TAX COMPLIANCE COSTS FOR SMALL GUESTHOUSE BUSINESSES AND RETURNS FOR LOCAL ECONOMIES IN MAHIKENG, SOUTH AFRICA

The paper examines the legislative requirements for small business tax compliance as a key factor in the impairment of the capacity of these businesses to contribute optimally towards local economies, with specific reference to guesthouses in Mahikeng Town, South Africa. Globally, small businesses are generally faced with a variety of regulations for compliance, including tax compliance regulations. While complying with the tax regulations, small businesses have to incur compliance costs. Additionally, small businesses are often affected by red tape in their pursued for compliance with tax regulations as compared to large and established companies because small businesses are less proficient in dealing with the complexities of such regulations and are unable to spread the costs of compliance across large-scale operations. The study reported in this paper included literature review as well as questionnaire surveys and interviews among guesthouse owners and managers. The paper reveals, among other things, that while South African Revenue Services (SARS) continues to issue guidelines to assist small business owners to complete and file tax returns on their own, these guidelines appear to be complicated for the sampled guesthouses, which have continued to employ professional tax practitioners who charge them for their services, therefore increasing their compliance costs. It is found that the cost of securing tax practitioners for small business tax compliance is hefty and that it undermines the capacity of guesthouses' contribution to the local economies. The paper finds that whereas SARS has provided guidelines, they have not been user-friendly for guesthouse managers and owners in Mahikeng, with the result that they have continued to hire tax practitioners at a hefty cost to their revenues. To this extent, this paper concludes that the legislative requirement for tax compliance is for Mahikeng guesthouses a costly disincentive that detracts from their capacity to contribute to the local economies. It is, therefore, recommended that SARS needs to revise and simplify small businesses tax compliance guidelines in order to reduce the costs. Such revisions and simplification needs to take into account the characteristic features of small business owners and managers, which include educational deficiencies, language challenges, limiting skills set and digital connectivity and expertise defects. For this reason, SARS guidelines for small businesses tax compliance