Why Businesses Evade Tax In Ghana

Abstract

The paper aims to assess why businesses evade tax in Ghana. This study uses a sample size of 100 respondents, consisting of 90 taxpayers 3 tax officials and, 7 personal interviews. Using descriptive statistics, the study's findings showed that the following are causes of tax evasion; a lack of tax education, high tax rates, a lack of enforcement of penalties, the perception that the government is misusing taxes, and unprofitable businesses. These are the main drivers of tax evasion in the country. The difficulties tax officials face in collecting taxes include their inability to contact all taxpayers and the lack of a taxpayer database. It was not surprising that less than 50% of the respondents responded to the fact that tax evasion may improve living conditions, given that the majority of the respondents did not obtain formal education. Furthermore, 32% of total respondents believe that tax evasion will end or reduce the social benefits enjoyed by citizens because the government will not have enough money to provide such amenities. This means that all respondents were aware of the negative effects of tax evasion on national development. Indeed, the administration must take every step plausible to incentivize tax payment. According to the research results, tax education was insufficient, as were improper sanctions implementation and tax collectors' inability to locate several liable taxpayers. The study concludes by proposing additional research focusing on raising tax adherence through tax education.