EFFECTIVENESS OF ELETRONIC METHOD IN FILLING

TAX RETURNS BY TAXPAYERS

The case study of Kinondoni Tax Region

Caroline Masele

Postgraduate Research Report

Institute of Tax Administration

August, 2021
 EFFECTIVENESS OF ELETRONIC METHOD IN FILLING
TAX RETURNS BY TAXPAYERS

The case study of Kinondoni Tax Region

By

Caroline Masele

A Research Report Submitted in Partial Fulfillment of the Requirements

for the Postgraduate Diploma in Taxation of the Institute of Tax
Administration
Institute of Tax Administration

August, 2021

ABSTRACT
Taxation is essential for sustainable economic development and tax administration is a basic
function of a successful state or government. In Tanzania taxation is the single largest source
of government budgetary resources. Given its central role, taxation has been applied to meet
two objectives, first taxation used to raise sufficient revenue to fund public spending without
recourse to excessive public sector borrowing and the other function it is used to mobilize
revenue in ways that are equitable or to raise revenue to meet huge public expenditure.
Taxation remains to be the main source of government revenue in both developed and
developing countries.

This study focused on assessing the effectiveness of electronic method in filling tax returns
by taxpayers in Kinondoni Tax Region as a case study. Specifically the study was guided by
three specific objectives which are to explore the usefulness of software used to manage e-
filling in Tanzania, to assess the effects of using e-filling by taxpayers in Tanzania on tax
returns, to assess challenges faced in improving tax returns in using e-filling system in
Tanzania. A survey research design was adapted to a targeting 57 tax payers, tax consultant
and tax officers questionnaire were administered among 57 tax payers, tax consultant and tax
officers in Kinondoni Tax Region.

The findings showed that electronic method in filling tax return by tax payers is efficient,
saves time, is automatic in calculation during filling return, link-up between tax payers, tax
consultant and tax officers and secure to use whereby there also challenges that led to
ineffective of the system such as low networking, inadequate knowledge to both taxpayers on
how to use the system, and tax officer on how to maintain the operation of the system.

Despite of these results Tanzania Revenue Authority should provide education and training to
taxpayers and tax consultant, also tax officers needs more experts and knowledge about the
system in order to handle problems concerning the system such as networking break down

ii
 CERTIFICATION
The undersigned certifies that he has read and hereby recommends for acceptance by
Institute of Tax Administration the research prepared by Caroline Masele titled Assessment
of electronic method in filling tax return by taxpayers: case study Kinondoni Tax
Region, in fulfilment of the award of Postgraduate Diploma in Taxation (PGDT).

Supervisor’s name Heriel Nguvava

Signature…………………

Date ………………………

iii
 DECLARATION
I Caroline Masele, declare that this research is my own original work and that it has not been
presented to any Institute or University for a similar or any other degree award.

Signature……………………

Date …………………………

iv
 ACKNOWLEDGEMENT
The success and completion of this research report is a result of collected effort from many
people who have contributed morally, materially or otherwise to the research report. I cannot
acknowledge all of them, but there are special ones which I cannot forget.
First, I would like to thank the almighty God, who gave me health and guided me through the
preparation of this research report.
Special thanks and acknowledgement goes to my supervisor Dr Nguvava for the tireless
assistance that they had accorded me throughout the preparation of this work. Indeed, he has
really sharpened my knowledge and broadens my thinking. May the Almighty God bless you.
Further, I would to thank all tax officers, tax consultants and tax payers in Kinondoni tax
region for their support and contributions for useful information which was required to
accomplish the research.
I am indebted to my family; you are the most awesome people that ever existed. I wouldn’t
trade you for any other thing or person. My parents Mr. and Mrs. Masele, my brothers and
their wife’s Mr. and Mrs. Emmanuel and Mr. and Mrs Joachim, I am grateful for the love and
support.

v
 DEDICATION
I dedicate this work to my beloved parents Mr. and Mrs. Masele, this research signifies the
beginning of many more achievements to come, thank you for the late rights you put in with
me and for always being my number one critic, advisors and editors. May almighty God bless
you, I also dedicate this research work to my beloved brothers Emmanuel, Joachim and their
wife’s Consolatha and Martha for appreciating me and insisting me on doing well in every
chance that I get. May almighty God bless you all.

vi
 COPYRIGHT
No any part of this research may be reproduced or transmitted by any means other than
permission from the Author or the Institute of Tax Administration.

