A study on the awareness and level of compliance with gift tax by formal sector employees in Kumasi Metropolis Ghana

Abstract

The study examined the awareness and level of compliance with gift tax by formal sector employees in
Kumasi Metropolis Ghana. Two hundred and fifty-two respondents were sampled for the study using the
purposive sampling method. Questionnaire was used to solicit data and information from the respondents.
Data collected were analyzed using descriptive statistics and probit regression model. The results of the
study revealed that the level of compliance with the gift tax is very low. The key reason identified in the
study for the low level of compliance with gift tax among Ghanaian taxpayers is unawareness of gift tax
obligations. The probit regression result revealed that level of education, knowledge of tax law, and
penalty for non- compliance significantly influence respondents’ decision to comply with the gift tax law
.Hence, the low level of education offered by the Ghana Revenue Authority on the gift tax and nonenforcement of the law have contributed to the low level of compliance. The study therefore recommends
that the Ghana Revenue Authority should step up education on the gift tax law and enforce penalty for
non- compliance to improve revenue from gift tax