses in South Africa: who outsources tax compliance work and why?, The World Bank.
CUCCIA, A. D. & CARNES, G. A. 2001. A closer look at the relation between tax complexity and tax equity perceptions. Journal of Economic Psychology, 22, 113-140.
DJANKOV, S., GANSER, T., MCLIESH, C., RAMALHO, R. & SHLEIFER, A. 2010. The effect of corporate taxes on investment and entrepreneurship. American Economic Journal: Macroeconomics, 2, 31-64.
EICHFELDER, S. & VAILLANCOURT, F. 2014. Tax compliance costs: A review of cost burdens and cost structures.
ENGSTRÖM, P., NORDBLOM, K., OHLSSON, H. & PERSSON, A. 2015. Tax compliance and loss aversion. American Economic Journal: Economic Policy, 7, 132-64.
ERAGBHE, E. & MODUGU, K. P. 2014. Tax compliance costs of small and medium scale enterprises in Nigeria. International Journal of Accounting and Taxation, 2, 63-87.
ERAGBHE, E. & OMOYE, A. 2014. SME characteristics and value added tax compliance costs in Nigeria. Mediterranean Journal of Social Sciences, 5, 614.
ETIKAN, I., MUSA, S. A. & ALKASSIM, R. S. 2016. Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5, 1-4.
EVANS, C., HANSFORD, A., HASSELDINE, J., LIGNIER, P., SMULDERS, S. & VAILLANCOURT, F. 2014. Small business and tax compliance costs: A cross-country study of managerial benefits and tax concessions. eJournal of Tax Research, 12, 453.
EVANS, C. & TRAN-NAM, B. 2014. Tax compliance costs in New Zealand: An international comparative evaluation. Tax Administration for the 21st Century Working Papers, 2.
FARIDY, N., FREUDENBERG, B., SARKER, T. & COPP, R. 2016. The hidden compliance cost of VAT: An exploration of psychological and corruption costs of VAT in a developing country.
HAO, W. & TRAN-NAM, B. 2017. Estimating aggregate tax compliance costs: a new approach using a state space model. Australian Tax Forum, 32, 197-224.
HUNG, S.-Y., CHANG, C.-M. & YU, T.-J. 2006. Determinants of user acceptance of the e-Government services: The case of online tax filing and payment system. Government Information Quarterly, 23, 97-122.
IBRAHIM, I. 2015. The profile of tax e-filing users and non-users: The case of Malaysia. International Conference on Accounting Studies. Johor Bahru, Malaysia.
ISLAM, M. A., MUHD YUSUF, D. & BASHAR BHUIYAN, A. 2015. Taxpayers’ Satisfaction in Using E-Filing System in Malaysia: Demographic Perspective.
JAMES, S. & ALLEY, C. 2002. Tax compliance, self-assessment and tax administration.
KASIPILLAI, J. 2010. A practical guide to self-assessment system. Kuala Lumpur: McGraw-Hill.
LAI, M.-L. & CHOONG, K.-F. 2010. Motivators, barriers and concerns in adoption of electronic filing system: survey evidence from Malaysian professional accountants. American journal of applied sciences, 7, 562-567.
LALLMAHOMED, M. Z. I., LALLMAHOMED, N. & LALLMAHOMED, G. M. 2017. Factors influencing the adoption of e-Government services in Mauritius. Telematics and Informatics, 34, 57-72.
LEGRIS, P., INGHAM, J. & COLLERETTE, P. 2003. Why do people use information technology? A critical review of the technology acceptance model. Information & management, 40, 191-204.
LIGNIER, P., EVANS, C. & TRAN-NAM, B. 2014. Tangled up in tape: The continuing tax compliance plight of the small and medium enterprise business sector. Austl. Tax F., 29, 217.
MAHMOOD, M., OSMANI, M. & SIVARAJAH, U. 2014. The role of trust in e-government adoption: A systematic literature review.
MAILLET, É., MATHIEU, L. & SICOTTE, C. 2015. Modeling factors explaining the acceptance, actual use and satisfaction of nurses using an Electronic Patient Record in acute care settings: An extension of the UTAUT. International Journal of Medical Informatics, 84, 36-47.
MAJI, S. K. & PAL, K. 2017. Factors Affecting the Adoption of e-Filing of Income Tax Returns in India: A Survey. IUP Journal of Accounting Research & Audit Practices, 16, 46-66.
MANSOR, H. A. & HANEFAH, M. M. 2008. Tax compliance costs of Bumiputera small and medium enterprises in Northern Malaysia. International Journal of Management Studies, 15, 21-42.
MPINGANJIRA, M. 2015. Perceived ease of use: examining its influence on personal use of the tax e-filing system. International Journal of Innovation and Technology Management, 12, 1550003.