vii
 TABLE OF CONTENTS
BSTRACT..............................................................................................................................ii
CERTIFICATION................................................................................................................iii
DECLARATION..................................................................................................................iv
ACKNOWLEDGEMENT.....................................................................................................v
DEDICATION......................................................................................................................vi
COPYRIGHT.......................................................................................................................vii
TABLE OF CONTENTS....................................................................................................viii
LIST OF TABLES..............................................................................................................viii
LIST OF FIGURES..............................................................................................................ix
LIST OF ABBREVIATION..................................................................................................x
CHAPTER ONE....................................................................................................................1
INTRODUCTION..................................................................................................................1
CHAPTER TWO...................................................................................................................6
LITERATURE REVIEW.......................................................................................................6
Technology acceptance model (TAM)...................................................................................9
CHAPTER THREE..............................................................................................................13
RESEARCH METHODOLOGY.........................................................................................13
CHAPTER FOUR................................................................................................................16
DATA PRESENTATION FINDINGS................................................................................16
CHAPTER FIVE..................................................................................................................21
DISCUSSION OF THE FINDINGS....................................................................................21
CHAPTER SIX....................................................................................................................22
CONCLUSION AND RECOMMENDATION...................................................................22
REFERENCE.......................................................................................................................23
Appendix 1: introductory letter............................................................................................24
Appendix 2:..........................................................................................................................25
QUESTIONNAIRE..............................................................................................................25
 LIST OF TABLES

Table 3.1 Sample size…………………………………………………...15

Table 4.1 Age of the respondents………………………………….........16

Table 4.2 respondents education level…………………………………..17

Table 4.3 Usefulness of soft ware………………………………………17

Table 4.4 Challenges faced in improving tax return…………………….18

Table 4.5 Effects of using e-filling by tax payers………………………..19

Table 4.6 Any recommendation for improvement of the system………..20

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 LIST OF FIGURES
Figure 1: Conceptual framework …………………………………………………..11

xiv
 LIST OF ABBREVIATION
TAM Technology acceptance model

DOI Diffusion of Innovation

UTAUT Unified Theory of Acceptance and Use of Technology

T.R.A Theory of Reasoned Action

TRA Tanzania Revenue Authority

PGDT Postgraduate Diploma in Taxation

xv
xii
 CHAPTER ONE

INTRODUCTION
1.1 Back ground of the study

Taxation is essential for sustainable economic development and tax administration is a basic
function of a successful state. In Tanzania, taxation is the single largest source of government
budgetary resources. Given its central role, taxation has been applied to meet two objectives.
First, taxation is used to raise sufficient revenue to fund public spending without recourse to
excessive public sector borrowing. Second, it is used to mobilize revenue in ways that are
equitable and that minimize its disincentive effects on economic activities Moyi Ronge,
(2006).Taxation remains to be the main source of government revenue in both developed and
developing economies.

However one of the biggest threats to this method of financing governments is tax avoidance and
evasion. Budgetary shortfalls and taxation gaps prevail in fiscal plans, resorting to dependence
on unsustainable financial sources such as Bank loans and multilateral donors. Developing
countries therefore need to develop and implement policies that reduce prevailing shortfalls and
unhealthy dependence on donor funds. According to Ochieng et al. (2014), the Tanzania
government has been pursuing tax reforms in order to design a system that is viable and
productive to finance and expenditure without recourse to deficit financing. With the devolved
structure of governance spelt out in the country’s constitution, there has been need for increased
revenue collection to sustain the activities for both the devolved and central governments.

The Tanzania Revenue Authority (TRA) has now rolled out an electronic filing system which
allows taxpayers to submit tax returns by a single click of button. The biggest advantage that the
system has brought convenience which increased compliance. Tax returns are now processed in
real time and taxpayers have confirmed that the return has been received and accepted by the
authority immediately while taking away the need to keep a stamped copy. This has brought
advantage to both taxpayer and Tanzania Revenue Authority (TRA) through saving time and
reducing risk of input errors of the old system which required data from the manual returns to be

1
keyed into the Tanzania Revenue Authority (TRA) system. Article by Gasper Ndamcho is an
Associate, Tax Services at PwC Tanzania (2020)

This study has emerged to find out how taxpayers and tax practitioners in Tanzania as a
developing nation, respond to online tax filing endeavours put in place by Tanzania Revenue
Authority (TRA) to enhance compliance to address a research void, in order to fill up a
knowledge gap. The study aim at assessing the effectiveness of electronic method in filing tax
returns by tax payers, online tax filing in Kinondoni Tax Region, looking at the usefulness of
software used to manage e-filling in Tanzania, effects of using e-filling by tax payers in Tanzania
on tax returns and challenges faced in improving tax returns in using e-filling system in
Tanzania. Also taxpayers should comply with three procedures, filling, and submitting and
payment compliance.

Therefore, a taxpayer would be called non-compliant if the three dimensions are not properly
accomplished. The aim of tax reforms in many countries is to achieve higher voluntary
compliance and one way to do this is by introducing electronic filing system Khadijah, (2013).
No matter what the justifications advanced, a tax fails to the extent that it is avoided or evaded
Shultz and Harris, (2004).The aim of tax reform in many countries is to achieve higher voluntary
compliance and one way to achieve this is by introducing a self-assessment system (SAS)
Khadijah, (2014).

