Tax Administration, Tax Incentive and SMEs’ Growth: The Moderating Effect of Firms Size

Abstract

The study examined the effect of tax administration and tax incentives on the growth of small and medium enterprises in the Kumasi Metropolis of Ghana. Explanatory research design supported by the quantitative research approach was employed. Structured questionnaires were administered for the collection of the primary data from 115 SMEs operating in the metropolis. The multiple regression results revealed that tax administration accounts for a statistically significant positive weak variance in SMEs’ growth, whilst tax incentives account for a statistically significant positive moderate variance in SMEs’ growth. Firm size moderates the predictive relationship between tax administration and SMEs’ growth. Medium enterprises have higher propensity in terms of tax compliance compared to small enterprises. Medium enterprises also have higher growth potential than small enterprises. Ghana Revenue Authority should implement preferential tax policies that support SMEs growth in Ghana with much emphasis on tax incentive packages to small enterprises.