This study investigates the impact of online tax systems on the tax compliance behavior of small business owners, addressing both technological and behavioral dimensions. While previous research has emphasized system usability, trust, and efficiency, there remains a significant gap in understanding how socio-economic, psychological, and demographic factors influence compliance decisions—particularly among informal and rural enterprises. The primary objective of this research is to evaluate how online tax systems shape compliance behavior, while secondary objectives explore the perceived benefits and challenges of these systems, the role of ease of use, trust, and data security, and how individual characteristics such as age, education, and business experience affect adoption. Using empirical data from small business owners, the study highlights cyber security concerns, varying levels of digital literacy, and limited confidence in system accuracy as key barriers to voluntary compliance. This aligns with broader concerns in digital finance and e-governance, where perceived security risks can significantly impact user engagement. The results indicate that half of the respondents are concerned about cyber threats when using online tax systems. This reflects a significant trust issue that could hinder wider adoption. The study reveals important insights into small business owners’ perceptions of online tax systems. Nearly half of the respondents expressed concern over cyber threats, highlighting trust and data security as major barriers to adoption.