Elizabeth Corrected Project

EFFECT OF ONLINE TAX SYSTEM ON TAX COMPLIANCE
A CASE STUDY OF KINONDONI TAX REGION
YEAR III, SEMISTER II
SEMESTER PROJECT
MSANGI, ELIZABETH.W.
DEPARTMENT OF BUSINESS STUDIES
SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS
AND INFORMATICS ARDHI UNVIVERSITY
DAR ES SALAAM JULY 2022

TITLE
EFFECT OF ONLINE TAX SYSTEM ON COMPLIANCE OF TAX PAYERS
A CASE STUDY OF KINONDONI TAX REGION
YEAR III, SEMISTER II
SEMESTER PROJECT
MSANGI, ELIZABETH.W.
A Semester Project Submitted in Partial Fulfillment of the Requirement for the Award of the B.Sc. in
Accounting and Finance of Ardhi University
DEPARTMENT OF BUSINESS STUDIES
SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS
AND INFORMATICS ARDHI UNVIVERSITY
DAR ES SALAAM JULY 2022
2
DEDICATION
This research project is dedicated to my lovely Parents for their presence anytime that I faced difficult
in my studies and moral support and encouragement. I dedicate this study to my dearest Brothers, and
Mr. Meshaki for their mental support and appreciation from the beginning of studies at Ardhi
University until this time I accomplish this study. Lastly, I dedicate this project to all my friends for
their materials support.
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DECLARATION
I, Elizabeth W. Msangi, hereby declare that the content of this report are the results of any own study
and findings and, to the best of my knowledge, they have not been presented anywhere for a Diploma,
Degree or any professional award in any Institution of Higher Learning.
…………………………………..
MSANGI, ELIZABETH W
Department of Business Studies
School of Earth Science, Real Estate, Business Studies and Informatics
Ardhi University
Dar es Salaam
SUPERVISOR’S DECLARATION
This report has been presented as a Semester Project in partial fulfilment of the requirements for the award of
the B.Sc. in Accounting and Finance of Ardhi University.
……………………………..... …………………………………
CPA(T) EPHRAIM NDARO DR. SALANANGA SANGA
SEMESTER PROJECT SUPERVISOR HEAD OF DEPARTMENT BUSINESS STUDIES
SCHOOL OF EARTH SCIENCES REAL ESTATE
BUSINESS AND INFORMATICS
ARDHI UNIVERSITY
DAR ES SALAAM
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ACKNOWLEDGEMENT
Having reached this stage of completing my bachelor degree is just a privilege. I have gained new
knowledge and skills necessary to operate in business world in confidence and effectively. It was a
long and challenging journey from the very point I stepped my leg at Ardhi University to pursue my
bachelor degree up to this stage.
First and foremost, I would like to thank the Almighty God for his grace and mercy as well for
granting me opportunity to undertake this study and as a party of accomplishment undergraduate
degree. He strengthened me and encouraged me through various difficulties until I finished my study.
I also appreciate the role played by my research supervisor, CPA (T) Ephraim Ndaro for his
guidance throughout conducting writing this research report. His tirelessly corrections and support on
how to write up good research. Special thanks to Kinondoni Tax Region staff members who
contributed a lot in adding inputs to this report during field practicum training session. My thanks to
reach Mr. Dismas for guidance and documentaries for accomplishment of proposal.
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ABSTRACT
Tax non-compliance is serious problems affecting Tanzania tax system, and this problem has been
contributing to low tax collection by the government for many years. However, Tanzania Revenue
Authority has been taking various measures to contain the problems of ineffective tax compliance by
taxpayers. Thus, using online tax system was one among the solution to address the problem. This
study was carried out to examine how online tax systems affect tax compliance. This study employed a
descriptive survey design of the study and it was conducted in Kinondoni tax region. In this study,
purposive sampling techniques was used to select a sample of 10 tax collectors and 100 tax payers in
Kinondoni tax region. The study employed questionnaire and interview guides are the primary tools
for gathering data and the data were analyzed using mixed approach involving both qualitative and
quantitative analysis to present tax compliance and the impact of the internet tax system.
According to the study’s findings, online systems have an impact on taxpayers in Kinondoni region
degree of tax compliance with regard to registration, filing and payments. According to the results of
the regression Analysis, there is a correlation between online tax system and compliance level of
taxpayers. An increase in online tax system would result to an increase in compliance level. Although
the level of compliance would vary depending on the population segment.
The study recommends that a further study should be done to reach a comprehensive conclusion
regarding the impact of the online system on tax compliance in Tanzania, studies should be conducted
on taxpayers in other tax regions that are either thought to be more advanced or less advanced.
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LIST OF ACRONYMS
EFDMS Electronic Fiscal Devices Management System
TIN Taxpayer Identification Number
TRA Tanzania Revenue Authority
VAT Value Added Tax
RGS Revenue Gateway System
I-TAXS Integrated Tax System
VRN Value added tax Registration Number
TABLE OF CONTENTS
TITLE.......................................................................................................................................2
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DEDICATION............................................................................................................................ii
DECLARATION........................................................................................................................iii
ACKNOWLEDGEMENT............................................................................................................iv
ABSTRACT...............................................................................................................................v
LIST OF ACRONYMS................................................................................................................vi
TABLE OF CONTENTS.............................................................................................................vii
LIST OF TABLES........................................................................................................................x
LIST OF FIGURE......................................................................................................................xii
CHAPTER ONE.........................................................................................................................2
INTRODUCTION AND BACKGROUND OF THE STUDY..............................................................2
1.0 Introduction......................................................................................................................2
1.1 Background to the Study...................................................................................................2
1.2 Statement of the problem.................................................................................................3
1 .3 Research Objectives.........................................................................................................4
1.3.1 Main objective.......................................................................................................4
1.3.2 Specific objectives..................................................................................................4
1.4 Research questions...........................................................................................................4
1.5 Significance of the study...................................................................................................4
1.6 Scope of the study.............................................................................................................4
1.7 Limitation and delimitation of the study...........................................................................5
1.8 Organization of the study..................................................................................................5
CHAPTER TWO........................................................................................................................6
LITERATURE REVIEW...............................................................................................................6
2.0 Introduction......................................................................................................................6
2.1 Definitions of key concepts...............................................................................................6
2.1.1 A Tax......................................................................................................................6
8
2.1.2 A taxpayer..............................................................................................................6
2.1.3 Tax Revenues.........................................................................................................6
