Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

The Effect of Peer Influence on Income Tax Compliance among Owners of Small and Medium Enterprises in Soroti District, Uganda

Otai Isaac Peter

http://dx.doi.org/10.6007/IJARAFMS/v13-i1/15684

Open access

This study investigates the effect of peer influence on income taxpayer compliance among owners of Small and Medium Scale Enterprises in Soroti district, Uganda. Income tax compliance contributes to the social and economic development of most economies through reduction of government fiscal deficit and debt, and as well generating finance for infrastructure development. The study findings are based on raw data collected by use of questionnaire. The raw data was then analyzed using Statistical Package for Social Scientists, where ordinary regression analysis was used to determine the effect of peer influence on income tax compliance proxied as filing of income tax returns and prompt payment of income tax. The study randomly selected 50 owners of SMEs in soroti district, Uganda. The findings show that peer influence has a positive and insignificant relationship with income tax compliance both proxied as filing of income tax returns and prompt payment of income tax. Conclusions were drawn based on the study findings while implications and recommendations are also discussed based on the findings.

Alabede, J. O., Ariffin, Z. Z., & Idris, K. M. (2011). Determinants of tax compliance behaviour: A proposed model for Nigeria. International Research Journal of Finance and Economics, 78(1), 121-136.
Al-Fassel, T. (2014). Strengthening tax and customs administration. Journal of Experimental Psychology: General, Friedrich Ebert Stiftung,136(1), 23–42.
Alm, J., Kirchler, E., & Muehlbacher, S. (2012). Combining psychology and economics in the analysis of compliance: From enforcement to cooperation. Economic Analysis and Policy, 42(2), 133-151.
Alm, J., & McKee, M. (1998). Extending the lessons of laboratory experiments on tax compliance to managerial and decision economics. Managerial and Decision Economics, 19(4?5), 259-275.
Alon, A., & Hageman, A. M. (2013). The impact of corruption on firm tax compliance in transition economies: Whom do you trust?. Journal of Business Ethics, 116(3), 479-494.
Alshira’h, A. F. (2019). The effect of peer influence on sales tax compliance among Jordanian SMEs. International Journal of Academic Research in Business and Social Sciences, 9(3), 710-721.
Alshir’ah, A. F., Abdul-Jabbar, H., & Samsudin, R. S. (2016). Determinants of sales tax compliance in small and medium enterprises in Jordan: A call for empirical research. Small, 10, 49.
Atawodi, O. W., & Ojeka, S. (2012). Factors that affect tax compliance among small and medium enterprises (SMEs) in North Central Nigeria. International journal of business and management, 7(12)
Awang, N., & Amran, A. (2014). Ethics and tax compliance. In Ethics, Governance and Corporate Crime: Challenges and Consequences. (Developments in Corporate Governance and Responsibility, Vol. 6), Emerald Group Publishing Limited, Bingley, pp. 105-113. https://doi.org/10.1108/S2043-052320140000006004
Ayoki, M. (2007). Tax Performance in Poor Countries: Country Report Uganda. Kampala: Institute of Policy Research and Analysis.
Bauer, A. M. (2016). Tax avoidance and the implications of weak internal controls. Contemporary Accounting Research, 33(2), 449-486.
Benk, S., Cakmak, A. F., & Budak, T. (2011). An investigation of tax compliance intention: A theory of planned behavior approach. European Journal of Economics, Finance and Administrative Sciences, 28(28), 180-188.
Bidin, Z., Sinnasamy, P., & Othman, M. Z. (2018). Excise Duty Compliance and Its Determinants in Malaysia. In Proceeding: 2nd International Conference on Social Sciences, Humanities and Technology (ICSHT 2018) (p. 40).
Bobek, D. D., Hageman, A. M., & Kelliher, C. F. (2013). Analyzing the role of social norms in tax compliance behavior. Journal of Business Ethics, 115(3), 451-468.
Bornman, M. (2014). Principles for understanding, encouraging, and rewarding voluntary tax compliance (Doctoral dissertation, University of Johannesburg).
Cevik, S., & Yeniçeri, H. (2013). The relationship between social norms and tax compliance: The moderating role of the effectiveness of tax administration. International Journal of Economic Sciences, 2(3), 166–180.
