Analyzing Tax Compliance Perceptions of Financial Sector Emerging SMEs: A Case Study of Kasama District

Tax compliance is a crucial aspect of business operations, yet many small and medium-sized enterprises (SMEs) struggle to meet their obligations, particularly in emerging economies. This study examines the impact of taxation and compliance on SMEs in Zambia’s financial services sector, with a focus on Kasama District. Using a quantitative research approach, the study analysed data from 65 SMEs, achieving a response rate of 97%. The findings highlight that while most SMEs are aware of their tax obligations, they face considerable challenges such as high tax rates, complex regulations, and bureaucratic hurdles. These factors not only increase operational costs but also discourage business growth, investment, and job creation. Limited access to professional accounting services and a lack of awareness about tax incentives further exacerbate compliance difficulties. The study concludes that reducing tax complexity, enhancing tax education, and implementing SME-friendly policies could significantly improve compliance rates and business performance. Addressing these issues would not only boost government revenue but also create a more supportive environment for SME growth and economic development in Zambia.