2.1.4 Tax compliance......................................................................................................7
2.1.5 Online tax systems.................................................................................................7
2.2 Theoretical review.............................................................................................................7
2.2.1 Technology acceptance model (TAM)....................................................................7
2.3 Empirical Literature Review..............................................................................................7
2.4 Conceptual framework....................................................................................................10
CHAPTER THREE....................................................................................................................12
RESEARCH METHODOLOGY..................................................................................................12
3.0 Introduction....................................................................................................................12
3.1 The research design........................................................................................................12
3.2 Study Area.......................................................................................................................12
3.3 Population.......................................................................................................................13
3.3.1 Targeted population of the study........................................................................13
3.4 Sample size and sampling techniques.............................................................................13
3.4.1 Sample size..........................................................................................................13
3.4.2 Sampling techniques............................................................................................14
3.5 Data collection instruments............................................................................................15
3.5.1 Questionnaires.....................................................................................................15
3.5.2 In-depth Interview discussion..............................................................................16
3.5.3 Documentary Source...........................................................................................16
3.6 Data processing and analysis technique..........................................................................16
3.6.1 Quantitative analysis............................................................................................16
3.6.2 Qualitative Data Analysis Method........................................................................16
3.7 Data validity and reliability..............................................................................................17
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3.8 Ethical considerations.....................................................................................................17
CHAPTER FOUR.....................................................................................................................18
PRESENTATION OF FINDINGS AND DISCUSSION OF FINDINGS.............................................18
4.0 Introduction....................................................................................................................18
4.1Response rate..................................................................................................................18
4.2 Reliability of the study.....................................................................................................18
4.3 Respondents general information...................................................................................19
4.3.1 Gender of respondent........................................................................................19
4.3.2 Respondents Age groups.....................................................................................19
Table 4.3:2 Respondents Age groups............................................................................19
4.3.3 Respondent Level of Education............................................................................20
4.4 Descriptive analysis for study objectives.........................................................................20
4.0 Descriptive statistical analysis.........................................................................................20
4.1 The level of compliance of tax payers.............................................................................21
4.1.1 Change in tax assessment....................................................................................21
4.1.2 Accurate determination of tax obligation and filing returns on time...................21
4.1.3 Accurate determination of tax obligation, timely filing and e-tax........................22
4.2 The effect of online tax registration on tax compliance..................................................23
4.2.1 Online tax registration (TIN).................................................................................23
4.2.2 The effect of online tax return filling on tax compliance......................................24
4.2.3 The effect of online tax Payments (RGS) on tax compliance................................24
4.3 Regression Analysis.........................................................................................................25
4.3.1 Analysis of Variance.............................................................................................26
CHAPTER FIVE.......................................................................................................................28
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS........................................................28
5.0 Introduction....................................................................................................................28
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5.1 Summary of the findings.................................................................................................28
5.2 Conclusion.......................................................................................................................29
5.3 Recommendations..........................................................................................................29
5.4 Suggestions for Further Research....................................................................................30
REFERENCES.........................................................................................................................31
APPENDICES..........................................................................................................................34
APPENDIX I : QUESTIONNAIRES.............................................................................................34
LIST OF TABLES
Table 3. 1 Sample size......................................................................................................14
Table 4. 1Reliability of the study............................................................................18
Table 4. 2 Gender of respondent.............................................................................19
Table 4. 3 Respondent Level of Education.............................................................20
Table 4. 4 Descriptive analysis................................................................................20
Table 4. 5Change in tax assessment........................................................................21
Table 4. 6 Accurate determination of tax obligation.............................................22
Table 4. 7 Accurate determination, timely filing and e-tax..................................22
Table 4. 8 Online tax registration...........................................................................23
Table 4. 9 Online tax return filling.........................................................................24
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Table 4. 10 Online tax payments.............................................................................24
Table 4. 11 model summary....................................................................................26
Table 4. 12 ANOVA.................................................................................................26
Table 4. 13 Tests of Coefficients...............................................................................27
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LIST OF FIGURE
Figure 2. 1Conceptual Framework.............................................................................11
13
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CHAPTER ONE
INTRODUCTION AND BACKGROUND OF THE STUDY
1.0 Introduction
This chapter tries to provide the study's background, problem statement, goal, objectives, research
questions, and importance.
1.1 Background to the Study