Chan, C. W., Troutman, C. S., & O’Bryan, D. (2000). An expanded model of taxpayer compliance: Empirical evidence from the United States and Hong Kong. Journal of International Accounting, Auditing and Taxation, 9(2), 83-103.
Chau, K. K. G., & Leung, P. (2009). A critical review of Fischer tax compliance model: A research synthesis. Journal of accounting and taxation, Vol.1 (2), pp. 034-040.
Clotfelter, C. T. ( 1983 ). Tax evasion and tax rates: An analysis of individual returns. The Review of Economics and Statistics, 65 (3), 363–373. doi: 10.2307/192418.
Colemen, C., & Freeman, L. (1997). Cultural foundations of taxpayer attitudes to voluntary compliance. Australian Tax Forum, 13(3), 311–336
Elffers, H., Robben, H. J., Hessing, D. J. (1992). On measuring tax evasion. Journal of Economic Psychology 13(4):545-567.
Elmi, M. A., Kerosi, E., & Tirimba, O. I. (2015). Relationship between Tax Compliance Barriers and Government’s Revenue Generation at Gobonimo Market in Somaliland. International Journal of Business Management and Economic Research (IJBMER), Vol 6(6),2015, 380- 399.
Fischer, C. M., Wartick, M., & Mark, M. M. (1992). Detection probability and taxpayer compliance:A review of the literature. Journal of Accounting Literature, 11, 1.
Frey, B., & Torgler, B. (2007). Taxation and conditional cooperation. Journal of Comparative Economics, 35, 136–159.
Gaisbauer, H. P., Schweiger, G., & Sedmak, C. (2015). Outlining the field of tax justice. In Philosophical explorations of justice and taxation (pp. 1-14). Springer, Cham.
Gobena, L. B., & Van Dijke, M. (2016). Power, justice, and trust: A moderated mediation analysis of tax compliance among Ethiopian business owners. Journal of Economic Psychology, 52, 24-37.
Grasmick, H., Scott, W. J. (1982). Tax Evasion and Mechanisms of Social Control: A Comparison with Grand and Petty Theft. J Econ. Psychol. 2: 213-230.
Guzel, S. A., Ozer, G., & Ozcan, M. (2019). The effect of the variables of tax justice perception and trust in government on tax compliance: The case of Turkey. Journal of Behavioral and Experimental Economics, 78, 80-86.
Hasan, I., Hoi, C. K., Wu, Q., & Zhang, H. (2017). Social capital and debt contracting: Evidence from bank loans and public bonds. Journal of Financial and Quantitative Analysis, 52(3), 1017-1047.
Hashimzade, N., Myles, G. D., and Tran-Nam, B. (2012): ‘Application of behavioural economics to tax evasion’, Journal of Economic Surveys, Online Version, doi:10.1111/j.1467-6419.2012.00733.x.
Jackson, B. R., & Milliron, V. C. (1986). Tax compliance research: Findings, problems, and prospects. Journal of accounting literature, 5(1), 125-165.
Kirchler, E. (2007). The economic psychology of tax behaviour. Cambridge University Press. ISBN 978-0-521-87674-2 hardback.
Kirchler, E., Kogler, C., & Muehlbacher, S. (2014). Cooperative tax compliance: From deterrence to deference. Current Directions in Psychological Science, 23(2), 87-92.
Kiwanuka, C. K. (2004). Tax Compliance, Taxpayer Service & Customer Care: A Case of Uganda Revenue Authority (1991-2004). URA Presentation to the First Management Meeting, Abuja, Nigeria (Monday 30th August 2004)
Lawan, J., & Salisu, U. M. A. R. (2017). A review of Fischer tax compliance model: A proposal for Nigeria. International Journal of Advanced Academic Research, 3(7), 54-69.
Lefebvre, M., Pestieau, P., Riedl, A., & Claire, M. (2015). Tax evasion and social information : An experiment in Belgium , France , and the Netherlands. International Tax and Public Finance, 22(3), 401–425. https://doi.org/10.1007/s10797-014-9318-z
Lewis, A. (1982). The psychology of taxation. Oxford: Martin Robertson.
Lin, M. T., & Carrol, C. (2000). The impact of tax knowledge on the perception of tax
fairness and attitudes towards comp liance. Asian Review of Accounting, 8(1), 44–58.
Mason, R., Calvin, L. D., Faulkenberry, G. D. (1975). Knowledge, evasion and public support for Oregon’s tax system. Corvallis, OR: Survey Research Center, Oregon State University.
Maseko, N. (2014). Determinants of tax compliance by small and medium enterprises in Zimbabwe. JOURNAL OF ECONOMICS AND INTERNATIONAL BUSINESS RESEARCH (JEIBR) ISSN: 2328-4617 VOL. 2(3), pp. 48-57.
Mohdali, R., & Pope, J. (2012). The effects of religiosity and external environment on voluntary tax compliance. New Zealand Journal of Taxation Law and Policy, 18(2), 119-139
Musimenta, D. (2020). Knowledge requirements, tax complexity, compliance costs and tax compliance in Uganda. Cogent Business & Management, 7(1), 1812220.
