Tax Compliance Cost: A Review of Cost Burdens and Cost Structures
DOI:
https://doi.org/10.53819/81018102t2605Abstract
Tax compliance costs represents a noteworthy yet often underestimated burden on taxpayers, particularly in emerging nations where weak institutional frameworks, corruption, and administrative inefficiency aggravate worsen compliance issue and undermine voluntary tax compliance. This study conducts a systematic literature review to evaluate the costs burdens and costs structures linked with tax compliance. The review synthesizes outcomes from various methodological approaches that were utilized by experts in estimating tax compliance costs. The study is anchored on the benefit theory and the ability to pay theory. The outcome stated that compliance costs are basically driven system complexity, onerous administrative procedures, multiplicity of tax types, frequent legislative amendments, amongst others. These costs impose an excessively heavy burden on businesses and individuals, creating a regressive compliance tax that distorts market competition, and triggers a downward spiral of eroding trust that diminishes voluntary compliance, and increased enforcement expenditures. The study concludes that addressing these issues requires comprehensive reform encompassing tax legislation simplification, harmonized administrative procedures, investment in user-friendly digital infrastructure, corruption mitigation. These measures are essential in reducing the compliance cost burdens, enhancing voluntary compliance and ensuring that taxation fulfills its desired developmental objectives.
Keywords: Tax Compliance Cost, Costs Burdens, Costs Structures, and Emerging Nations.
References
Abdulrasaq, M., & Babatunde, A. A. (2024). Tax enforcement strategy: The antidote to non-tax compliance in North-West Nigeria. Journal of Business Management and Accounting, 14(1), 67-89.
Ajibola, A. A., Kasali, D. O. & Lateef, S. A. (2026). Role of tax audits in enhancing tax compliance: evidence from Ogun State. FUDMA Journal of Accounting and Finance Research, 4(1), 16-29.
Akims, M. A., Pyoko, O. M., Akims, K. A., Motende, W. N., Odwa, B., & Toyiring, D. B. (2023). Tax Education and Tax Compliance: A Review of Literature. Journal of Economics, 7(1), 51–63. https://doi.org/10.53819/81018102t4235
Ali, M. (2021). A systematic literature review of sustainable entrepreneurship with thematic analysis. World Journal of Entrepreneurship, Management and Sustainable Development, 17(4), 742-764.
Bernard, O. Memba, F. & Oluoch, O. (2018). Influence of cost of tax compliance on tax compliance among investors in the export processing zones in Kenya. International Journal or Scientific Research and Management, 6(10), 744-749.
Blyse (2026). The Importance of Taxation and Tax Administration. Retrieved 24th July 2026 from https://blyce.com/the-importance-of-taxation-tax-administration/
Chigbu, E. E., Eze, A. L., & Ebimobowei, A. (2012). An empirical study on the causality between economic growth and taxation in Nigeria. Current Research Journal of Economic Theory, 4(1), 29-38.
Contos, G., Guyton, J., Langetieg, P., Lerman, A. H., & Nelson, S. (2012). Taxpayer compliance costs for corporations and partnerships: A new look. IRS Research Bulletin: Proceedings of the IRS Research Conference 2012, 4-18.
Eichfelder, S., & Vaillancourt, F. (2014). Tax compliance costs: A review of cost burdens and cost structures. Available at SSRN 2535664.
Eke, M. N. (2023). Principles and Importance of Taxation to the Nigeria's Economy. Retrieved 25th July 2026 from https://www.researchgate.net/publication/371339851_PRINCIPLES_AND_IMPORTANCE_OF_TAXATION_TO_THE_NIGERIA%27S_ECONOMY
Emslie, T. S., Davis, D. M., Hutton, S. J., & Olivier, L. (2011). Income tax: Cases and materials. Capetown: The Taxpayer.
Emwionmwusi, O., Nzotta, S., Chris-Ejiogu, U. & Uzoamaka, G. (2022). Effects of Taxation on the Growth of Nigerian Economy. International Journal of Accounting and Financial Management Research, 1(1), 1-17.
Ernest, B. T., Daniel, S. & Nicholas, A. (2022). Determinants of tax compliance costs of small and medium enterprises in emerging economies: Evidence from Ghana. Social Sciences & Humanities Open, 6(1), 30-43.
European Union (2013). A Review and Evaluation of Methodologies to Calculate Tax Compliance Costs. Retrieved 24th July 2026 from https://taxation-customs.ec.europa.eu/document/download/9d0ee4ea-48f5-4f4c-b0ca-3a732022d2ef_en?filename=taxation_paper_40.pdf
Evans, C., Tran-Nam, B., & Lignier, P. (2014). Tangled up in tape: The continuing tax compliance plight of the small and medium enterprise business sector. Australian Tax Forum, 2(9), 217-247.
Gregory, A. A., & Ndu, O. M. (2023). Tax collection, utilization systems and the performance of small and medium scale enterprises in Nigeria: A multivariate approach. Journal of Tax Reform, 9(2), 134-144.
Grigorios, L., Andreas G. K. & Michail P. (2022). The Tax compliance costs of businesses and its key determinants: Evidence from Greek Businesses. Journal of Tax Administration 7(1) 39-56.
Hansford, A. & Hasseldine, J. (2012). Tax compliance costs of small and medium-sized enterprises (SMEs): The case of the UK. Journal of Tax Research, 10(1), 288-303.
Ibrahim, R. T., Tijjani, M. S., Salami, S. & Yabagi, M. (2026). Determinants of Tax Non-Compliance in Nigeria. International Journal of Research and Innovation in Applied Science (IJRIAS), 11(3), 1027-1036.
Ilemona, S. A. (2023). Effects of Tax Compliance Determinants on Tax Evasion in Nigeria: An Empirical Insight. African Development Finance Journal, 6(1), 87-104.
