Self-Assessment, Tax audit, Tax knowledge and Tax Compliance a Structural Equation Model (SEM) Approach.

International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue VIII, August 2021 | ISSN 2321–2705

Self-Assessment, Tax audit, Tax knowledge and Tax Compliance a Structural Equation Model (SEM) Approach.

Abusomwan, Rachael Eloho (Mrs.) and OZIEGBE, David Jerry
Department of Accounting, Faculty of Social Sciences
Benson Idahosa University, Benin City, Nigeria

Abstract: The broad objective of this study is to examine the impact of tax assessment methods and compliance levels amongst small and medium scale enterprises in Edo state. The research design for this study is the exploratory research design. Primary data was used as the data source and well-structured likert scale questionnaire was developed for the research instrument. A total sample of 144 respondents was selected using the simple random sampling technique. The SEM is employed in this study to examine the causal relationships. The measurement model and then the full structural model were examined. Looking at the path analysis, it is observed that SAS do not have a direct impact on voluntary tax compliance However, SAS was then found to have an indirect impact on voluntary tax compliance through tax knowledge (TK) which is significant at 5% (p=0.000). This implies that the enactment of SAS in itself may not have a significant direct impact in improving tax compliance but can only be effective through improvement in other contextual factors such as tax knowledge. The direct effect of tax knowledge (TK) is positive significant at 5% but the direct effect of tax audit (TAU) on voluntary tax compliance is positive though not significant at 5%. Hence the study recommends that the need for the tax authorities to improve enlightenment campaigns about self- assessment procedure to SME’s. Secondly, tax authorities should work at improving tax knowledge through various mass media channels.

I. INTRODUCTION

Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments. Taxes are, therefore, transfers of money to the public sector, but they exclude loan transactions and direct payments for publicly produced goods and services. Classifying tax by nominal source of taxation, we have by direct and indirect taxes. A direct tax is assessed and collected directly from the individuals who are intended to bear it while an indirect tax is not collected directly from the individuals who are intended to bear it. Tax compliance is a major problem for many tax authorities and it is not an easy task to persuade taxpayers to comply with tax requirements. The definition of tax compliance in its most simple form is usually cast in terms of the degree to which taxpayers comply with the tax law. However like many such concepts, the meaning of compliance can be seen almost as a continuum of definitions. This ranges from the narrow law enforcement approach, through wider economic definitions and on to even more

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