Electronic tax filing was first coined in United States, where the Internal Revenue Service’s
(IRS) began offering e-filing for tax refunds only Muita, (2011). This has now grown to the level
that currently approximately one out of every five individual taxpayers is now filing
electronically. This however, has been as a result of numerous enhancements and features being
added to the program over the years. Online tax filing (Electronic tax filing or e-filing) is a
process where tax documents or tax returns are submitted through the internet; usually without
the need to submit any paper return Wasao, (2014). The e-filing system encompasses the use of
internet technology, the Worldwide Web and Software for a wide range of tax administration and
compliance purposes.

Tax compliance is the timely filing and reporting of required tax information, the correct self-
assessment of taxes owed and the timely payment of those taxes without enforcement action

2
Jones, (2009). From this definition, there are three dimensions of tax compliance: filing,
reporting, and payment compliance. Therefore, a taxpayer would be called non-compliant if the
three dimensions are not properly accomplished. The aim of tax reforms in many countries is to
achieve higher voluntary compliance and one way to do this is by introducing electronic filing
system Khadijah, (2013). No matter what the justifications advanced, a tax fails to the extent that
it is avoided or evaded Shultz and Harris, (2004).The aim of tax reform in many countries is to
achieve higher voluntary compliance and one way to achieve this is by introducing a self-
assessment system (SAS) Khadijah, (2014).

1.2 Statement of the problem

Worldwide, taxpayer’s resistance, underutilization and inability to use electronic filing system
remain a great concern and still a problem to various tax agencies which are adopting electronic
tax administration systems Fjeldstad and Katera (2017). Previously tax system in Tanzania based
on manual system in filling tax return which was accompanied by poor recording, time
consuming and non compliance with the taxpayers, Tanzania Revenue Authority annual report
(2019) this contributed into failure to meet expected and targeted budgets by the government and
in order to address this challenges electronic filing system in Tanzania was introduced, in the
year (2020), initially on a voluntary usage basis for all categories of income tax payers, through
an online system called TRA Online.

The challenge of lack of knowledge on the electronic method in filing tax returns by tax payers is
serious on the grounds that it may have played part in tax collection and even after aggressive
publicity by TRA in the print and electronic media, Government face challenges in its
implementation whereby might be to overcome the inherit obstacle to human kind of negative
altitude in adopting changes. Adoption of e-filling involves among other things, transformation
from manual to electronic documentation of which acceptability varies corresponding to
different users, thus there is a need to consider all levels associated with tax administration
Blumc &Bott, (2015).

The implementation of e-services (e-filling) in any government is time consuming, complex and
challenging Blumc & Bott, (2015); Ambali, (2009) in most cases in an environment that is more
electronic ready people are generally comfortable with the introduction of new technologies and

3
thus e-filling initiatives can be easily adopted unfortunately this back ground is lacking in
Tanzania Rumanyika & Mashenene, (2014). Yonazi (2013) and Sefue (2014) indicate that
Tanzania faces challenges in implementing e-filling electronic services including issues of
knowledge of the method, and the willingness to use electronic services. However due to
introduction of electronic method Tanzania has not yet enabled the tax payer to adopt the system,
Tanzania Revenue Authority has failed to solve this problem despite its usage for some time,
current study aimed at assessing the effectiveness of electronic methods in filling tax return by
the tax payers in Kinondoni tax region.

1.3 Research objectives

This research include four objectives whereby one is general objective and three specific
objectives which are to assess effectiveness of electronic method in filling tax returns by tax
payers, to explore the usefulness of soft ware used to manage e-filling in Tanzania, to assess
effects of using e-filling by taxpayers in Tanzania on tax returns and to asses challenges faced in
improving tax returns in using e-filling system in Tanzania.

1.3.1 General objectives

The general objective of the study is to assess effectiveness of electronic method in filing tax
returns by tax payers.

1.3.2 Specific objectives

The study is aimed at achieving the following specific objectives:

(i) To explore the usefulness of software used to manage e-filing in Tanzania

(ii) To assess effects of using e-filing by taxpayers in Tanzania on tax returns
(iii) To assess challenges faced in improving Tax returns in using e-filing system in
Tanzania

1.3.3 Research questions

(i) What is the usefulness of software used to manage e-filing in Tanzania?

(ii) What are the effects of using e-filing by taxpayers in Tanzania on tax returns?

4
 (iii) What are challenges faced in improving Tax returns in using e-filing system in
Tanzania?

1.4 Significance of the research

Tanzanian government relies heavily on taxes to fund its development expenditure. An increase
or decline in tax revenues has a direct bearing on the economy of Tanzania as a country. The
researcher is intends to assess the effectiveness of electronic method in filling tax return by the
taxpayers by looking on the usefulness of soft ware used to manage e-filling, effects of using e-
filling by taxpayers and the challenges faced in improving tax returns in using e-filling system in
Tanzania.

5
 CHAPTER TWO

LITERATURE REVIEW
2.0 Introduction

This chapter provides a review of related literature so as to establish the relationship between
variables in the selected area of study. It establishes the relationship that exists between
effectiveness of electronic method in filling tax return by the taxpayer’s, the researcher will
present the theoretical as well as empirical related literature review.