The state budget's main source of income comes from taxes and the government uses them as a
weapon to control the macroeconomic environment, encourage investment, fight inflation, safeguard
domestic manufacturing, and redistribute income and wealth in society. (Do et al. 2022).
The term "online tax system" originated in the United States, the point at which the Internal Revenue
Service (IRS) began only offering electronic filing for tax refunds (Muita, 2011). Online tax filing is
the practice of submitting tax forms or tax returns online, typically without the use of physical tax
returns (Wasao, 2014). The online system includes using software, the internet and the World Wide
Web for a range of tax administration and compliance goals. The world's tax administration is
increasingly focused on finding ways to make the tax assessment process simpler in order to promote
voluntary compliance (Sanker, 2019).
In 2014, the Tanzania Revenue Authority changed the nation's manual tax system to a new online
platform called I Tax. With the new online tax system known as I Tax, tax payers can examine their
tax positions and access all TRA services from the convenience of their home or place of employment
(TRA, 2014).
Since the Tanzania Revenue Authority (TRA) upgraded and adapted the online system of tax payment
during 2016 there are a lot of changes that made in the revenue collection also in facilitating the
convenience to taxpayers in their payments.
The earliest online system of tax payment was Electronic Financial Data Management System
(EFDMS) whereby this system used by taxpayers who are required as per tax laws to collect VAT
(Value Added Tax) by using the Electronic Fiscal Device (EFD) machine. Moreover, in current years
the authority introduced other system to make more convenience to taxpayers in their tax payment
those systems are Revenue Gateway System (RGS) and Taxpayer Identification Number (Online TIN)
registration (Ongwamuhana, 2011).
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Introduction of those systems has made a lot of changes and makes a big impact in the revenue
collection to TRA. Online tax systems have become the most suitable way for taxpayer for their tax
payment and performing other activities related to taxation.
This study based on making assessment on the results or impact of online tax systems on taxpayer
compliance in Dar es Salaam.
1.2 Statement of the problem

Tanzania is among the countries that losses it’s Tax Revenues due to tax non-compliance, where by
Taxpayers use both legally and illegal means to avoid tax payments (Avoidance and evasion). The
public sector suffers from the lost tax revenue as a result of tax evasion, which reduces its ability to
support its essential expenses (Collin et al. 2021).
In order to reduce tax evasion, the government has implemented several steps to improve the
effectiveness of tax administration and collection, as well as to lighten the burden on taxpayers. The
Taxpayer Identification Number (TIN), a special identification for each taxpayer that is also helpful in
banking tax payments to the Tanzania Revenue Authority Bank Account, was first established by the
government in the 1993/94 budget. The uniqueness of this number helps TRA to easily trace
taxpayer’s records. In order to boost tax collection and decrease the likelihood of tax evasion, the
government had also established online VAT return filling and the use of online fiscal tools. (Kim and
Kim, 2018).
Despite the importance of taxes and a number of tax improvements, including tax education and online
tax services, noncompliance with the law remains difficult (Terkper, 2003). Many scholars are now
interested in learning why such tax compliance behaviors arise in company businesses as a result of
this (Nawawi and Salin, 2018; Nkundabanyanga). Nawawi and Salin (2018) Be aware that there are
greater odds of non-tax compliance if the tax authorities do not have enough measures in place to
prevent tax evasion. Nkundabanyanga et al. (2017) It has been established that there are instances of
non-compliance in Tanzania even with the implementation of tax collecting procedures. However,
these studies were unable to determine how the online tax system affected taxpayer compliance. Thus,
this study intends to address this gap by examining the effect of the online tax system on taxpayers' tax
compliance in the Kinondoni tax zone.
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1 .3 Research Objectives
1.3.1 Main objective

To examine the effect of online tax system on tax compliance of taxpayers
1.3.2 Specific objectives

i. To determine how online tax registration affects tax compliance.
ii. To evaluate how online tax return filing affects tax compliance.
iii. To assess the effect of online tax payments on tax compliance
1.4 Research questions

i. What impact does online tax registration have on taxpayer compliance?
ii. What impact does online tax return filing have on taxpayer compliance?
iii. What impact do online tax payments have on taxpayer compliance?
iv. What is the extent of tax compliance level among taxpayers in Kinondoni tax region?
1.5 Significance of the study

It is hoped that the findings of the study will be valuable to the entire government, as well as to people
and businesses. The following are some implications for this study that are anticipated;
The study's conclusions and suggestions will assist policymakers in determining the most effective
means of boosting tax compliance throughout the economy. Knowing the key factors that influence
taxpayers to comply with tax payments would enable the policy makers to undertake measures that
against identified factors which would result to an increase in tax compliance.
If properly implemented, the study's conclusions should result in increased tax receipts. If the
government would take appropriate measures against the factors found to have significant effects to
tax compliance, would increase tax payment compliance level and hence increase Government Tax
revenue.
Because it will be cited by other academics, the results of the study will be valuable to academics and
other researchers. Additionally, the study would offer beneficial theoretical understanding of
Tanzania's tax compliance-influencing elements.
1.6 Scope of the study

This research was done in Tanzania, however because of the size, geography, infrastructure
challenges, and time and money constraints, it was done in Dar es Salaam city utilizing Kinondoni as
an example. The availability of all types of taxpayers, from people to corporations, as well as
dependable transportation and other methods of communication, were considered when choosing this
location.
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1.7 Limitation and delimitation of the study
Confidentiality, this was limitation researcher faced in this study as issue concerning tax are
confidential; some of respondents mainly those from small and medium enterprises and large business
treat Tax matter with high confidentiality hence they were afraid of answering questionnaires but after
clarifying the intention of my study they finally understood and provided a very good cooperation.
1.8 Organization of the study

