Evaluating the Role of Tax Administration in Enhancing Sme Tax Compliance in Zambia: Challenges and Policy Solutions

Abstract

This study emphasized the need to enhance the control systems of tax administration in Zambia with A Lot of Focus is on Paying Tax Obligations by SMEs. The object of this study was to examine the contributing factors of SMEs in continuing to face tax compliance problems despite their important role of creating jobs and developing the economy. The study aims at analyzing the efficiency of Zambian Revenue Authority (ZRA) in tax collection, exploring the administrative, institutional and behavioral impediments to which SME compliance is subjected as well as drawing up policy and legal measures to improve the system. This study used a qualitative research method to collect data from different sources such as Acts, reports, academic literatures and official documents to ZRA and Ministry of Finance. From the SME point of view, feedback for these representatives was also collected to give a practical description about which administrative and behavioral barriers they face. The major results from this study reveal various shortfalls in Zambia’s tax administration systems, which make it difficult for SMEs to meet their obligations of paying taxes. Foremost among these are cumbersome tax procedures, excessive compliance costs, low taxpayer awareness, digital divide and uneven administration of tax regulations. Behavioral factors like low tax morale and negative perceptions of tax utilization also play a significant role. In conclusion, the study suggests that improving SME tax compliance in Zambia necessitates a more supportive and transparent approach to tax administration. This involves streamlining tax procedures, enhancing taxpayer education, expanding digital accessibility, revising penalty frameworks, and fostering trust between SMEs and tax authorities. These reforms not only promote compliance but also foster sustainable economic growth and boost domestic revenue generation.