Correlates of Tax Compliance of Small and Medium Size Businesses in Cameroon
Taxation provides a predictable and stable flow of revenue to finance development objectives. This is important in a country like Cameroon that has serious challenges with meeting its development objectives. Small and medium enterprises (SMEs) are significant for economic growth in the country,...
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| Format: | Article |
| Language: | English |
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University of Primorska
2015-12-01
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| Series: | Managing Global Transitions |
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| Online Access: | http://www.fm-kp.si/zalozba/ISSN/1581-6311/13_389-413.pdf |
| Summary: | Taxation provides a predictable and stable flow of revenue to finance development
objectives. This is important in a country like Cameroon that
has serious challenges with meeting its development objectives. Small and
medium enterprises (SMEs) are significant for economic growth in the
country, contributing as much as about 22 percent of the gross domestic
product. SMEs generate taxable incomes. They also collect employment
and value added taxes on behalf of the government. Taxation, however, imposes
high cost to small businesses. SMEs are less tax compliant in comparison
to large businesses. SMEs are considered the ‘hard to tax group
from the informal sector.’ As such, the literature suggests that only a fraction
of their taxable incomes is reported to tax authorities. Against this
background, factors that correlate with tax compliance of 575 small and
medium size companies in Cameroon are discussed from a survey of companies
in the manufacturing and wholesale sectors. High registration cost
and time-consuming processes promote tax non-compliance. The perception
that tax system is corrupt discourages registration and filing compliance.
When there are too many compliance hurdles, the probability of filing
compliance is reduced. However, a fair and static system encourages
filing and registration compliance. A clear and consistent tax system promotes
filing compliance. Authorities that understand their responsibilities
and are willing to respond to enquiries during the registration process promote
tax compliance in general. |
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| ISSN: | 1581-6311 1854-6935 |