This work is divided into five chapters. Chapter one covers the backdrop, issue statement, general and
specific objectives, research questions, significance of the study, and study scope. The definition of
essential terms, numerous assessments of the literature, theoretical models, and conceptual framework
are covered in chapter two. In Chapter 3, the research methodology including sampling strategies, data
analysis methodologies, research design, study region, study population, sample size, and ethical
considerations is discussed.
The primary subjects of chapter four are the presentation and discussion of the results and analysis.
The conclusions, suggestions based on the research, and areas that need more study are covered in
Chapter 5.
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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter reviews a number of prior studies that have been carried out globally in accordance with
the study's aims. The chapter also extended far to discuss theory that prop up the current study through
various scholars. The chapter consists of, definitions of essential key words, theoretical and empirical
review relevant to the study and furthermore, the study discussed conceptual framework.
2.1 Definitions of key concepts
2.1.1 A Tax
A tax is the sum of money that the person (whether legal or natural) who is subject to it must pay to the
government (frequently accompanied with a tax return that the taxpayer submitted). Examples include
import taxes, value added taxes, corporate taxes, and income taxes. Tax refers to an involuntary fee
normally levied on corporate enterprises and all people of a given country and which is enforced by
law for the purpose of collecting revenue for government spending. Tax is paid without holding the
government responsible in providing various public good and services for particular people (Mannesh,
2000). This study adopted this definition.
2.1.2 A taxpayer
A taxpayer is a person or a business that must pay income taxes. Taxpayers are required to pay, and
failing to do so is unlawful. In recent years, a Taxpayers Identification Number (TIN) or other unique
reference number provided to a country's inhabitants has been used to identify taxpayers.
(www.wikipedia.org). This study adopted this definition
2.1.3 Tax Revenues

Tax revenues are the financial resources that the government receives from the taxing of different
groups of people and businesses. Two taxes make up the majority of tax revenue. Direct taxes are the
first type of tax and are typically levied against individuals or property. Corporate tax, individual
income tax, withholding tax on rent, management and professional fees, and property tax are some
examples. The other types of taxes are indirect taxes, which are typically levied on transactions. These
include stamp duty, import duty, excise duty (on imported and domestic items), and VAT (on imported
and domestic supply) (Chijoriga, 2012). This study adopted this definition.
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2.1.4 Tax compliance
Tax compliance refers to following the rules for filing taxes and paying them on time. This includes
adhering to the reporting obligations, administrative guidelines, and laws. This means submitting tax
forms on time, disclosing all income, claiming all allowable deductions, and paying taxes on time
where they are due. This study adopted this definition.
2.1.5 Online tax systems

Internet tax systems are online platforms that allow taxpayers to access tax services online. Obtaining a
tax identification number, filing tax returns, and submitting an application for a payment and
compliance certificate are a few of them. (Wasao, 2014). This study adopted this definition.
2.2 Theoretical review
2.2.1 Technology acceptance model (TAM)

The Technology Acceptance Model (TAM) was first proposed by Davis in 1986 to help understand
and predict user behavior with reference to information technology (Legris et al., 2003). To describe
the reasons why a user accepts or rejects the use of information technology, Davis (1989) TRA was
converted into a proposed TAM (IT). Carter and Belanger (2004) stressed that TAM is used by
numerous studies to better understand IT adoption and its effectiveness in organizations, particularly in
the realm of information systems, as mentioned by Shajari and Ismail (2010). However, TAM has
shown to be a solid and dependable model for identifying user adoption patterns. (Shajari and Ismail,
2010). According to Chuttur (2009), several research has found statistically significant results for the
considerable influence of attitude on behavioral intention to use a specific system, and these studies
have convincingly supported the use of TAM as a model for predicting system usage behavior. TAM
provides a basis for enhancing taxpayers' attitudes and beliefs about using an electronic tax system,
which affects their tax compliance behaviors.
2.3 Empirical Literature Review