2.1 Definition of terms and concepts

2.1.1 Online tax filing system

Online tax filing (Electronic tax filing or e-filing) is a process where tax documents or tax returns
are submitted through the internet; usually without the need to submit any paper return and the e-
filing system encompasses the use of internet technology, the Worldwide Web and Software for
a wide range of tax administration and compliance purposes. Wasao, (2014).

2.1.2 Tax compliance

Tax compliance is the timely filing and reporting of required tax information, the correct self-
assessment of taxes owed and the timely payment of those taxes without enforcement action
Jones, (2009). From this definition, there are three dimensions of tax compliance: filing,
reporting, and payment compliance.

2.2 Theoretical literature

6
This study borrows heavily from existing research theories which have been put across by
various scholars with regard to adoption of technology in society and tax compliance. The
theories used for this study were Technology acceptance model (TAM), Diffusion of Innovation
(DOI) Theory, Unified Theory of Acceptance and Use of Technology (UTAUT) and Theory of
Reasoned Action (T.R.A).The theories were suitable for this study in that they explain taxpayer’s
behaviour when adopting new technology. Online filing being new technology to use was
explained well by these theories on adoption process. The tax compliance theories of the Social
Psychological approach and Economic approach were well illustrated on how they influence
taxpayers’ tax compliance

2.3 Theories of adoption of online filing technology

2.3.1 Technology acceptance model (TAM)

This theory was advanced by Venkatesh and Davis, (2000). The TAM has been validated as a
powerful and parsimonious framework to explain the adoption of information technology by the
users. The TAM postulates that user adoption of a new information system is determined by their
intention to use the system, which in turn is determined by their beliefs about the system. The
TAM further suggests that two beliefs-perceived usefulness and perceived ease of use-are
instrumental in explaining the variance in the users’ intention. Perceived usefulness is defined as
the extent to which a person believes that using a particular system will enhance his or her job
performance, while perceived ease of use is defined as the extent to which a person believes that
using a particular system will be free of effort.

Among the beliefs, perceived ease of use is hypothesized to be a predictor of perceived

usefulness. TAM can be used with confidence to examine the effect of individual differences that
is computer self-efficacy on users’ acceptance of electronic tax-filing systems through three
beliefs perceived usefulness, perceived ease of use, and perceived credibility. The users’
perceived credibility of Web systems has a marked influence on user willingness to engage in
online exchanges of money and personal sensitive information Miyazaki and Fernandez, (2001).

2.3.2 Diffusion of Innovation (DOI) Theory

7
This theory which seeks to describe the patterns of adoption of technology, explaining the
mechanism of the adoption and further predicting whether and how a new invention or
innovation was successful, was advanced by Everett Rogers in (1962). The DOI theory proposes
that technological innovation is communicated through particular channels, over time, among the
members of a social system. Based on this definition, using e-filing technology is a fairly new
practice in Tanzania and can be seen as an innovation for each individual internet user.

2.3.3 Unified Theory of Acceptance and Use of Technology (UTAUT)

This model was formulated by Venkatesh and others and it aims to explain user intentions to use
an information system and subsequent usage behaviour. The goal of UTAUT is to understand
one’s intention to use an information system and the actual usage of the system Venkatesh et al,
(2003). The theory holds that four key constructs (performance expectancy, effort expectancy,
social influence, and facilitating conditions) are direct determinants of usage intention and
behaviour. Gender, age, experience, and voluntariness of use are posited to mediate the impact of
the four key constructs on usage intention and behaviour Venkatesh, (2003).

2.4 Theories of Tax Compliance

The main theoretical approaches to tax compliance have commonly been divided into the
economic deterrence’ approach and the wider behavioural approach which incorporates both
social and fiscal psychological approaches.

2.4.1 Economic approach of tax compliance

The economic definition of taxpayer compliance views taxpayers as ‘perfectly moral, risk-
neutral or risk-averse individuals who seek to maximize their utility, and chose to evade tax
whenever the expected gain exceeded the cost Milliron and Toy, (1988). Thus, a pure ‘cost-
benefit’ approach is given for why or why not taxpayers may comply with the tax laws. Some
researchers propose that individuals are expected to weigh ‘the uncertain benefits of successful
evasion against the risk of detection and punishment Fischer et al, (1992). Consequently, a
penalty structure forms part of the punishment, and is a critical factor in an individuals’ choice to

8
evade tax. The models which have been based on the economic theory of compliance generally
focus on deterrence.

2.4.2 RELEVANCE THEORY TO THE RESEARCHER

Technology acceptance model (TAM)

TAM is an information system theory that models how users come to accept and use technology
perceived ease-of-use. This theory is relevant to the research as determines the need of people to
use technology in filling tax return, whereby it is defined the degree to which a person believes
that using a particular system would be free from efforts Harriet Karimi etal (2017). The actual
system use is the end point where we want everyone to be able to do with technology so we have
to form behavioural intention which is a factor that leads people to use the technology. Warshaw
(2007) argued that new technologies such as personal computers are usually thought complicated
and that causes an element of uncertainty hence affecting successful adoption of these systems.
With attitudes formed people fail even to try to learn how to use the new technology.

