Exploring small and medium-sized enterprises’ (SMEs’) perceptions of tax amnesty programmes in Zambia: A qualitative analysis of compliance behaviour and institutional constraints

Abstract

In emerging economies, tax forgiveness initiatives are commonly used to reclaim unpaid taxes and encourage businesses, particularly small and medium-sized enterprises (SMEs), to comply voluntarily with tax obligations. Nevertheless, there remains a lack of consensus on their effectiveness, and limited qualitative evidence exists regarding SME perceptions in sub-Saharan Africa. This study explores the views of SMEs that engage, or may potentially engage, in tax amnesty initiatives in Zambia, with a focus on institutional dynamics, administrative challenges, and behavioral responses. Data was collected through SME surveys and semi-structured interviews with tax officials, tax advisors, and policymakers using a qualitative research approach. The analysis employed Braun and Clarke’s thematic analysis framework, informed by compliance theory and agency theory. The findings reveal significant gaps in understanding and awareness that hinder SME participation in tax amnesty programs. Although financial incentives such as penalty reductions and flexible payment arrangements strongly motivate participation, long-term compliance is constrained by complex administrative procedures, digital system challenges, inadequate tax knowledge, and limited post-amnesty support. Following the amnesty period, many SMEs reverted to non-compliance, indicating that observed behavioral improvements were largely temporary. Key informants further highlighted moral hazard concerns arising from repeated amnesty and persistent distrust between SMEs and tax authorities. The study concludes that while tax amnesty programs can generate short-term compliance gains, they are insufficient on their own to achieve sustained compliance among SMEs. This underscores the need for complementary reforms in taxpayer education, administrative support, digital capacity enhancement, and trust-building initiatives. Policy implications emphasize the importance of clear communication strategies, structured post-amnesty support mechanisms, tailored compliance assistance that recognizes SME heterogeneity, improved digital infrastructure with capacity development, and institutional trust-building between tax authorities and SMEs to transform tax amnesty from a revenue recovery tool into a foundation for a durable culture of compliance. The study suggests a few changes based on what it found. First, it's a good idea to offer more tax education specifically for small and medium enterprises (SMEs). Next, making administrative processes simpler would help a lot. Also, providing better support for digital systems is important. Finally, setting up ongoing assistance after tax amnesty programs can really make a difference. By doing these things, tax amnesty programs could become tools that encourage people to follow tax rules on their own over the long term, instead of just bringing in quick money.