Abstract

Tax compliance is a significant issue for small and medium-sized enterprises (SMEs), especially in developing countries like Cameroon. SMEs are vital to the economic growth of Cameroon, but their tax compliance often faces challenges due to various factors such as limited resources, complex tax systems, and insufficient understanding of tax regulations. This study aims to investigate the factors influencing the tax compliance of SMEs in Bamenda, Cameroon. By identifying the key determinants of tax compliance, the research provides insights into the barriers SMEs face and suggests strategies for improving compliance levels.

The study adopts a mixed-methods approach, combining quantitative surveys of SMEs and qualitative interviews with tax officials and SME owners. It examines factors such as the complexity of the tax system, the availability of tax education and advisory services, the perception of fairness in the tax system, and the level of enforcement by tax authorities. Additionally, the research explores the impact of SME characteristics—such as size, sector, and financial capacity—on their tax compliance behavior.

Preliminary findings suggest that the complexity of tax regulations and the perceived high tax burden are major deterrents to compliance among SMEs in Bamenda. Many business owners lack access to accurate tax information and professional guidance, which exacerbates non-compliance. Moreover, a weak relationship between tax authorities and SMEs, characterized by distrust and fear of punitive measures, discourages voluntary compliance. On the other hand, SMEs that perceive the tax system as fair and transparent and have access to tax education tend to comply more with tax regulations.

The study highlights the need for tax reforms that simplify the tax code, provide targeted education and support for SMEs, and promote a collaborative relationship between tax authorities and business owners. Improved tax compliance among SMEs will not only increase government revenue but also enhance the sustainability and growth of the SME sector in Cameroon.

Keywords: Tax compliance, SMEs, Bamenda, Cameroon, tax education, tax burden, tax enforcement, tax system complexity, business growth.