Digital Tax Policy on Absorptive Capacity of TRA Employees for Effective Tax Collection in Tanzania.

Abstract

The study aims to assessment of Impact of digital business for effective tax collection in Tanzania (a case of TRA-Arusha).This mixed research approach will adopt causal, observational research design and descriptive research design which will enable the researcher to answer questions raised between variables to assess challenges facing tax authority in effective tax collection and compliance in digital economy within Tanzania, preliminary test such pilot study to ensure validity and reliability of data and lastly data will be analyzed through Stata and Microsoft excel. The objectives of the study will be to identify the challenges that tax authority is experiencing in taxing the digital business, to analyze the effectiveness of taxation laws and regulations set on the taxation of digital business and lastly to suggest the solutions for the challenges facing tax authority in taxing digital market. The implication will be for the nation to realize the strong and competitive economy in Tanzania. The results of R square = 73.9% is a suitable fitted level to explain the model. This is interpreted as that; the effective tax collection in digital business in Tanzania 73.9 % is the function of digital tax policy, internet tax agent and Absorptive capacity of TRA employee’s inclusion while other unidentified factors can explain effective tax collection on digital economy business for only 26.1%. By concluding the study will help tax authority to know the challenges brought by digital economy and plan ahead for mechanism to meet the changes while ensuring revenue is increasing. it shall also provide reasons for the tax authorities to adopt the innovation through the use of technology to strengthen the current legal and regulatory framework and develop solutions to broaden tax base.