Abstract:
Tax is an important means of revenue for the government. Therefore, all efforts must be made by the governments to
accurately and efficiently collect relevant taxes for continuing the government’s operations. But in reality, many obstacles
have been encountered in the application of taxes. Department of Inland Revenue still struggles to keep efficient and
effective tax administration. Small and Medium-sized Enterprises (SMEs) are considered significant for economic growth
and for generating taxable income for a country. However, SMEs have less compliance when compared to large business
entities. This study aims to identify the determinants of tax compliance among the owners of small and medium-sized
enterprises in the Kegalle District. A questionnaire was designed using the Five Point Likert Scale and distributed among
the owners of SMEs in the Kegalle district which was the unit of analysis of the survey. Data was collected from a sample
of two hundred Obtained data analyzed with statistical techniques of correlation, regression and descriptive statistics
using IBM SPSS 25. There is a huge gap in the literature on tax compliance related to SMEs in Sri Lanka with Tax
Knowledge, Tax Morale, Tax Rate and Tax Penalties. Thus, it is recommended for further surveys with more similar
factors to increase the reliability of the study. By emphasizing these underlying factors, tax authorities will able to make
necessary changes to the tax administrative system in Sri Lanka that greatly increase the compliance level of SMEs
resulting being increasing the government revenues, allowing authorities to provide quality service to taxpayers and finally
the government as a whole will able to provide more improved utilities to the citizens of the country
