Blockchain-enabled tax administration, self-assessment and SME tax compliance: evidence from a developing economy

Abstract

Although literature suggests that IT-led tax administration can enhance tax compliance through transparent, efficient and effective tax system, limited studies exist on the benefits of modern technologies, such as blockchain, for the management of taxes. The purpose of this study is to examine the impact of blockchain adoption on IT-led tax administration, self-assessment and tax compliance among small and medium-sized enterprises (SMEs). It seeks to understand the relationship between perceived usefulness and ease of use of blockchain technology, which in turn impact IT-led tax administration, self-assessment and tax compliance. Five hypotheses were tested using a cross-sectional survey of 227 SMEs across the Accra-Tema industrial hub. Data were analysed using partial least squares structural equations modelling version 23. The results underscore the significance of all five hypotheses, revealing a notable influence of perceived usefulness and perceived ease of use on blockchain adoption, which in turn, impacts IT-led tax administration, self-assessment and tax compliance. Both tax administrators and taxpayers should consider blockchain adoption and self-assessment policy as crucial to enhancing tax compliance. Governments should create an enabling environment that facilitates blockchain adoption in the taxing system by emphasizing the need for tailored support for SMEs. The study provides preliminary empirical evidence on the implications of blockchain adoption intentions and self-assessment on tax compliance from both taxpayers' and tax administrators' perspectives in the context of a developing economy. Literature on blockchain implications for tax compliance is underdeveloped.