How Do Tax Compliance Costs Affect the Compliance Behaviour of Small and Medium Enterprises? Qualitative South African Evidence

Nhlanhla Malumane () and Masibulele Phesa ()
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Nhlanhla Malumane: University of KwaZulu-Natal
Masibulele Phesa: University of KwaZulu-Natal

A chapter in Embracing Technological Agility in Accounting and Business – Vol. 1, 2026, pp 29-45 from Springer

Abstract: Abstract This study examines the impact of tax compliance costs on the behaviour of SMEs in Nelspruit, Ehlanzeni Region, Mpumalanga Province, South Africa. SMEs play a vital role in economic development by creating jobs, reducing poverty, and contributing to the tax system. However, tax compliance presents a significant burden, with SMEs incurring high costs for tax practitioners and compliance efforts, hindering their growth and sustainability. Using qualitative research, purposive sampling was done, interviews were conducted with 17 SME owners, and thematic analysis was done to assess how compliance costs affect their behaviour. Findings reveal that tax compliance costs, software licenses, administrative burdens, and lost opportunities are detrimental to business operations. The mental strain of meeting bureaucratic demands exacerbates the negative impact. This study contributes valuable insights into the challenges SMEs face in tax compliance and highlights the need for policy reforms to ease these burdens for business sustainability.

Keywords: Small and Medium Enterprises (SMEs); Tax compliance; Tax compliance costs; Small business owners; Qualitative research method (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-032-13380-9_3

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DOI: 10.1007/978-3-032-13380-9_3

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