Self-Assessment, Tax audit, Tax knowledge and Tax Compliance a Structural Equation Model (SEM) Approach

The broad objective of this study is to examine the impact of tax assessment methods and compliance levels amongst small and medium scale enterprises in Edo state. The research design for this study is the exploratory research design. Primary data was used as the data source and well-structured likert scale questionnaire was developed for the research instrument. A total sample of 144 respondents was selected using the simple random sampling technique. The SEM is employed in this study to examine the causal relationships. The measurement model and then the full structural model were examined. Looking at the path analysis, it is observed that SAS do not have a direct impact on voluntary tax compliance However, SAS was then found to have an indirect impact on voluntary tax compliance through tax knowledge (TK) which is significant at 5% (p=0.000). This implies that the enactment of SAS in itself may not have a significant direct impact in improving tax compliance but can only be effective through improvement in other contextual factors such as tax knowledge. The direct effect of tax knowledge (TK) is positive significant at 5% but the direct effect of tax audit (TAU) on voluntary tax compliance is positive though not significant at 5%. Hence the study recommends that the need for the tax authorities to improve enlightenment campaigns about self- assessment procedure to SME’s. Secondly, tax authorities should work at improving tax knowledge through various mass media channels.