Tax compliance, administrative capacity and domestic tax revenue in Uganda

Abstract

This study examined the relationship between tax compliance, administrative capacity and domestic tax revenue performance. The study’s aim was to examine the relationship between tax compliance and domestic revenue collection performance; and also investigate the relationship between administrative capacity and domestic revenue collection performance. Data on tax collection, URA expenditure, and tax payer register for the period from 2012 to 2023 extracted from URA records was used in the analysis. ADF, PP, F-bounds, and stability test, and Autoregressive Distributed Lag Model approach were used to examine the relationship. Results showed evidence of a positive relationship between tax compliance and domestic revenue collection in the long-run. Similarly, there was a significant association between administrative capacity and domestic revenue performance. In conclusion, evidence suggests that tax compliance and enhancing administrative capacity improve domestic revenue collection performance.