2.5 Empirical literature

2.5.1 Taxpayers perception towards online filing technology

Perception and attitude towards online filing has been identified as one of the major factors that
influence the adoption of a new innovation or technology Mandola, (2013). Although, the e-
filing system may offer potential benefits to improve administrative compliance efficiency, the
benefits gained may be obstructed by tax users' unwillingness to accept and use the new tax
technology. In essence, the move to adopt an e-filing system is neither hassle free nor well
accepted by all tax parties, particularly the tax agents and professionals Kamarulzaman, (2010).

According to Palmer (2002) electronic tax filing systems can be evaluated in terms of usability,
design and performance including download delay, navigability, site content, interactivity,
responsiveness, user satisfaction, the likelihood of return to the website and frequency of use.
Another critical issue on e-filing is that the TRA has to ensure the confidentiality and privacy of
the information submitted through the Internet is preserved For example, empirical study found

9
that American taxpayers vary widely in their attitudes, technology readiness, acceptance and
utilization of e-filing technologies Walsh and White, (2000).

2.5.2 Technical skills of filing returns

According to Mandola (2013), there has been little research exploring the possession of technical
skills of filling in and filing tax returns as a factor that affects the adoption of online filing
system by citizens, especially in developing countries. Lee et al. (2008) on user evaluation of tax
filing web sites in South Korea and Turkey, to compare the design and the complexity of the web
sites and the ease with taxpayers are able to file tax returns and queries on their tax status. While
Turkey had a complex online system, to the contrary Turkish users did not find tax filing system
difficult to use and that was attributable to the fact that they relied on accounting professionals to
do their tax returns online. On the other hand, South Korean system was considered less complex
but few taxpayers were using it as expected.

Tax practitioners and the study aimed at establishing the necessary skills required by taxpayers to
fully utilize a tax online system. The study found that three skills are needed by a taxpayer to
interact well with technology based tax system namely, spread sheet software, word-processing
software and e-mail. The findings of this study has got implications on the current study in that
in analysing the effectiveness of electronic filing system, one must not ignore the mandatory
skills users of the system need to have. Failure to consider such skills may make the intention of
the system not to be realized Maede, (2002).

10
2.6 Conceptual framework
A conceptual framework is described as a set of broad ideas and principles taken from relevant
fields of enquiry and used to explain relationship between variables. Source Mandola (2013)

Independent Variables

Perception towards online tax filing

 Perceived usefulness
 perceived ease of Use
 User satisfaction
 perceived insecurity
Tax Compliance

 Correct Returns
 Timely Return
 Accurate Return

Technical Skills of Filing Returns

 Knowledge of taxation system

s
 Internet familiarity and skills
 Professionals assistance

Figure 1. Conceptual framework

Having in place an electronic tax filing system is one thing, but being able to be used by
taxpayers is another thing. This has influence on the current study in a way that the tax website
ease of usage must be considered before such a system is rolled out to taxpayers. Other factors to
consider should also be the capacity of the system and the efficiency Lee et al, (2005).

This study proposes a framework that incorporates the significant effect of taxpayers’ perception
towards online tax filing and technical skills of filing the tax returns which is a significant on tax
compliance. The intervening variables are the moderating factors that affect an individual’s
preference to tax compliance. The dependent variable is a result of the interaction between the

11
inputs (independent variables) and the intervening variables. The government and other tax
agencies can enhance compliance by education and training, tax amnesty and technology. The
conceptual framework as illustrated in Figure 1 is a diagrammatic representation of the variables
that determines the online tax filing that enhances effectiveness of electronic method.

12
 CHAPTER THREE

RESEARCH METHODOLOGY
3.0 Introduction

This chapter discusses the research methodology that was used in the study which include, research
design, study area, target population, methods of data analysis, sample techniques and sample size and
sample procedure and method of data collection.

3.1 Research design

The research design that was used in this study was descriptive survey design because it establishes
relationship between variables particularly effectiveness of electronic method in filling tax return by the
taxpayers and for the aim to achieve the objectives of the research.

3.2 Study Area

This study was conducted at Kinondoni tax region due to the fact that most of the taxpayers in Kinondoni
tax region fall under the small and medium taxpayers’ bracket. Also it was easy for the researcher to
collect data easily due to the nature of study.

3.3 Limitation and delimitations of study

3.3.1 Limitation of the study

The process of collecting data is taken as one of the limitation of this study because it was not a simple
tax due to reason which might be beyond the researcher. First of all there was a financial shortage to
cover transportation, stationeries, time and others. Hence in order to accomplish this work the researcher
decided to have small sample size of data within minimum costs.