Nakiwala, A. (2010). Tax competencies, compliance costs and income tax compliance among SMEs in Uganda; Masters Dissertation
Odinkonigbo, J. J. (2009). Rethinking the Nigeria’s tax policy toward achieving tax compliance, Unpublished doctoral thesis, New York University, Toronto.
Omweri, L., Miqwi, W., & Obara, M. (2010). Taxpayers ’ attitudes and tax compliance behaviour in kenya how the taxpayers ’ attitudes influence compliance behaviour among smes business income earners in Kerugoya. African Journal of Business & Management, 1(8), 112–122.
Onu, D., & Oats, L. (2014). Social norms and tax compliance (Working Paper No. 006-14). Tax Administration Research Centre.
Organization for Economic Co-operation and Development (OECD). (2014). Tax Compliance by Design. Achieving Improved SME Tax Compliance by Adopting a System Perspective. Paris: OECD.
O'shaughnessy, D. B. (2014). Tax compliance determinants: A proposed model for cross-country analysis.
Palil, M. R., & Mustapha, A. F. (2011). Factors affecting tax compliance behaviour in self- assessment system. African journal of business management, 5(33), 12864-12872.
Puspitasari, E., & Meiranto, W. (2014). Motivational postures in tax compliance decisions: an experimental studies. International Journal of Business, Economics and Law, 5(1), 100–110.
Raza, S. H., & Naqvi, S. M. A. (2016). Impact of Tax Evasion on Total Tax in Pakistan. International Journal of Academic Research in Business and Social Sciences, 6(11), 730-739.
Saeed, S., Zubair, Z. A., & Khan, A. (2020). Voluntary Tax Compliance and the Slippery Slope Framework. Journal of Accounting and Finance in Emerging Economies, 6(2), 571- 582.
Safakli, O. V., & Kutlay, K. (2014). A Research on Students' Tax Compliance: Case Of European University of Lefke. International Journal of Academic Research in Economics and Management Sciences, 3(2), 1-7.
Sapiei, N. S., Kasipillai, J., & Eze, U. C. (2014). Determinants of tax compliance behaviour of corporate taxpayers in Malaysia. eJTR, 12, 383.
Sebele-Mpofu, F. Y. (2020) Governance quality and tax morale and compliance in Zimbabwe?s informal sector, Cogent Business and Management 7(1).
Sebikari, K. V. (2014). Critical analysis of the taxation policy on small businesses and entrepreneurial enterprises in Uganda. Journal of Economics and Sustainable Development, 5(10), 12-19.
Seidu, A. N., Abdul, I. W., & Sebil, C. (2015). Modelling the causes of tax default among small and medium scale enterprises (SMEs) in the tamale metropolis of Ghana. European Scientific Journal January, 11(1), 155–168.
Torgler, B. (2012). Tax morale, eastern Europe and European enlargement. Communist and Post-Communist Studies, 45(1–2), 11–25.
Tusubira, F. N., & Nkote, I. N. (2013). Social norms, taxpayers? morale and tax compliance among SBEs in Uganda. Journal of Accounting, Taxation and Performance Evaluation, 2(1), 1-10.
Umar, M. A., Derashid, C., & Ibrahim, I. (2017). Challenges of tax revenue generation in developing countries: Adopting the carrot and stick approach. Journal of Humanities and social sciences, 22(1), 30-34.
Warneryd, K. E., & Walerud, B. (1982). Taxes and economic behavior: Some interview data on tax evasion in Sweden. Journal of Economic Psychology, 2(3), 187-211.
Weber, T. O., Fooken, J., Herrmann, B. (2014) Behavioral Economics and Taxation. European Commission Tax Paper.
Wenzel, M. (2005). Motivation or rationalisation? Causal relations between ethics, norms and tax compliance. Journal of Economic Psychology, 26(4), 491-508.
William, M. (2015). The influence of social norms and tax system on tax compliance. a case study of small and medium taxpayers in Tanga city- Tanzania (Unpublished doctoral thesis, University of Tanzania).
Woodward, L., & Tan, L. M. (2015). Small business owners' attitudes toward GST compliance: a preliminary study. Australian Tax Forum, 30, 517.
Yusof, N. M., Ling, L. M., & Wah, Y. B. (2014). Tax non-compliance among SMEs in Malaysia: Tax audit evidence. Journal of Applied Accounting Research, 15(2), 215–234.

In-Text Citation: (Peter, 2023)
To Cite this Article: Peter, O. I. (2023). The Effect of Peer Influence on Income Tax Compliance among Owners of Small and Medium Enterprises in Soroti District, Uganda. International Journal of Acdemic Research in Accounting, Finance and Managment Science, 13(1), 387–398.