Mayiku (2015) carried out research on the elements influencing tax compliance in Tanzania. It tries to
look at the Tax Compliance, which has faced a variety of obstacles. These difficulties include
problems with tax collections, people's resistance to paying taxes, inadequate record keeping, and the
failure to issue receipts for sales made, to name a few.
This study used both qualitative and quantitative methodologies to investigate the factors influencing
tax compliance. The findings of this study demonstrate that despite tax policies, reforms, and
techniques acting as a catalyst to increase government revenues, tax evasion persists in Tanzania.
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Tax evasion methods included changing the name of the firm, shutting it down during an examination,
not using receipts, keeping inaccurate sales records, and concealing additional businesses. Variables
affecting tax compliance in Tanzania include low business returns, high tax rates, tax knowledge,
taxpayers' dissatisfaction with government expenditure, ignorance of tax issues, the requirement for
big profits, irregular follow-ups from tax authorities, and the likelihood of audits and fines.
Additionally, the study shows that several critically vital facilities, such offices, are not conducive to
the proper discharge of TRA obligations. The study suggests that the government increase its efforts in
TRA in order to ensure that enough and sufficient tax is collected in order to increase revenue at the
national level as well as in Dodoma Municipality and to ensure that TRA stakeholders adhere to all
TRA regulations in terms of paying tax. Additionally, the research advises that community education
on tax compliance is crucial if Dodoma and the entire level of TRA are to fulfill their set revenue
collection targets.
The impact of online tax filing on the tax compliance of small and medium-sized businesses was
studied by Edward and Ambrose (2017). Both descriptive statistics and inferential statistics were
applied to the data analysis for this investigation. The findings demonstrate that online tax filing has an
effect on compliance level based on MSE's perception of online tax filing and technical tax return
filling skills.
According to the correlation research, the technical expertise required to file taxes was negatively
correlated. According to the regression analysis, the level of compliance was significantly influenced
by technical proficiency and submitting tax returns. According to the report, the tax authority should
intensify its efforts to educate taxpayers about online tax filing, including its benefits and how it
operates. This would help taxpayers understand and value it. The authority should routinely participate
in capacity-building initiatives, such as hosting nationwide training seminars on the online tax filing
procedure.
Tarmidi, Fitria and Purwaninggsih (2017) eFiling and eBilling, two tax online applications, were
implemented, and their effects on tax reporting and payment compliance were examined. The
information used in this study was gathered through a survey given to 150 tax professionals who
served as tax payer representatives for KPP Madya Jakarta Timur. Regression testing results and
SmartPLS analyses support the idea that implementing an online tax application has a large, favorable
impact on tax compliance.
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Night and Bananuka (2019) conducted study on the mediating function of adoption of electronic tax
systems in the link between attitudes toward electronic tax systems and tax compliance using evidence
from small business enterprises (SBEs) of an African emerging country. This study used closed-ended
questionnaires and a quantitative research approach. This study used cross-sectional research methods,
and the SPSS statistical package was used to analyze the data.
The findings indicate that adoption of the electronic tax system mediates the association between
perceptions toward the system and tax compliance to some extent. Additional research demonstrates a
strong correlation between attitudes toward and acceptability of the computerized tax system and tax
compliance. According to the study, the government, through tax authorities, may want to boost tax
compliance by educating taxpayers about the benefits of electronic tax systems. This could positively
alter taxpayers' attitudes toward electronic tax systems, encourage adoption of the system, and, as a
result, boost tax compliance. Growing the use of computerized tax systems and ensuring that taxpayers
receive greater training on the value of tax compliance must be tax authorities' top priorities.
Le et al. (2021) did a study on the variables influencing small and medium-sized businesses'
compliance with electronic tax compliance in Vietnam. Data from 402 SMEs that are business
taxpayers were chosen using a questionnaire survey method that the researcher designed. According to
the findings, four sets of characteristics significantly influence Vietnamese SMEs' adherence to
electronic tax compliance. According to the findings, four sets of characteristics significantly influence
Vietnamese SMEs' adherence to electronic tax compliance. These include Vietnamese tax
administration (VTA), Perceived Usability (PTE), Taxpayer Awareness (TA), and the Effectiveness of
Vietnamese Tax Policy (VTP). Exploratory factor analysis (EFA) with Cronbach's alpha coefficients
was carried out using the factor analysis. In line with the study, taxpayer awareness is the component
that has the biggest influence over these four categories. It is recommended that the Vietnamese
government focus on supporting and promoting SMEs to help them fully understand their tax duties.
The report suggests a number of approaches, including holding workshops for updating tax laws and
providing quick courses on electronic tax compliance to corporate taxpayers.
The effect of administrative penalties, electronic filing, and electronic billing on individual taxpayer
compliance in Badung Regency was the subject of a study conducted by Sentanu and Budiartha in
2019. This study collected its data using a survey strategy that involved questionnaire procedures. Out
of a total population of 126,477 taxpayers, the sample for this study included 100 taxpayers registered
at North Badung KPP and South Badung KPP. The varying use of e-filing is assessed using user
perceptions of utility and usability. Usability and ease of use perceptions are used to quantify
characteristics for e-billing usage.
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Administrative penalty factors are measured using four indicators, including the role of tax sanctions,
penalties for tax violations, penalties depending on the seriousness of infractions, and the
administration of sanctions in compliance with legislation. The analytical technique is called multiple
linear regression analysis. The study's conclusions show that administrative fines, electronic billing,
and electronic filing all have a positive effect on taxpayer compliance.
According to Nkundabanyanga et al. (2017), for people to pay taxes, they must believe that the
government is exchanging something for their money. A government should be regarded as providing
services to its citizens insofar as there is some degree of parity between the taxes paid to the
government and the cost of the services supplied to taxpayers. While the intangible qualities of
services make them challenging to quantify virtually, Bananuka et al. (2018) discovered that one of the
most crucial methods to guarantee accountability is through the physical output or appearance of
operations. The construction of hospitals, schools, and roads must be visible to taxpayers, and
everyone must have access to security.
Taxpayers are more inclined to abide by the law if they believe that the government treats all of its
residents fairly. (Nkundabanyanga et al., 2017).
The history of young professionals in India filing their income taxes electronically was studied by
Amitabh et al. in 2009. By analyzing how young Indian professionals will adopt or behave toward
submitting tax returns electronically or without paper, this study aimed to better understand
compliance. According to a regression research, the antecedents for young Indian professionals were
perceived tax system simplicity, individual information technology innovation, relative advantage,
filing service performance, and compatibility. The current study's findings imply that any online
system, whether it is designed for small, medium, or large taxpayers, must be user-friendly, inventive,
and accessible.
2.4 Conceptual framework
Described as a written or visual presentation that "explains either visually or in narrative form the
major issues to be investigated, the essential concepts, components, or variables, and the presumptive
relationships between them," a conceptual framework identifies the key questions that need to be
answered. Miles et al. (1999) It can also be characterized as a group of broad ideas and principles used
to structure a future presentation and taken from relevant fields of study. (2015) Wong and Wai Yee
The image below depicts the conceptual model that describes the nature of the relationship between
the independent factors and the dependent variable.
23
The conceptual framework illustrates the topic's variables in terms of the interactions they now have,
including the online tax system and compliance. The online tax system is an independent variable,
whereas compliance is a dependent variable. Figure 2.1 below illustrates that link in greater detail.
Independent variable Dependent variable
EFFECTIVE TAX
ONLINE TAX SYSTEM
COMPLIANCE
Online Tax Registration (TIN) Timely payment of tax
Online Tax Return Filling Timely filling of tax
Online Tax Payments (RGS) Reduction of compliance
costs
Figure 2. 1Conceptual Framework