3.3.1 Delimitations of the study

*This study is the covers the research objectives, research questions, research variables and targeted
populations and tries to answer the research questions and objectives. Also uses the primary and
secondary data to obtain the information.

3.4 Target Population

13
The population of the study consisted of Small and medium Taxpayers, tax officers and tax consultants in
Kinondoni tax region, Due to financial and time constraints the researcher will not collect data from all
taxpayers, tax consultants and tax officers in the study.

3.5 Sampling techniques and Sample size

3.5.1 Sampling techniques.

Purposive sampling method will be used to select the sample from the population. This method is
a non-probability sampling technique. This method is selected because the researcher based on
the based on the knowledge and skills of the participants.
3.5.2 Sample size

The researcher has adopted the formula which was developed by Cochran (1993) in obtained the sample

No=Z^2pq/e^2

Where, no is the sample size

Z^2 is the confidence level which is 90%

P is the estimated proportional that is present in the population

Q is 1-p

e^2 is marginal error

Therefore,

No= (1.65)^2(70)(30)/(10)^2

= 57

Therefore the sample size of the study was 57 respondents who were the distributed by the researcher
categories of taxpayers, tax consultants and tax officers as shown by table

Table 3.1 Sample size

Number Type of respondents Sample size

1 Tax consultant 7
2 Taxpayers 30

14
3 tax officers 20
Total sample size 57
Source: Researcher, 2021

3.6 Methods of data collection.

The study used both primary and secondary data. Primary data was obtained through the use of
questionnaire containing both open and close ended questions, the questionnaire was distributed to the
taxpayers, tax consultant and tax officers in Kinondoni Tax Region. Secondary data was obtained from
internet web sites, books, journals and magazines.

3.7 Method of data analysis

Data analysis involved descriptive method of which qualitative and quantitative data were used for the
purpose to collect and analyze data so as to respond to the research objectives.

15
 CHAPTER FOUR

DATA PRESENTATION FINDINGS

4.0 Introduction

This chapter provides the description of the results of data presentation findings, data were
analysed in narrative manner and tables such as demographic information for the respondents is
reported such as age, and education also the detailed analysis of the research questions and the
chapter discusses the research objectives.

4.1 Descriptive Results

The study sought to establish the effectiveness of electronic method in filing tax returns by tax
payers in Kinondoni Tax Region. Three main categories of questions were framed and the same
given to the respondents, such as what is the usefulness of soft ware used to manage e-filling in
Tanzania, what are the effects of using e-filling by taxpayers in Tanzania on tax returns and what
are the challenges faced in improving tax returns in using e-filling system in Tanzania. Each
question had several components tested in order to realize the objectives of the study.

4.2 Demographic information.

4.2.3 The age of the respondents

Table 4.1

Age Frequency Percent

25-35 25 43.9%
35-45 15 26.3%
45-55 9 15.8% Source: survey data (2021)
Over 55 years old 8 14%
Total 57 100% Results from table 4.1 shows
that the respondents were aged
between 25 to 55 and over 55 years old. Majority of respondents falls between 25 to 45 years
old that is (70.2%), therefore a big number of respondents are able and capable to obtain new
technology because can be trained and understand the system.

16
4.2.4 Level of education of the respondents

Table 4.2

Education level Frequency Percent

Secondary level 21 36.8%
Certificate level 7 12.3%
Diploma level 9 15.8%
Degree level 15 26.3%
Masters level 5 8.8%
Total 57 100%
Source: survey data (2021)

Table 4.2 shows education level of the respondents involved in this study. It indicates that
(36.8%) of the respondents are secondary education level, (12.3%) certificate level, (15.8%)
Diploma level, (26.3%) Degree level, (8.8%) Masters level. Therefore due to education level
effectiveness of the system in filling tax return, how to use the system and to manage is the
problem.

Data shows that (36.8%) respondents were secondary level holders and followed by degree,
diploma, certificate and masters. Therefore research findings and data collection fallen to a large
number of respondents who had low level of education.

4.2.1 To explore usefulness of soft ware used to manage e-filling in Tanzania.

Table 4.3

Strongly Percent Strongly Percen Neutral Percent Total

agreed, disagree, t
Agreed Disagree
Tax payers 25 83.3% 3 10% 2 6.7% 30
Tax 6 85.7% 0 0% 1 14.3% 7
consultant
Tax officers 15 75% 0 0% 5 25% 20
Source: Survey (2021)

The respondents were categorised in three group’s tax payers, tax consultant, and tax officer,
(83.3%) of the taxpayers, (85.7%) of the tax consultant and (75%) of the tax officers strongly
agreed and agreed that electronic method in filing tax returns is efficient. With regard to easy,
17
time saving, the system is safe to both users and automatic in calculating when filling returns.
Therefore the system it’s effective to tax payers, tax consultant and taxpayers and only (10%)
from tax payers disagree on the effectiveness of electronic method in filling tax returns and
(6.7%) were neutral about the system while (25%) from tax officers were neutral and (14.3%)
tax consultant were neutral.

