Tax Compliance in Sub-Saharan Africa: How Important are Non-Pecuniary Factors?

Abstract

This paper assesses the importance of non-pecuniary factors on tax compliance in Sub-Saharan Africa (SSA). In addition, the paper examines how legal origins affect tax compliance factors. Using the Round 5 of the Afrobarometer survey data across 29 countries, the findings revealed that non-pecuniary factors in the form of tax knowledge limitation; non-compliance by others; and corruption of tax officials are associated with reductions in the probability of tax compliance in SSA. On the contrary, factors such as trust in tax department; handling the provision of health, education and road needs, tend to be associated with increase the probability of complying with tax laws and obligations in SSA. In terms of legal origins, institutions and fiscal exchange have bigger association with compliance for common law countries (British origin) and civil law countries (French origin) respectively.

JEL Classification: H26, H41

Keywords: Tax knowledge, tax compliance, fiscal exchange, institutions, SSA