Orientation: ?Tax compliance costs are regressive in nature and impose a heavy burden on performance and sustainability of small businesses. Research purpose: ?The aim of this article was to identify endogenous factors that drive tax compliance costs of small businesses in the construction industry of South Africa. Motivation for the study: ?Small businesses in the construction industry face many challenges that result in low-profit margins, poor performance and eventually failure. Tax compliance costs are one of the factors behind poor performance and failure, as often cited by small businesses, and as such warranted an investigation into the factors that drive the costs. Research design, approach and method: ?Data were collected using self-administered questionnaires that were emailed to contractors in classes 3 and 4 of the Construction Industry Development Board’s register. A total of 83 usable questionnaires were returned and analysed using the structural equation modelling function of STATA data analysis and statistical software. Main findings: ?Statistical tests performed revealed that business size, age, method of settling tax obligations and qualifications of the tax preparer drive tax compliance costs of small businesses in the construction industry. Practical/managerial implications: ?Empowerment of employees and owners engaged in tax tasks, through formal education and tailor-made training, reduces the tax compliance burden and improves the performance of small construction businesses. Contribution/value-add: ?The results of the study could assist business owners and managers in the construction industry in identifying efficient tax approaches that could minimise the tax compliance costs burden. They also assist with better planning by government departments in terms of the kind of tax support required by small businesses in the construction industry.
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