4.2.2 Challenges faced in improving tax returns in using e-filling system in

Tanzania.

Table 4.4

Strongly Percent Strongly Percen Neutral Percent Total

agreed, disagree, t
Agreed Disagree
Tax payers 19 63.3% 6 20% 5 16.7% 30
Tax 5 71.4% 2 28.6% 0 0% 7
consultant
Tax officers 11 55% 9 45% 0 0% 20
Source: Survey report (2021)

From findings in table 4.4 (20%) respondents from taxpayers, (28.6%) tax consultant and (45%)
tax officers provided with questionnaire by the researcher strongly agreed and agreed that there
is different challenges which lower the effectiveness of the electronic method in filling tax
returns by the taxpayers.

Technology is the big problem to taxpayers, tax consultants and tax officers where by tax payers
have inadequate knowledge and skills to use e-filling due to the fact that the system is a new to
the taxpayers also to the tax officers, there are no enough expertise to operate the system.
Therefore this system has low networking especially during due date of filling returns and only
(45%) from tax officers, (28.6%) from tax consultant, (20%) from taxpayers disagree hence led
to ineffective of system in filling tax return by the tax payers and (16.7%) were neutral about the
system.

4.2.3 Effects of using e-filling by taxpayers in Tanzania on tax returns.

Table 4.5
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 Strongly Percent Strongly Percen Neutral Percent Total
agreed, disagree, t
Agreed Disagree
Tax payers 25 83.3% 5 16.7% 0 0% 30
Tax 6 85.7% 1 14.3% 0 % 7
consultant
Tax officers 18 90% 0 0% 2 10% 90
Source: Survey report (2021)

From findings in table 4.5 (83.3%) respondents from taxpayers, (85.7%) tax consultant and
(90%) tax officers provided with questionnaire by the researcher strongly agreed and agreed that
there is positive effects which enable the effectiveness of the electronic method in filling tax
returns by the taxpayers.

The system link-up tax payers, tax consultant and tax officers and there is no need to meet during
submission of returns, unnecessary penalties and interest to taxpayers are omitted, also the
system enabled the tax payers to file returns on time, and the system ensure accuracy of
information and (16.7%) from taxpayers and (14.3%) from tax consultant strongly disagree and
disagree with negative effects of the system by looking at the cost of implementing due to the
fact that needs for them to have facilities such as computer since there are small and medium
taxpayers they cannot afford it and (10%) from tax officers were neutral.

4.2.4 Provide any recommendations for effectiveness in using e-filling system.

Table 4.6

Number of respondents Percent

commented
Tax payers 25 83.3%
Tax consultant 4 57.1%
Tax officers 12 60%

Source: Survey report (2021)

From findings in table 4.6 (83.3%) respondents from taxpayers, (57.1%) tax consultant and
(60%) tax officers provided with questionnaire by the researcher recommended, taxpayers and

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tax consultant recommended on Tanzania Revenue Authority should offer training and education
to the taxpayers on how the system works, advantages of the system, also the effects of taxpayers
not submitting the return on time and how penalties and fines are calculated in order for tax
payers to be aware and comply with the changes of the system and tax officers recommended on
the authority (Tanzania Revenue Authority) should provide training so that to be capable for
them to operate and maintain the system also to be more expertise in the system.

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 CHAPTER FIVE

DISCUSSION OF THE FINDINGS

The study thought to analyse the effectiveness of electronic method in filling tax return by the
taxpayers, the study found that access to computing and internet facilities can be a major
problem for using of e-filling in Tanzania where the economy is dominated by small tax payers
who either can afford to have facilities and they have limited skills in information technology,
therefore due to this hinder the effectiveness of electronic method in filling tax return by the tax
payers. Studies by Sweeny etl (1999) and Yilmaz &Coolidge (2014) report some cost of e-filling
for small taxpayers, additional capital may be needed to invest for e-filling in order to put system
in place this may entail purchasing of hardware and connectivity to internet, the study of
Malaysian Azmi and Kamarulzaman (2010) e-filling system also point out the technical aspect of
filling process as challenges facing taxpayers with regard to its use, where by tax payers having
inadequate skills or knowledge about information technology system hence made for them
difficulty to use the system.

Usefulness of software used to manage e-filling in Tanzania majority of the tax payers find that
online tax filling returns is efficient in regard to whether it is easy and simple to file tax return
online, the system saves time to both taxpayers and tax officers, access of e-filling is simple, also
the system is secure.

CHAPTER SIX

CONCLUSION AND RECOMMENDATION

6.0 Introduction

This chapter represents the conclusion and recommendation of the study. Overall objective was
to assess the effectiveness of electronic method in filling tax return by the tax payers.

6.1 CONCLUSION

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The study found that majority of the respondents have positive respond and negative, however
respond from taxpayers, tax consultant and tax officers was different whereby for taxpayers and
tax consultants needs training and education this is major challenge facing them in filling tax
return while the tax officers needs more knowledge about the system and expertise in order to
handle problems such as networking breaking down therefore it’s important to address this issue.

