Abstract: The motive of this paper was to establish the existing relationship between the perceived factors that impact tax compliance in Tanzania using SMES at Babati town council Manyara, as a case study, and develop the best ways to promote high tax compliance level in our economy. The study used a mixed approach and survey design, where 100 respondents were chosen to take part using random and purposeful sampling methods. The study revealed, that the provision of quality services and good governance had positive and significant influence on tax compliance in Tanzania, with an adjusted R2 =86.1%. The study recommended to Tanzania Revenue Authority to offer high quality services and good governance to the taxpayers, and the government should continue to invest in superior social services such as health services, education services, and infrastructure. Services should base on scientific and needs of society.