Effect of electronic taxation system on tax compliance, a case study of Kira division

Abstract

The study examined the effect of electronic taxation system on tax compliance in Kira Division as a case study. The study was guided by the following objectives: (i) To examine the effect of system accessibility on tax compliance among taxpayers in Kira Division, (ii) To assess the effect of system efficiency on tax compliance among taxpayers in Kira Division and (iii) To analyze the role of system integration on tax compliance among taxpayers in Kira Division. The research design was case study. The duration was cross-sectional. Both the qualitative and quantitative research approaches were used. A sample size of 97 respondents was used. The questionnaire and interview guide were the main instruments of data collection. According to the study findings from the field, it was revealed that 63(64.3%) agreed that the Uganda Revenue Authority (URA) e-tax system is accessible and easy to use. Many appreciated the ability to file returns conveniently from their homes and workplaces, even outside official hours. This flexibility is seen as a key driver of timely compliance among small business owners and accountants. However, 6(6.2%) were not sure and 28(28.9%) were in disagreement citing issues of frequent system downtimes and poor internet connectivity. Study findings further revealed that 60(61.8%) were in agreement that the process of filing taxes through URA’s system is simple and easy to follow compared to 7(7.2%) who were neutral and (42.5%) who disagreed. The findings revealed that 55(56.7%) agreed that the digital integration of URA systems has made it easier for them to file and pay taxes. However, 5(5.2%) were neutral on statement and 37(38.1%) were in disagreement. The study concludes that system accessibility is a fundamental determinant of tax compliance among taxpayers in Kira Division. Although majority perceived the URA e-tax platform as accessible, reliable and conducive to fulfilling tax obligations conveniently, some respondents face stumbling blocks related to, unstable internet connectivity, frequent system outages and insufficient digital literacy. The study recommended that Kira division should adopt the use internet payment system to allow tax officers to issue assessments and refunds more quickly and lower corruption by reducing face-to-face interactions. Kira division and clients should subscribe to reliable internet providers for effective and efficient service delivery. Kira division should also employ skilled personnel with more experience on network management in order to ensure the reliability of network.