Tax audit and compliance among corporate entities the role of tax education and fear-appealing messages

Abstract

The study examined the role of tax education and fear-appealing messages in the linkage between tax audit and tax compliance among corporate entities in Ghana using the Greater Accra Region as the case study. Using the correlational research design and a quantitative research approach the study focused on a clustered population of 766 companies representing the Weija-Gbawe Municipality. Sampling 256 corporate entities, questionnaires were administered with an 80% response rate. Data analysis was conducted using Partial Least Squares – Structural Equation Modeling (PLS-SEM). The findings recorded a significant and positive relationship between tax audit and tax compliance. Again, tax education mediates the existing relationship between tax audit and tax compliance. However, fear-appealing messages negatively but significantly affects tax audit and tax compliance. The study concluded that regular organization of tax audits and thorough selection of the tax audit unit collectively contribute to the effectiveness of the tax audit process resulting in enhanced tax compliance. Therefore, the Ghana Revenue Authority must increase the pace to increasing tax audit frequency which would lead to an improved level of tax compliance among corporate entities in Ghana.