Tax compliance and domestic revenue collection in Uganda: a case of Uganda Revenue Authority (URA) head office Nakawa Kampala

Abstract

The main aim of this study was to examine the effect of tax compliance efforts on domestic revenue collection using URA as a case study. Specifically, the study assessed: Tax Awareness and Education (TAE); Taxpayer’s Attitude towards payment (TPA); Tax Collection Technology Systems (TCTS); and Fines and Penalties (FP) in relation to their effect on Domestic Revenue Collection (DRC). A sample size of 97 respondents was selected from a study population of 2900 using Yamane’s formula. Data was collected using a Likert scale based questionnaire containing five choices; strongly agree, agree, not sure, disagree and strongly disagree. Data was analyzed using Mean and standard deviation, Pearson correlation and regression analysis with the help of Statistical package for social sciences (SPSS) version 20. The findings revealed a significant positive relationship between:Tax Awareness and Education (TAE) and Domestic Revenue Collection (r = .380**); Taxpayer’s attitude towards payment (TPA) and Domestic Revenue Collection (r = .328**); Tax Collection Technology Systems (TCTS) and Domestic Revenue Collection (r = .370**); and a significant positive relationship between Fines and Penalties (FP) and Domestic Revenue Collection (r = .449**). It was concluded that tax awareness and education, taxpayer’s attitude towards payment, tax collection technology systems, and fines and penalties are significant predicators of revenue collection, where a change made in one of the independent variables can lead to a change in domestic revenue collection in Uganda. It was recommended that: the tax system should provide a clear and simple guideline on how to fill tax returns; and also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers. There should be massive sensitization of taxpayers aimed at inculcating a positive attitude in the minds of people regarding the importance of paying taxes; Tax collection technology systems should be enhanced to accessible websites and easy inputs with descriptions user guide for different functionalities; and that there should be moderate levels of fines and taxes to employ as this will make taxpayers comply in order to avoid fines and penalties.