Source: Researcher own design (2022)
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CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter describes the procedures that were followed in conducting the study. This describe the
research design, study population, sample design, data collection instruments and concluded with
strategies for data analysis and data collection.
3.1 The research design

The research adopted the use of case study design. This made it possible to analyze how technology
affects levels of tax compliance in all areas, including online registration, payment, and tax filing
(Doyle, 2004). TRA was selected to be the case of the study because the design provides a variety of
ways of data collection, analysis, and making inferences as well as in its capacity to gather data from a
variety of sources, including interviews, surveys, observations, and documentary reviews that include
historical findings/data. Utilizing case studies makes it easier to combine different types of evidence,
which reduces bias.
The design helps to triangulate and increase the validity, reliability, and credibility of findings and the
design also provides for the gathering, summarizing, interpreting, and presentation of data by
researchers for clarification. Additionally, the importance of this design is crucial in establishing and
reporting the current state of affairs and aids in determining the population status of this study.
However, case study research designs are more typically prepared and dignified with accepted
evaluative questions.
Because it may ensure the higher reliability of the confirmation obtained data, the current study used
this strategy.
3.2 Study Area

The Kinondoni tax region in Dar es Salaam served as the study's focus area. Kinondoni is one of the
five municipals of Dar es Salaam region which houses the largest commercial city Dar es Salaam. The
city contributes the highest revenue to the government due to massive commercial activities and
industrial center of varieties of industries. Kinondoni is one of the tax regions which contribute more
to the TRA tax collection as it has many big businesses and enterprises. However, Tax return in
Kinondoni is below the target for the last two financial years and there it has the problems of tax
compliance and related challenges (TRA report, 2019).
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3.3 Population
The whole taxpaying population in the Kinondoni Tax zone was the target audience. Where by the
Kinondoni is among of the highest Tax region in Dar es salaam which included the taxpayers that
covered all section of tax payment schedule of assessment and payment.
3.3.1 Targeted population of the study

The study's intended audience was public officers engaged in tax collections in TRA, Kinondoni to
acquire reliable information concerning the research topic. This research results generalized to
Tanzania Revenue Authority having online tax systems
By considering the research design for this study the TRA public office was selected as the case study
among all other public offices from the Dar es Salaam region.
The employees from this case study contained the targeted population for this research study and the
results which were revealed from this case are generalized to the entire population of the study. The
TRA target was 10 employees from various departments including the administrative department,
compliance department, planning department and accounting department so the accessible population
for this study included 10 staff members and 100 tax payers paying tax in Kinondoni tax region, Dar es
Salaam.
3.4 Sample size and sampling techniques
3.4.1 Sample size

The researcher selected ten (10) staff members from TRA out of the entire population of staffs to
ensure the sample size shouldn't be too small or too huge in order to preserve an accurate picture of the
population the researcher is trying to study.
Therefore, for this study sample size that was used in this study comprises of all public officers from
the various department (10 staffs) were selected to represent what the researcher tries to observe,
describe and explain. The selection of these respondents was made owing to the limited sample size, as
it was noted that a sample of at least 10 respondents is adequate for the study and can support
statistical analysis.
26
i.e., n is larger than or equal to 50+8M,
where n is the sample size and
M is the number of independent predictors.
Three independent variables (M=3) make up this study.
Therefore, n must be greater than or equal to 50 + 8 (3) = 74 for the minimal sample size.
since 74 is the bare minimum required for this investigation. Consequently, the researcher decides to
choose 100 as the study's sample size.
Table 3. 1 Sample size

Departments Sample Size Sampling techniques
Administrative department 3 Purposively sampling
Compliance department 5 Purposively sampling
Planning department 1 Purposively sampling
Accounting department 1 Purposively sampling
Tax payers 100 Simple random sampling
Total 110
Source: Field Data 2022
3.4.2 Sampling techniques

Purposive sampling was used in the study for non-probability sampling technique and simple random
sampling for probability sampling, where a researcher was able to collect the information from specific
people, who have enough knowledge, skills, and relevant information about the use of a web-based tax
system from the chosen example study (TRA).
3.4.2.1 Simple random sampling techniques

The research employed a basic random approach in the selected sample from population. Regardless of
the business categories or amount of money spent in each taxpayer's business, simple random sampling
was employed to collect samples from all taxpayers. Since every respondent has an equal chance of
being chosen, the study used a straightforward randomization method. 100 tax payers were chosen
using a straightforward random selection technique. The fundamental justification for using a simple
random sample of 100 tax payers is that each one has an equal probability of being chosen.
27
3.4.2.2 Purposive sampling techniques
The researcher selected the components they felt to be knowledgeable and able to provide the
necessary data using the purposive/judgmental sampling technique. The researcher purposefully
selected ten(10) employees who had pertinent, consistent, and important information that
complemented the research's goals such as (3) from the administrative department, (5) from
compliance, and (1) from the planning and (1) accounting department as indicated in Table 3.1 above.
The use of purposeful sampling enables the identification and capture of important individuals from
the overall population who are knowledgeable about the subject under study and have the necessary
information. As a result, the type of sampled respondents depends on the research's understanding of
the participants. The investigator chose the participants for the study based on known variables by
using judgmental sampling.
3.5 Data collection instruments

