Influence of Taxpayers’ Trust on Income Tax Compliance among Small and Medium Enterprises in Tanzania

Abstract

This study examines the influence of taxpayers’ trust in the Government onincometaxcompliance behaviour in the stages of registration, correct declaration of income andpaymentoftaxes within due dates. Data was collected from six tax regions of Tanzania. Descriptivestatisticsand Partial Least Square measures were used in data analysis. Based on the findings, thestudyconcluded that taxpayers who have higher level of trust in the government are morewillingtoregister in the tax system and make correct declaration of their income. However, higher level oftrust in the government does not significantly influence their decisions to pay taxes withinduedates. The study suggests that other factors, such as ability to pay and financial conditionsof thetaxpayers may hinder the taxpayers’ obligation to pay tax. In addition to enhancingthelevel oftaxpayers’ trust in government, tax authorities should use various administrative measurestoensure taxpayers’ compliance. For instance, they can use various forms of communicationtoremind taxpayers about consequences of non-compliance