THE IMPACT OF SELF-ASSESSMENT SYSTEM ON COMPLIANCE LEVELS OF SMALL AND MEDIUM ENTERPRISES: CASE STUDY-VAN SALES COMPANY

The study examined the impact of the self-assessment system on compliance levels of Small and Medium Enterprises (SMS) in a developing country. The major objectives of the study were to assess the effects of the Self-Assessment System (SAS) on revenue collection on SMEs, to identify the factors that affect SMEs in complying with the self-assessment system, to determine the best practices that the tax authorities can make use of to ensure tax compliance by SMEs and to determine the self-assessment system’s limitation towards reducing tax evasion. The research covered the period of 2011-2015. Questionnaires and interviews were used as research instruments to collect data. The target population of the study was 30 respondents consisting of 8 managers and supervisors and 22 staff members. The data collected was tabulated and graphically presented. Findings were that the SMEs are not properly tax educated to meet the requirements of the self-assessment system. Tax attitude, transparency of the tax system, economic and psychological factors also contribute to non-compliance. Some SMEs perceived that the Marginal Tax rate is high. The study concluded that the economic hardships, lack of knowledge and attitude towards tax were major motivators of SMEs tax noncompliance. The researchers recommend that tax education should be provided time and again. Also the use of tax incentives such as tax holidays and exemptions that will increase compliance to Small and Medium Enterprises