Promoting income tax compliance among the self-employed in the tamale metropolis of Ghana

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AUGUST, 2015
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The income tax non- compliance behavior is identified to be high among the self-employed. This fact is longstanding in income tax compliance literature. Improper application of tax promotion strategies has been identified as one of the major reasons for the high prevalent rate of income tax non-compliance among the self-employed. The main objective of this research work is to determine which promotion strategy could be used to elicit compliance among the self-employed; relative to the reason for non-compliance. The specific objectives of this study include; to determine the demographic characteristics of the self-employed and how these characteristics affect compliance, to examine the role of cooperation in promoting income tax compliance among the self-employed, to examine the determinants of income tax compliance and non-compliance among the self-employed and the role of penalties and sanction in promoting income tax compliance among the self-employed. Descriptive survey was carried out and a total of two hundred and twelve (212) responses were received and used for the analysis of the data. The findings show that respondents with no or less formal education are highly income tax non-compliant. Overstatement of expenses, understatement of income and late submission of returns were identified as forms of income tax non-compliance. The study concluded that Most of the self-employed in the Tamale Metropolis are not generally familiar with income tax laws and that is why most of them are not on the tax roll of Ghana Revenue Authority (GRA). The other factors like ignorance, lazy accounting, complexity of procedures and non-beneficial of taxes influenced income tax non-compliance decisions of most self-employed in the metropolis. The study is recommending that tax authorities should promote the benefits to derive from proper records systems and educational programmes to improve quality reporting by the self-employed.
A thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the degree of Masters of Business Administration (Accounting Option),