Assessing the impact of late tax audit on revenue collection

Abstract

The purpose of this article was to assess the impact of late tax audit on revenue collection in Arusha Tax Region. The main objective was to examines the reasons for late tax audit and the impact of late tax audit on PAYE, SDL, VAT and WHT-SERV on the revenue collection. The study employed a descriptive approach and both primary and secondary data were collected. The study was limited to 85 respondents of the Arusha Tax Region. The analysis of data through SPSS version 22 and Multiple Linear regression method. After using multiple regression whereby computation of average, percentage, correlation and regression analysis was done. From the findings, Pay As You Earn (PAYE), Skills and Development Levy (SDL), Value Added Tax (VAT) and Withholding Tax on Services (WHT-SERV) held at a constant zero revenue collection would be at 7.9581. That is, a unit increase in late tax audit PAYE would lead to a decrease in revenue collection by a factor of 1.064086. In addition, a unit increase in late tax audit on SDL would lead to a decrease in revenue collection by 0.391659. Results also indicate that a unit increase in late tax audit on VAT would lead to a decrease in revenue collection by 0.8907509. And finally, a unit increase in late tax audit on WHT-SERV would lead to decrease in revenue collection by 0.1726882. Furthermore, the findings revealed the existence of late tax audits, 89% and reasons were insufficient auditing staff, the complexity of other types of businesses operated by taxpayers, compliance with tax Laws among taxpayers as well as poor cooperation from taxpayers. Therefore, from the finding, it is clear as tax audits are conducted earlier as possible the more revenue to be collected on time.