The importance of tax proceeds in operation and undertakings of any government in the whole world cannot be over emphasized because taxes had been categorized as one of the critical sources of government revenue of any nation. This study investigates the impact of audit exposure, taxpayer knowledge, penalty awareness, and firm size on SME tax compliance in Tanzania using logistic regression. The findings show larger firms are significantly more likely to comply than smaller firms. Moreover, the results shows that penalty awareness and audit exposure have positive and significant effects on compliance. Also, the firm size and tax knowledge tends to rise compliance odds. Hence the study concludes that compliance incentives that are made by different institutions and policy makers should focus on creating awareness on tax knowledge and penalty rules. Audit plays a role in compliance but it is not the primary driver as few businesses are audited. Strengthening audits through better targeting, while helping smaller firms understand and manage their tax obligations, could make a real difference.
Mbwambo et al. (Sun,) studied this question.