Tax compliance among SME's.

Question:

Can social norms lead to tax non-compliance in Ugandan SME's? This qn is based on some incentives given to some foreign investors and domestic investors are not given the incentives and there fore low compliance.need more clarification.what is the percentage contribution of SME's to tax in Uganda.

Answer:

Yes Social norms lead to tax non-compliance in Ugandan SMEs .Since Social norms refer to individuals’ perceptions of what most other people believe is appropriate, it will therefore means that a domestic investor in Uganda will only accept to pay some taxes where a foreign investor is given incentives only if other domestic investors embrace such a policy brought in by the government and vice versa.

Currently, there are several complaints for example among domestic investors as regards to the foreign investors who come to do business in the country and are not complying to the investment act however government continues to give them incentives which domestic investors are finding unfair hence non compliance.

SME's contribute less than 10%of the total tax revenue collected.