Both taxpayers, tax consultant and tax officers agreed on the system that the system saves time,
link-up the tax payers, tax consultant and tax officers, the system is accuracy and secure, the
system easy to assess, enable on time submission and unnecessary penalties and interest were
omitted.

5.2 RECOMMENDATION

Based on the above findings this study recommends the following to be addressed so as to
enhances effectiveness of electronic method in filling tax return by the tax payers and realise its
objectives since e- filling is the new technology Tanzania Revenue Authority (TRA) should
provide training and education to the taxpayers so as tax payers should be able to understand the
system. Also tax officers should provide technical support to the tax payers such physical visit
and special call centre for the e-fillers solving the problem or challenges of connectivity to make
sure the system is available at all times this will reduce the problem of late file returns.

5.2.1 For future researchers

The researchers should look on the performance of electronic method in filling tax return

22
 REFERENCE
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Ontario: Addison - Wesley Publication Company.

Ajzen, I. and Fishbein, M. (1980). Understanding attitudes and predicting social behaviour. Englewood

Cliffs, NJ: Prentice-Hall.

Fatimah, A. (2007). Malaysian tax professionals and electronic tax filing: Survey evidence from

members of Malaysian Institute of Taxation.

Kamarulzaman, A. A.(2010). Adoption of Tax e-filing: A Conceptual Paper. Africa Journal of Business

Management- Vol 5

Khadijah, I. (2014). Tax complexities in Malaysian Corporate Tax System: minimize to maximize.

Mandola, V. (2013). Factors Influencing the Adoption and use of Integrated Tax Management System

by Medium and Small Taxpayers.

Moyi, E. And Ronge, E, (2006). Taxation and tax modernization in Tanzania. Institute of economic

affairs.

Mugenda, O.M. and Mugenda, A.G. (2003). Research Methods: Quantitative and Qualitative

Approaches.

Muita, E.W.(2011). Factors that Influence Adoption and Use of E-Filing System of Tanzania

Saunders, M.N.K, Lewis, P. and Thornhill, A. (2000). Research Methods for Business

Venkatesh V, D. F. (2003). User Acceptance of Information Technology: Toward A Unified View. MIS

Quarterly, 425478.

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Wasao, D. (2014). The Effect of Online Tax System on Tax Compliance among Small Taxpayers in

East Africa.

Appendix 1: introductory letter

Dear participant

I am a student of Institute of Tax Administration (ITA) pursuing Post Graduate Diploma in

Taxation; I am conducting academic research on assessing the effectiveness of electronic method
in filling tax return by taxpayers.

I am inviting you to be part of this research answering the questionnaire which has been attached
with this letter so as to facilitate my research. Be assured that the information provided by you
will be handled with confidence.

Thank you.

24
 Appendix 2:

QUESTIONNAIRE
PART A: RESPONDENTS BACK GROUND INFORMATION
Please tick in the appropriate age and level of education you have.

1. Age
a) 25-35
b) 35-45
c) 45-55
d) Over 55 years old

2. Level of education
a) Secondary level
b) Certificate level
c) Diploma level
d) Degree level
e) Masters level

PART B: SPECIFIC RESEARCH QUESTIONS

Please tick the number which describes the best level of agreement or disagreement and neutral
to your answer.

1. Strongly agree, 2. Agree, 3. Strongly disagree, 4. Disagree, 5. Neutral

25
 Usefulness of software used to manage e-filling in 1 2 3 4 5
Tanzania

3. The access of e-filling through Tanzania Revenue

Authority website is easy

4. Filling lodging and other operations are simplified in e-

filling

5. Calculations, filling and lodging is simply automated in

e-filling system

6. E-filling save time that could be otherwise spent on TRA

office to greater extent

7. E-filling security system is very strong and safer to both

users

Effects of using e-filling by taxpayers in Tanzania on 1 2 3 4 5

tax returns.

8. E-filling system enable on time submission of returns

9. E-filling ensure accuracy of information and data needed

in filling return

10. E-filling enable easy and fast processing of return when

submitted to TRA

11. The link -up between three parties ( taxpayer, consultant

and TRA) is possible through e-filling

12 Unnecessary penalties and offence for the failure, late

submission or wrong filling is avoided through e-filling.

13 E-filling system is it cost full when using it

26
 Challenges faced in improving tax returns in using e- 1 2 3 4 5
filling system in Tanzania

14 There is sufficient technology to enable all e-filling

operations

15 Sometimes e-filling system collapses or there is

networking break down

16 TRA has sufficient expertise to deal with all matters

concern with e-filling

17 E-filling can be able to involve small taxpayers

18 Taxpayers have sufficient knowledge and skills to use e-

filling

PART C: ADDITIONAL QUESTION (optional)

19. Provide recommendations for the solution of effectiveness in using e-filling system.

Thank you for your cooperation.

27