Impact of Tax Knowledge, Tax Fairness and Religious Ethics on Tax Evasion of Small and Medium Enterprises in Katsina South Senatorial Zone.

Abstract

The study examines the impact of tax knowledge, tax fairness and religious ethics on tax evasion of SMEs in Katsina State. The data of the study was collected from 200 SMEs in Katsina South Senatorial Zone using a structured questionnaire. Three hypotheses were tested using Partial Least Square Structural Equation Modelling (PLS-SEM). The findings of the study revealed that tax knowledge, taxfairness and religious ethics are significantly related to tax evasion. Based on the findings of the study, the study concludes that tax knowledge, tax fairness and religious ethics play a vital role in the changes of tax evasion activities of SMEs in Katsina State. Based on the conclusion of the study, the study recommends among other that States Internal Revenues Services should provide adequate know of tax related issues in the State be very effective so that taxpayers in the state will be well equipped on the importance of tax payment and this will minimise number of tax payers participating in tax evasion activities in the State. In addition, the States Internal Revenues Services should redesign its tax policies in such a way that the tax payers will feel that the tax system is fair to them and not the other way round. This will minimise tax evasion activities in the State. Additionally, States Board of Internal Revenues Services should create a religion unit within the Board and engage the services of religion leaders to educate SMEs owners that God knows all their hidden activities and they will be punished by HIM if they engaged in illegal activities such as tax evasion.