Effect of ICT innovations on tax compliance in Uganda: A case of the Kakasa Business Solutions on small and medium enterprises in the Ndeeba Trading Centre

Abstract

This study examined the effect of ICT innovations on tax compliance in Uganda using a case of SMEs in Ndeeba trading centre Lubaga Division Kampala District. Specifically, the study assessed the effect of Digital Tracking Solution on tax compliance; examined the effect of Electronic Fiscal Receipting and Invoicing System (EFRIS) on tax compliance; and assessed the effect of Electronic Tax Services on tax compliance. A sample size of 110 respondents was selected from a study population of 150 business owners using Solvene’s formula. Data was collected by 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 study established a significant positive relationship between: Electronic Tax services (ETS) and tax compliance (r = .463**); Electronic Fiscal Receipting and Invoicing System (EFRIS) and tax compliance (r = .337**); and Digital Tracking Solution and tax compliance (r = .314**). The correlation between the dependent and independent variables implies that a change made in one of the independent variables can lead to a change in tax compliance by SMEs. Accordingly, the researcher concluded that Electronic Tax services (ETS), Electronic Fiscal Receipting and Invoicing System (EFRIS) and Digital Tracking Solution are significant predicators of tax compliance, where a change made in one of the independent variables can lead to a change in tax compliance by SMEs. It was concluded that Uganda revenue Authority through the Ugandan government should incorporate more Digital tax services to ease tax registration, assessment, and filling of tax returns, ensure that actual tax declarations are made and ensure timely payment of taxes as well as proper tax administration.