MUÑOZ-LEIVA, F., CLIMENT-CLIMENT, S. & LIÉBANA-CABANILLAS, F. 2017. Determinants of intention to use the mobile banking apps: An extension of the classic TAM model. Spanish Journal of Marketing - ESIC, 21, 25-38.
MUTURI, H. M. & KIARIE, N. 2015. Effects of online tax system on tax compliance among small taxpayers in Meru County, Kenya. International Journal of Economics, Commerce and Management. United Kingdom Vol. III, 12, 280.
NAICKER, Y. & RAJARAM, R. 2019. Factors that Influence Tax Compliance of SMEs in South Africa. Vol 10, 94-111.
OBERT, S., RODGERS, K., TENDAI, M. J. & DESDERIO, C. 2018. Effect of e-tax filing on tax compliance: A case of clients in Harare, Zimbabwe. African Journal of Business Management, 12, 338-342.
PAVEL, J. & VÍTEK, L. 2014. Tax Compliance Costs: Selected Post-transitional Countries and the Czech Republic. Procedia Economics and Finance, 12, 508-515.
PITCHAY MUTHU CHELLIAH, P., THURASAMY, R., ALZAHRANI, A. I., ALFARRAJ, O. & ALALWAN, N. 2016. E-Government service delivery by a local government agency: The case of E-Licensing. Telematics and Informatics, 33, 925-935.
SANDFORD, C. T., GODWIN, M. & HARDWICK, P. 1989. Administrative and compliance costs of taxation, Fiscal publ. Bath.
SANDHU, K., ALOMARI, M. K. & WOODS, P. 2014. Exploring citizen perceptions of barriers to e-government adoption in a developing country. Transforming Government: People, Process and Policy, 8, 131-150.
SANTHANAMERY, T. & RAMAYAH, T. 2014. Explaining the e-Government usage using expectation confirmation model: The case of electronic tax filing in Malaysia. Government e-Strategic Planning and Management. Springer.
SANTHANAMERY, T. & RAMAYAH, T. 2018. Trust in the System: The Mediating Effect of Perceived Usefulness of the E-Filing System. User Centric E-Government. Springer.
SINGH, D. P. 2014. Online shopping motivations, information search, and shopping intentions in an emerging economy. The East Asian Journal of Business Management, 4, 5-12.
SLEMROD, J. B. & VENKATESH, V. 2002. The income tax compliance cost of large and mid-size businesses. Ross School of Business Paper.
SMULDERS, S. & EVANS, C. 2017. Mitigating VAT compliance costs - a developing country perspective. Australian Tax Forum, 32, 283-316.
SMULDERS, S., STIGLINGH, M., FRANZSEN, R. & FLETCHER, L. 2016. Determinants of internal tax compliance costs: evidence from South Africa. Journal of Economic and Financial Sciences, 9, 714-729.
SMULDERS, S., STIGLINGH, M., FRANZSEN, R. & FLETCHER, L. 2017. Determinants of external tax compliance costs: Evidence from South Africa. South African Journal of Accounting Research, 31, 134-150.
SWISTAK, A. 2016. Tax penalties in SME tax compliance. Financial theory and practice, 40, 129-147.
TALLAHA, A. M., SHUKOR, Z. A. & HASSAN, N. S. A. 2014. Factors Influencing E-Filing Usage Among Malaysian Taxpayers: Does Tax Knowledge Matters? Jurnal Pengurusan (UKM Journal of Management), 40.
TRAN-NAM, B., EVANS, C. & LIGNIER, P. 2014. Personal taxpayer compliance costs: Recent evidence from Australia. Austl. Tax F., 29, 137.
TRAN-NAM, B. & WALPOLE, M. 2016. Tax disputes, litigation costs and access to tax justice. eJournal of Tax Research, 14, 319.
WADESANGO, N., MUTEMA, A., MHAKA, C. & WADESANGO, V. 2018. TAX COMPLIANCE OF SMALL AND MEDIUM ENTERPRISESTHROUGH THE SELF-ASSESSMENT SYSTEM: ISSUES AND CHALLENGES. Academy of Accounting and Financial Studies Journal, 22.
WEI, K.-M., TANG, Y.-T., KAO, Y.-C., TSENG, L.-C. & WU, H.-H. 2017. Using an updated Delone and McLean model to assess the success of implementing the ward cleaning logistics system in a medical center. Journal of Statistics and Management Systems, 20, 965-976.
Published
2021-02-08
How to Cite
Nomlala, B., & Oluka, A. (2021). Tax Compliance Costs and the use of e-filing by SMMEs : Tax Compliance Costs and the use of e-filing by SMMEs . The Journal of Accounting and Management, 11(2). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/735
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