What Drives the Tax Compliance Levels of Sole Traders in South Africa?
Authors: Cathrine Thato Koloane, Mangalani Peter Makananisa, Sandisiwe Sityoshwana and Thabisa Tokwe
Affiliations: Senior Specialist: Market Research, National Revenue and Compliance Division, Operational Research Unit at the South African Revenue Service; Specialist: Statistical Support, National Revenue and Compliance Division, Operational Research Unit at the South African Revenue Service; Functional Specialist Research, SMME, Traders and Travellers Segment at the South African Revenue Service; Senior Researcher, SMME, Traders and Travellers Segment at the South African Revenue Service
Source: African Multidisciplinary Tax Journal, 2023 Issue 1, p. 20–44
The study examined the drivers of levels of tax compliance of sole traders in South Africa. The study adopted a quantitative research approach where a sample of 500 sole traders was selected from a database of 146 075 active sole traders for the fiscal year 2020/21. A survey questionnaire was used to collect primary data from the participants. Only 194 sole traders responded to the questionnaire, resulting in a response rate of 39 per cent. Descriptive and inferential statistics, as well as multiple linear regression, were used to conduct the analysis. The study revealed that the tax compliance level of sole traders is inf luenced by whether their friends and relatives pay all their taxes and whether they have too much debt, which discourages tax compliance. The study recommended targeted taxpayer education and awareness, tax alleviation measures for sole traders, and government transparency in expenditure management policy, amongst other things. The study makes an important contribution to the body of knowledge in this research area and provides much-needed insights on how to improve the tax compliance levels of sole traders.