Rethinking tax compliance: focus on tax knowledge and institutional support for SME performance in South Africa
Year: 2026
Type: article
Study design: Observational Study
Abstract: Tax compliance is widely portrayed as an administrative burden that constrains small and medium enterprise (SME) performance in emerging economies, yet the institutional support and human-capital resources available to entrepreneurs are rarely examined alongside this burden. The study addressed this oversight by testing how perceived financial cost, tax knowledge, and administrative burden relate to entrepreneurial performance, and whether perceived government support mediates the relationship between financial cost and performance. A cross-sectional design was used, with survey data collected from 159 formally registered SMEs and analyzed through exploratory factor analysis and multiple regression. Results show that financial cost and administrative burden do not significantly predict entrepreneurial performance, whereas tax knowledge is a significant positive predictor and government support significantly mediates the relationship between financial cost and performance. The findings indicate that SME performance depends less on the size of the tax burden itself and more on entrepreneurs’ regulatory literacy and their access to institutional support. Tax knowledge should therefore be understood not merely as a compliance facilitator but as a performance driver, a finding that shifts the academic discourse from burden to capability and points policymakers toward capability-building and institutional support, rather than cost-reduction alone, for SMEs in African markets.
Authors: Boris Urban, Mahad Moti, Dudu Lungiswa Mpokela
Institution: University of the Witwatersrand
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7225394590