Tax Administration and Tax Compliance in Municipalities in Uganda: A Case Study of Soroti Municipal Council

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION iii

ACKNOWLEDGEMENT iv

LIST OF ACRONYMS v

TABLE OF CONTENTS vi

LIST OF TABLES x

CHAPTER ONE: INTRODUCTION 1

1 .0 Introduction I

.1 Background to the Study

.1 .1 Historical Perspective

1.1 .2 Theoretical Perspective 2

1 .1 .3 Conceptual Perspective 2

1.1.4 Contextual Perspective 3

1.2 Statement of the Problem 3

1.3 Purpose of the Study 4

1 .4 Specific Objectives 4

1 .5 Research Questions 4

1.6 Hypotheses 4

1.7 Scope of the Study 4

1.7.1 Subject Scope 4

1.7.2 Geographical Scope 5

1.7.3 Time Scope 5

1.8 Significance of the Study 5

1.9 Operational Definition of Key Terms 5

CHAPTER TWO: LITERATURE REVIEW 6

2.0 Introduction 6

2.1 Conceptual Framework 6

2.2 Theoretical Review 7

2.2.1 Role of Tax Administration 7

2.2.2 Tax Administration Methods 8

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2.2.2.1 Tax Payer Identification .8

2.2.2.2 Taxpayers’ Registration 9

2.2.2.3 Tax Assessment Procedures 9

2.2.2.4 Tax Collection Procedures 10

2.2.2.5 Sensitization of Taxpayers 10

2.2.2.6 Monitoring and Enforcement 11

2.2.3 Tax Administration in Uganda 11

2.3 Conceptual Review 12

2.3.1 Levels of Tax Compliance among Taxpayer’s 15

2.3.1.1 Willingness to Pay 15

2.3.1.2 Timely Payment 16

2.3.1.3 Levels of Penalties and Disputes 16

2.3.2 Factors Hindering Tax Compliance 16

2.3.2.1 Attitude towards Tax Payment 16

2.3.2.2 Inadequate Knowledge 17

2.3,2.3 Poor Cash-flow Management 17

2.3.2.4 Poor Record Keeping 17

2.3.2.5 Difficulties in Identifying and Locating Individual Taxpayer 17

2.4 Review of Related Literature 18

2.5 Empirical Review 19

2.6. Research Gaps 20

CHAPTER THREE: RESEARCH METHODOLOGY 22

3.0 Introduction 22

3.1 Research Strategy and Design 22

3.2 Survey Population 22

3.3 Sampling 22

3.3.1 Sampling Techniques 22

3.3.2 Sampling Procedure 22

3.4 Data Sources 23

3.5 Data Collection Methods and Tools 23

3.6 Measurement of Variables 23

3.7 Data Presentation and Analysis 23

3.7.1 Data Presentation 23

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3.7.2 Data Analysis and Tools .24

3.8 Limitations of the Study 24

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION

OF THE FINDINGS 25

4.0 Introduction 25

4.1 Background Information about the Respondents 25

4.1 .1 Respondents According to Gender 25

4.1.2 Age of the Respondents 25

4.1 .3 Level of Education 26

4.1.4 Marital Status of the Respondents 27

4.1.5: Period of Respondents Spent in the Business 27

4.2 Tax Administration 28

4.2.1: Voluntary Registration of Taxpayers 28

4.2.2. Allocation of Tax Identification Numbers (TIN) to Tax Payers 28

4.2.3: Presence of Records for Correct and Accurate Assessment of Tax Payers 29

4.2.4 Assessments Are on Monthly and Annual Incomes of Individual Taxpayers 30

4.2.5 Sensitization of Tax Payers 30

4.2.6 Discussion of Tax Matters by Tax Officials with Taxpayers 31

4.2.7 Discussion of Findings Collected By the Authority Staff from the Tax Payers ... 32

4.2.8 Tax Obligations are Paid in the Right Offices 32

4.3 Tax Payer’s Compliance 33

4.3.1 Disclosure of earned incomes by the companies 33

4.3.2 Correct and Accurate Assessments 34

4.3.3: Consistencies in Following Up of Tax Laws 34

4.3.4: Filing of Annual Returns of Taxpayers 35

4.3.5 Period in which Taxes are Paid 36

4.3.6 Trend of Tax Collections 36

4.4 The Relationship between Tax Administration and Tax Compliance 37

4.4.1 Assessment System and Total Revenue Collections 37

4.4.2 Tax Collection Methods and Procedures and Tax Payer’s Compliance 37

4.4.3. Monitoring of Taxpayers and Revenue Collected by SMC 38

4.4.4 Massive Sensitization of Taxpayers and the Level of Tax Collections by SMC.. 39

4.4.5 Identification and Registration of Tax Payers and Revenue Collected 39

VIII

4.4.6 Relationship between Tax Administration and Taxpayer’s Compliance 40

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION ANI)

RECOMMENDATIONS 42

5.1.0 Main Findings of the Study 42

5.1.1 Findings on Tax Administration 42

5.1.2 Findings on Taxpayer’s Compliance 42

5.1.3 Findings on the Relationship between Tax Administration 42

5.2 Conclusions 42

5.2.1 : Conclusion on the Tax Administration 42

5,2.2: Conclusion on the Taxpayer’s Compliance 42

5.2.3: Conclusion on the Relationship between Tax Administration 43

5.3 Recommendations 43

5.3.1 Recommendations on Tax Administration 43

5.3.2 Recommendations on Taxpayer’s Compliance 43

5.3.2: Recommendations on Relationship between Tax Administration 44

5.4 Areas of Further Study 44

REFERENCES 45

APPENDICES 47

APPENDIX I: RESEARCH QUESTIONNAIRE 47

APPENDIX II: TIME FRAMEWORK 51

APPENDIX III: BUDGET 52

APPENDIX IV: INTRODUCTORY LETTER 53