Impact of Digital Business for Effective Tax Collection in Tanzania:

Abstract

The study aimed to assess the Impact of digital business for effective tax collection in Tanzania (a case of TRA-Arusha).This quantitative research approach has adopted causal and descriptive research design which has enabled the researcher to answer questions raised between variables to assess impact of digital business 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 has been analyzed through Stata and Microsoft excel. The objectives of the study were to assess the influence of digital data tax inclusion for effective tax collection, to examine adaptation of digital tax agent inclusion for effective tax collection and to examine the influence of digital tax policy on absorptive capacity of TRA employees for effective tax collection in Tanzania. The implication is 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 also provided 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.