Factors Affecting Tax Compliance among Retailers in Tanzania

Abstract

The study aimed to assess the factors affecting tax compliance among retailers in Tanzania. The Case of Arusha City Council. Specifically, study aimed to assess the effect of tax rate on tax compliance, to evaluate the effect of tax education on tax compliance and to determine the effect of Fine and penalty on tax compliance. The study adopted the descriptive design. Data was collected from 96 retailers through questionnaires. Simple random sampling techniques were used to select sample. Data was analyzed descriptively ways by using SPSS version 25. Data was presented in tables. The study found that, tax rate has an effect on tax compliance. Also, the study's findings indicate that tax fines and penalties have an effect on tax compliance. Moreover, the findings found that the tax education has an effect on tax compliance. The study recommended that there should be moderate levels of fines and penalties so that tax payers are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties. Also, tax authorities should consider tax rates that are affordable and comparable to the businesses in order to be fair since the taxpayers considered tax rates as burdens to their businesses. Moreover, study recommended to tax authority to improve taxpayer education programs so that people understand their rights and duties as taxpayers. The research findings will serve as the foundation for tax authorities to strengthen their policies and modify tax administrative procedures in order to establish the most advantageous conditions for retailers and enterprises in general to execute tax compliance.