This paper examines the association between isomorphic forces, tax fairness, strategic responses, and tax compliance of small and medium scale enterprises in Ghana. Although the mobilization of domestic tax revenue to embark on crucial developmental projects has been a preoccupation of every government, there is paucity of studies that systematically investigate the institutional dimensions and socio-economic factors that motivate the individual to honor their tax obligation. In addition, despite the existence of tax-related studies in developing countries, research that examines why the individual managers of SMEs evade tax is highly limited. Given that tax compliance is a critical and important issue for nations around the world, the aforementioned factors that characterized SMEs tax compliance are investigated. A survey of 169 SME managers and 64 tax collection institutions from both the demand and supply sides of tax compliance was used. All the variables – isomorphic forces, tax fairness except strategic responses have a positive impact on tax compliance. The findings suggest that isomorphic forces and tax fairness as possible explanations for perceived tax compliance have a predictive force in Ghana. Strategic response was statistically insignificant but positive. Strengthening isomorphic forces and ensuring a fair tax system will compel taxpayers to fulfill their tax obligations. The paper is novel because it represents the first study that provides initial empirical tax compliance evidence from both the demand and supply sides of tax compliance.

Keywords: Isomorphic forces, Tax fairness, Strategic response, Tax compliance, SMEs