Influence of Tax Digitalization on Tax Compliance in Ghana: The Moderating Influence of Tax Knowledge.

Abstract:

Recently the Government of Ghana has began implementing digital tools in its tax administration with the view of increasing tax compliance and correct revenue shortfall. The purpose of this study therefore is to examine the influence of tax digitalization on tax compliance in Ghana, with a focus on the moderating role of tax knowledge. Using a quantitative cross sectional research approach, data were collected from 219 taxpayers in Techiman Municipality to assess their perceptions and behaviours regarding tax compliance, the use of digital tax systems, and their knowledge of tax laws and regulations. A regression was run using SPSS statistical software. The findings revealed a general neutrality among respondents concerning their level of tax knowledge (M= 3.34, SD= 0.463), their use of digital platforms for tax preparation and payment (M= 3.43, SD= 0.524), and their compliance with tax obligations (M= 3.06, SD= 0.535). Despite this neutrality, statistical analysis indicated that tax digitalization significantly influences tax compliance (β = .535, CI = .612 - .922). Additionally, tax knowledge was found to have a significant positive effect on tax compliance β = .224, CI = .261 - .746). Importantly, tax knowledge also moderated the relationship between tax digitalization and tax compliance (int_1= .21: p = .002), suggesting that higher levels of tax knowledge enhance the positive impact of digitalization tax on compliance. These findings underscore the importance of strengthening taxpayer education and improving digital infrastructure to boost compliance levels in Ghana’s tax system. The findings have important implications for both tax administrators and policymakers. While digitization improves efficiency and accessibility in tax administration, taxpayer education significantly amplifies its effectiveness. Efforts to modernize tax systems must be paired with investments in improving tax literacy, especially among small business owners, low-income earners, and rural populations who may lack formal financial education. Again, the Ghana Revenue Authority (GRA) and local governments should intensify taxpayer education efforts using localized, practical, and accessible communication channels, including radio programs, workshops, and community engagement forums.