Rethinking SME Tax Compliance in Developing Economies: An Integrated Theoretical Approach

Introduction: Tax compliance remains a persistent challenge in developing economies, particularly among small and medium-sized enterprises (SMEs), which form the backbone of the private sector, yet they consistently exhibit low compliance rates (Nkundabanyanga et al., 2017; Musiimenta et al., 2020). While prior studies have applied single theoretical lenses such as deterrence (Allingham & Sandmo, 1972) or behavioural intentions (Ajzen, 1985), these approaches provide only partial explanations of compliance behaviour. Objective: This article aims to develop an integrated framework that synthesises multiple theories to provide a more comprehensive understanding of SME tax compliance in developing contexts. Methods: A conceptual synthesis of six theories: Institutional Isomorphism, Comparative Treatment, Fiscal Exchange, Economic Deterrence, the Theory of Planned Behaviour, and Social Influence was undertaken through critical review and comparative analysis. Each theory’s assumptions, applications, and limitations were mapped, and complementarities were identified to construct a unified framework. Results: The proposed model positions taxpayer behaviour as a mediating mechanism linking institutional pressures, fairness perceptions, and behavioural-social dynamics to compliance outcomes. It demonstrates how compliance is shaped by coercive and normative pressures, perceptions of equity and reciprocity, attitudes and control beliefs, and the influence of peer networks. Discussion/Conclusion: By embedding institutional, behavioural and economic perspectives into one explanatory model, this framework advances theoretical coherence, generates new avenues for empirical testing, and provides policymakers with a practical guide for designing holistic compliance strategies. The study concludes that improving SME tax compliance in developing economies requires interventions that combine enforcement, fairness reforms, service provision, taxpayer education, and community engagement