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Abstract

The study examined the influence of financial inclusion and tax compliance in Tanzania, focusing on access to financial services, quality of financial services, and usage of financial services. Guided by the positivist philosophy, the study employed a deductive approach utilizing the supply-leading theory and economic deterrence theory as the guiding frameworks. A cross-sectional survey design was employed, and multistage sampling was employed to obtain a sample of 386 bank agents by using a multistage sampling method. The study used primary data that was collected through structured questionnaires, which contained closed-ended questions measured on a 7-point Likert scale, and analyzed data by using Partial Least Squares equation modelling (PLS-SEM). The study has found access to financial services and usage of financial services positively influence tax compliance, while the quality of financial services has no influence on tax compliance. The results imply the need for BOT and TRA to provide innovation incentives to financial service providers for investing in innovations that link financial service usage and access with tax payment systems via digital platforms. Findings imply the need for policy reforms through revisitation of the National Financial Inclusion Framework 2023–2028 and embedding it with tax compliance efforts and service quality benchmarks. The current study integrated Supply-Leading Theory and Economic Deterrence Theory. The two theories imply that financial inclusion contributes to tax compliance when inclusion moves beyond access and becomes embedded in the everyday financial behaviour of taxpayers.

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