Tax education, tax compliance and the mediating role of tax knowledge on small and medium enterprises in Uganda: a case of SMEs in Rubaga Division

Abstract

This study examined the impact that tax education can have on tax compliance among the Small and Medium Enterprises (SMEs) in Rubaga Division in Kampala, with specific emphasis on how tax knowledge mediates this relationship. A cross-sectional survey research design was used, employing self-administered questionnaires to collect data from 277 SME owner-managers and technical staff. Quantitative data analysis was conducted using SPSS Version 27 and Hayes’ PROCESS Macro Version 4.2 to test both direct and indirect effects. The findings of the study revealed that tax education significantly and positively predicts tax compliance among SMEs in Rubaga Division at 0.001 level of significance (B=0.767, p=0.000), while the connection between tax education on tax compliance, mediated by tax knowledge, the results were (B=0.238, BootSE = 0.039, p < 0.001, 95% BootCI [0.167, 0.321]) This result indicates that tax education contributes to increased tax compliance not only directly but also indirectly by enhancing tax knowledge, which subsequently influences compliant behavior among SMEs. The study recommends that the Uganda Revenue Authority and other stakeholders intensify participatory tax education strategies such as seminars and clinics that not only disseminate information but also build lasting knowledge among SME taxpayers. Further research is recommended to widen the geographical scope beyond Rubaga Division and to explore qualitative dimensions of tax behavior among SMEs.

Subject Key words: Tax education; tax compliance; tax knowledge; small and medium enterprises ; Uganda SMEs; Rubaga Division.