Level of Tax Knowledge and Technology Adoption among Small Taxpayers in Ghana

Abstract

This study examined the effect of the level of tax knowledge on technology adoption among small taxpayers in Ghana. To achieve the purpose of the study, the Generalised Ordered Logit, Multivariate Decomposition for nonlinear response models and the Probit Estimation Techniques were the main analytical tools used. The study used survey data collected by the Directorate of Research, Innovation and Consultancy (DRIC) where a sample of 490 small taxpayers was analysed. The explanatory sequential mixed-method design informed the orientation of the study. The study found that more than half of small taxpayers have an average level of tax knowledge. The results also showed that sex, educational level, firms’ income, type of organisation, tax complexity, and tax education influence small taxpayers’ tax knowledge level. The study further found that the mean predicted gap in tax knowledge between male and female firm managers is huge and statistically significant, and 60% of it can be explained by differences in educational level, tax complexity and tax education. It was also found that the level of tax knowledge significantly affects the adoption of technology for tax preparation and reporting. On the other hand, the qualitative analysis revealed that lack of education, internet connection, organisational barriers, technological resources and trust serves as major barriers to the adoption of iTAPS. Based on the results, the study recommends that the Domestic Tax Revenue Division should adopt strategies like zonal tax education workshops and training, provision of tax awareness programs and design simplified tax rules for firm managers especially among sole proprietorships, female managed firms, firms with less income and firms in the Northern region and rural areas to improve their tax knowledge level. Government through the GRA should intensify the awareness and training on the use of iTAPS; ensuring simplified platforms, improved internet coverage, trust and incentive for its usage.