An instrument used to collect data from a field of study based on the subject of the study is referred to
as a data collection instrument. (Orodho, 2008). This study employed various data collection
instruments in collection of data. Using multiple sources enabled the weakness of one instrument to be
supplemented by the strengths of the other. There were three main methods for collecting data for this
study. Questionnaire, interview guide and analysis of the documentary. When gathering data, the
researcher turned to primary sources. Instruments including questionnaires, interviews, and
observation were used to gather primary data.
3.5.1 Questionnaires
This study included questionnaire in obtaining primary and quantitative data from respondents
particularly taxpayers. The researcher prepared questionnaires with a set of 15 questions separated into
three parts. The questions in the first half concentrated on the demographics of the respondents, while
the questions in the second section were more administration- and tax-related. The last section was
questions design on Likert scale and which were based on research objectives. The advantage of using
questionnaires was because they are cost effective and they save time (Saunders, 2003). The
respondents were asked to respond to both closed- and open-ended questions in the survey. The
researcher administered the entire process of data collection using questionnaires.
28
3.5.2 In-depth Interview discussion
This study applied in-depth interview discussion to gather primary qualitative data from key
informants of the study. This included Tax officials from various TRA administrative offices through
discussion of interview guide questions. This tool involved one to one discussion of a set of 6
questions between researcher and each respondent at different time and place of convenience. A total
of 10 tax officials were engaged in the interview discussion where the researcher took down points.
The advantage of using interview discussion was because it gave researcher opportunity to speculate
and explore deeper into the mind of interviewee. It also gave informants (interviewee) an opportunity
to open up and express their inner feelings and opinions on the subject.
3.5.3 Documentary Source

To obtain secondary data, the study reviewed various documents and records relevant to the required
data. In this regard, the researcher sought various TRA records including annual revenue collection
reports and publications for review and extraction of data. Furthermore, review different articles and
data related to the topic from the internet which helped to expand the knowledge related to the topic
and taxation.
3.6 Data processing and analysis technique

Data analysis technique usually depends on the nature of the study. Therefore, both qualitative and
quantitative analysis methods were employed in this study to examine the data. Using SPSS, the
quantitative data was examined. All of the data were cleaned, analysed, and then displayed as
percentages and tables or charts.
3.6.1 Quantitative analysis

A five-point Likert scale was used as part of questionnaires to collect quantitative data. Descriptive
statistics on the impact of the online tax system on taxpayer compliance are provided in this section.
This is because the information was gathered from surveys that participants completed using the 5-
Likert Scale, which allowed the participant's information to be quantified quantitatively in a useful
way. The Statistical Package for Social Sciences was used to handle and process the data (SPSS).
3.6.2 Qualitative Data Analysis Method

With the use of an interview instrument, the qualitative data used in the current study were gathered.
The problems that taxpayers who use electronic tax systems must overcome are included in the
qualitative data, and the information on online tax registration, online tax return filing, and online tax
payments will be reinforced by the qualitative findings. Qualitative data are non-numeric in nature and
take the form of words rather than numbers.
29
In the suggested study, content analysis was used to examine qualitative data, which is a method that
focuses on obtaining and methodically and objectively examining the content of a text. Information for
this study was gathered from officers in administration, compliance, accounting and planning during
interviews.
In this study, content analysis, a method that focuses on obtaining and methodically examining a text's
content, was used to examine qualitative data.
Smaller data chunks were created as part of the content analysis, and each smaller chunk received a
code that was later grouped and tallied. Finally, the researcher supplemented this qualitative data
provided by respondents and they were narratively presented with themes to support the results. The
researcher assessed whether each group participant used a given code, the researcher determined
whether each participant used a given code, and the researcher identified all instances of a given code.
3.7 Data validity and reliability

According to Kathuri and Pack (1998) The extent to which a test genuinely assesses the variables it
claims to evaluate is known as validity. A portion of around 10% of the data collection instruments
were pilot tested with some study participants in order to guarantee the validity of the instruments.
This made it easier for the researcher to verify the instruments' correctness and to spot and fix any
questions that might have been unclear to respondents before starting the data collection process. This
made it easier for respondents to react to queries posed to them.
3.8 Ethical considerations
A researcher observed ethical issues during the entire process and collected the information after been
given the consent of respondent and being open and honest to the respondent who gave the
information, was not forced to take a part in the study and maintain the confidentiality of information
which were provided by respondents about a particular research topic.
Additionally, the researcher had to take into account moral considerations when gathering data, such as
avoiding fabrication and falsification of data (cooking data), preserving dignity, taking into account
human rights, privacy, and confidentiality to all participants by not asking for their names, adhering to
data collection procedures and using appropriate research instruments and guidelines, protecting data
from access by unauthorized people, and being sensitive to culture and all diversities in the population.
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CHAPTER FOUR
PRESENTATION OF FINDINGS AND DISCUSSION OF FINDINGS
4.0 Introduction
In this chapter, the data analysis results that were obtained using various study-related data collection
methods are described in both narrative and tabular form. First, there is a presentation of the
respondents' demographic information, which includes their gender, age, marital status, and
organizational composition. Second, the chapter outlines the objective of the research. The study's
objective was to ascertain how the electronic tax system affected the TRA taxpayers' ability to comply
with tax laws. The following were the study's main areas of focus: online tax payments, electronic tax
filing, and system registration (RGS).
4.1Response rate
However, due to administrative constraints and incompleteness, the researcher eliminated 10 responses
(e.g., too much missing information, inconsistency and inconveniences resulted from preoccupation of
study respondents). The sample size included in this study consisted of 100 respondents. This
represents 83% of the sampled respondents and the remaining 10 respondents were made for interview
guide. Since replies were received from all taxpayer strata according to the sample design, the
researcher deemed the response sufficient.
A response rate of more than 60% of respondents is considered satisfactory, but if the unresponsive
rate is high, the researcher must do a follow-up study to investigate the causes of the low response rate,
according to Mugenda & Mugenda (2003), as these reasons may be important to the study's objectives.
The likelihood of response bias is decreased with high response rates.
4.2 Reliability of the study
How consistently a method measures something is referred to as its reliability. whether the same
outcome can consistently be obtained by applying the same techniques under the same conditions.
Table 4. 1Reliability of the study
Reliability Statistics
Cronbach's Alpha N of Items
.894 22
Source: Figure data (2022)
31
The results for reliability according to the study was as shown in Table 4.1 above which in accordance
to the study Cronbach's Alpha of 0.894 indicated that data collection instruments were reliable since
the results indicated and alpha value of more than 0.7, the requirements of reliability.
4.3 Respondents general information

