Tax Systems on Voluntary Tax Compliance in Tanzania

Abstract

vi ABSTRACT Despite TRA's efforts to enhance compliance by simplifying processes and introducing user- friendly online services, voluntary compliance rates remain low. Taxpayers still struggle to comprehend tax requirements, access services, and navigate the tax system's complexities. Additionally, they perceive an inequitable tax burden and suspect corruption within the tax administration, diminishing their motivation for compliance. Thus, this study sought to examine the influence of tax systems on voluntary tax compliance in Tanzania, A case of Tanzania Revenue Authority - Manyara Tax Region. Specifically, this study sought to evaluate the influence of online payment system, electronic filing system and electronic fiscal device management system on voluntary tax compliance. The study employed the Theory of Planned Behaviour and Technology Acceptance Model. It used a descriptive research design, employing a quantitative approach with data collected through surveys from SMEs within the region. Both primary and secondary data sources were utilized for comprehensive insights. Simple random sampling ensured a representative sample of 398 respondents. Data was analyzed using descriptive and inferential statistics, employing statistical analysis through SPSS to examine relationships between variables and determine predictors of voluntary tax compliance. Findings showed that the online payment system significantly facilitates timely tax payments, motivating taxpayers to be more compliant with their tax obligations but with moderate preference for traditional payment methods. Findings indicated that electronic filing system has a significant influence on voluntary tax compliance emphasizing the importance of simplifying the system and providing user support. Also, the study found that the use of electronic fiscal devices substantially promotes voluntary tax compliance underlining the need for their mandatory use, training programs, and incentives for businesses. The study recommends TRA to invest in and promote the adoption of digital tax systems, enhancing user-friendliness and cybersecurity. For future studies, we recommend a longitudinal assessment of the long-term effects, alongside a comparative analysis of digital tax systems' effectiveness in different regions and a qualitative exploration of taxpayer perspectives on compliance within these systems