The role of artificial intelligence in enhancing tax compliance among SMMEs: a scoping review and implications for South Africa.

Abstract

South Africa’s economic stability relies significantly on Small, Medium and Micro Enterprises (SMMEs) that represent around 60% of businesses and enhance employment opportunities and economic growth. SMMEs face numerous challenges, including tax compliance. The complexity and cost of tax compliance are significant hurdles, as these enterprises often lack the necessary personnel and expertise to navigate intricate tax regulations, leading to potential tax penalties. Artificial Intelligence (AI) offers an effective solution to these issues by automating processes, improving accuracy, and reducing expenses. AI-powered tax compliance tools can help SMMEs to manage complex tax laws, minimise errors, and improve efficiency. They can also assist with data analysis, risk assessment, and audit preparation, allowing businesses to allocate resources to more strategic activities. Understanding these benefits is crucial to encourage SMMEs’ adoption of AI technology. The South African Revenue Service (SARS) has introduced several measures in order to streamline tax compliance, such as utilising technology and digital platforms. SARS’ digital transformation aims to modernise and enhance tax administration, demonstrating the important role played by tax in fiscal development. Technology is evolving at a rapid pace, making it at ease for taxpayers to access information and embark on tax-related activities, which used to take longer and required much data. To guide the research process, the study adopted a scoping review methodology. This approach allowed for a structured exploration of existing literature and evidence, helping to map key concepts and identify gaps related to AI-driven tax compliance among SMMEs. This study aims investigates how AI can help small businesses in South Africa stay on top of their tax responsibilities. The research aims to find simple, practical ways to reduce the stress and complexity of staying compliant. The study’s objectives included evaluating how AI can improve tax compliance, identifying the necessary infrastructure for AI-powered models, and determining the knowledge and skills required to implement these models. The findings have practical implications for tax practitioners, tax agencies and policymakers, informing the design of targeted interventions and educational initiatives to increase tax awareness and foster a culture of compliance among SMMEs. By overcoming the challenges and leveraging AI technologies, SMMEs can enhance their competitiveness and operational efficiency. This ultimately supports economic development and improves their compliance status, contributing to a more robust and fair tax system. Some of the challenges faced during the study included limited access to reliable data due to confidentiality concerns, the possibility of participation bias, and the fast-paced evolution of AI technology.