Iswahyudi, H. (2018). Economic Consequences of Tax Noncompliance. Jurnal BPPK Badan Pendidikan dan Pelatihan Keuangan, 11(2), 49-60.
John, O. C., Shehu, A. N., Ahmad, B. A., Abdullahi, A. A. & Abdulkarim, M. M. (2024). Effect of Compliance Cost and Tax Burden on Tax Compliance of Small and Medium-Scale Enterprises in Benue State, Nigeria. Gusau Journal of Accounting and Finance, 5(2), 262-282.
Kazeem, S. B., Sadiat, O. S. & Adeolu, J. O. (2025). The Impact of Taxation on Economic Growth and Development. Asian Journal of Economics, Business and Accounting, 25(3), 389-399.
Kendrick, M. S. (1939). The ability to pay theory of taxation. The American Economic Review. 29(1), 92-101.
Khaemba, F. O., Simiyu, R. F. & Lusala, V. A. (2025). The Effect of Tax Compliance Costs on Financial Performance of Commercial Banks in Western Kenya. East African Scholars Journal of Economics, Business and Management, 8(9), 296-311.
Kramer, H. (2021). The effectiveness of tax audit penalties: A case study of Nigeria. African Journal of Public Finance, 10(4), 78-91.
Latif, A. N. (2025). Factors Influencing Tax Non-Compliance among Taxpayers: A Review. International Journal of Research and Innovation in Social Science (IJRISS), 9(1), 81-88.
Mahangila, D. N. (2017). The Impact of Tax Compliance Costs on Tax Compliance Behaviour. Journal of Tax Administration, 3(1), 57-81.
Makoni, C. K. & Laryea, J. E. N. (2025). Consequences of Non-Tax Compliance: A Comprehensive Analysis of Potential Revenue Leakage and Its Impact on Federal Infrastructure Investment. EPRA International Journal of Economic and Business Review (JEBR), 13(9), 40-69.
Merima, A. (2018). Regulatory Burdens in Tax Administration and Firms’ Compliance Costs in Africa. International Centre for Tax and Development Working Paper 78.
Obodoechi, E. U. & Mbobo, M. E. (2024). Effect of Tax Compliance Costs on Tax Evasion by Small and Medium Enterprises. International Journal of Research and Innovation in Social Science (IJRISS), 2(6), 45-62.
Olasunkanmi, Y. T., Ogieriakhi, A. P., Oladapo, O. G., Chigozie, P. I., Adewumi, J. O., Esegine, J. K. & Ohaeri, U. E. (2025). Evaluating the Economic Impact of Tax Avoidance and Evasion on Personal Income Tax Administration. Path of Science, 11(1), 10-17.
Pigou, A. C. (1928). A Study in Public Finance, Macmillan, London.
Prado, S. M. M., Franco, M. J. Z., Zapata, S. G. Z., García, K. M. C., Everaert, P., & Valcke, M. (2022). A Systematic Review of Financial Literacy Research in Latin America and the Caribbean. Sustainability (Switzerland), 14(7), 1-43.
Putri, S. A., & Prihatiningtias, Y. W. (2023). The mechanism and benefits of receiving government facilities in bonded zone for tax and financial report: A Case Study. Telaah Ilmiah Akuntansi dan Perpajakan, 1(4).
Rashid, M. H. U., Ahmad, A., Abdullah, M. S., Ahmmed, M., & Islam, S. (2022). Doing business and tax evasion: evidence from Asian countries. SAGE Open, 12(4), 21-58.
Reddy, D. (2021). Taxpayer Behavioural Factors Influencing Entrenched Tax Gaps. (Doctoral dissertation).
Rotimi, O. (2021). Impact of Tax Compliance on Standard of Living in Nigeria. Journal of Accounting and Management, 11(1), 237-250.
Ryšavá, T., & Zídková, H. (2021). What are the factors of tax evasion? New findings in the EVS Study. Review of Economic Perspectives, 21(4), 385–409.
Sahoo, S., Kumar, A., Mishra, R., & Tripathi, P. (2022). Strengthening Supply Chain Visibility with Blockchain: A PRISMA-Based Review. IEEE Transactions on Engineering Management, 1-17.
Saldajeno, P., Angelica, D. & Sarita. A. N. (2025). Drivers of Tax Non-Compliance: A Systematic Review of Evasion and Avoidance. Journal of Economics, Management and Trade, 31(6), 177-85.
Salih, D. M., Emmanuel, D. M., Gheni, A. F. & Ayodele, F. G. (2025). Tax Compliance Strategies and Revenue Generation in Nigeria, Economy, Business and Development. An International Journal (EB&D), 6(1), 1-18.
Sasidharan, A., & Duggal, M. (2023). Does sustainability matter for firm value: Evidence from China. International Journal of Management and Business Research, 7(3), 12-22.
Tayo, O. L., Adenike, O. M. & Babaloal, O. (2026). Tax Compliance and Economic Growth in Nigeria: Evidence from Southwest Nigeria. Journal of Accounting, Auditing and Taxation, 1(1), 16-23.
WeFinder (2022). What is the Importance of Taxation? Retrieved 25th July 2026 from https://www.wefinder24.com/2022/06/what-is-importance-of-taxation.html
World Bank Group (2025). Paying Taxes. Retrieved 25th July 2026 from https://subnational.doingbusiness.org/en/data/exploretopics/paying-taxes/why-matters.
York, E. & Muresianu, A. (2018). Reviewing Different Methods of Calculating Tax Compliance Costs. Retrieved 24th July 2026 from https://taxfoundation.org/research/all/federal/different-methods-calculating-tax-compliance-costs/