To comprehend the demographic traits of the study's respondents, the study required them to indicate
their gender, age and educational level.
4.3.1 Gender of respondent

To understand the gender of respondents of the study, the study required them to indicate their
gender. Table 4.2 below showed the results.
Table 4. 2 Gender of respondent
Frequency Percent
Valid Male 72 72.0
Female 28 28.0
Total 100 100.0
Source: Field data (2022)
The results in the Table 4.3.1 above indicated that out of 100 respondents involved in the study,
72(72.0%) are males and 28(28.0%) are females. This implied that majority of SMEs businesses were
owned by men.
4.3.2 Respondents Age groups

To understand the age groups of respondents of the study, the study required them to indicate their age
group. Table 4.3.2 below shows the results.
Table 4.3:2 Respondents Age groups
Frequency Percent
Valid 21-30 8 8.0
31-40 36 36.0
41-50 45 45.0
50 and above 11 11.0
Total 100 100.0
The study results in table 4.2 indicated that respondents with age group 21-30 years were 8(8.0%),
those with age group 31-40 years were 36(36.0%), respondents with age group 41-50 years were
45(45.0%) and those with age above 50 years were 11(11.0%). This implies that majority of
respondents have ages between 41-50 years which is the active age in business.
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4.3.3 Respondent Level of Education
To understand the demographic characteristics of respondents of the study, the study required them to
indicate their education level. Table 4.3 below shows the results.
Table 4. 3 Respondent Level of Education
Frequency Percent
Valid Primary 29 29.0
Secondary 41 41.0
Diploma 19 19.0
degree level and higher 11 11.0
Total 100 100.0
In terms of educational status, the study indicated that that 29 (29.0%) have primary school education
level, 41 (41.0%) have secondary school level, 19 (19.0%) have diploma education level and 11(11%)
have bachelor degree and above level. This implied that majority of respondents had secondary
education level which is sufficient for respondents to run business.
4.4 Descriptive analysis for study objectives

4.0 Descriptive statistical analysis.
Data analysis makes it possible to numerically describe and compare variables, which improves
statistical analysis and data interpretation (Saunders et al., 2009).
While standard deviation, variance, and skewness are used to quantify data variability, means,
medians, and modes are used to measure the central tendency of the data (Hair, et al., 2003).
Table 4. 4 Descriptive analysis
Descriptive Statistics
Mean Std. Deviation N
Effect of online tax 2.73 1.473 100
system
registration
return filing
payments

The above table provides a descriptive analysis of online tax return filing, payment, and registration, as
well as the impact of the online tax system (dependent variable). The highest mean for the descriptive
analysis's online tax return filling is 2.92. It suggests that in the Kinondoni district, online tax return
33
filing has the greatest impact on tax compliance. Additionally, online tax registration comes in second
with a 2.82 rating. It shows that the advent of online tax registration has had a significant impact on
taxpayer compliance in the Kinondoni district.
4.1 The level of compliance of tax payers
4.1.1 Change in tax assessment

Taxpayers were questioned about whether they had observed a change in their tax assessment since
2020 in order to determine the impact of e-tax on tax assessment. The results are displayed in table 4.5
Table 4. 5Change in tax assessment
Frequency Percent
Valid Yes 82 82.0
No 18 18.0
Total 100 100.0
Source: Field data, (2022)
According to the findings in Table 4.5, 82% of the tax payers surveyed said yes, while just 18% said
no. This suggests that since 2020, taxpaying citizens have seen a change in tax assessment. This
unequivocally establishes that the new system, which was implemented in 2020, is to blame for the
shift in tax assessment. This is because all of the bias that tax payers previously detected in the manual
method has been completely erased by the technology. This is true because the new system allows for
self-assessment, which tax payers are satisfied with, and since a reform was proposed that included the
introduction of a 3 percent income tax and the reversal of PAYE and SDL. One of the respondents
commented that;
“Self-assessment has increased many tax payers since it makes easier for me to assess my
business as a result of electronic filing I comply with the system and make sure that I inform
other tax payers on self-assessment through online tax system”
4.1.2 Accurate determination of tax obligation and filing returns on time

They were questioned about their ability to appropriately calculate their tax liability and file their
returns on time in order to assess if tax payers follow the tax processes and rules of TRA. Table 4.6
displays the results.
Table 4. 6 Accurate determination of tax obligation
34
Frequency Percent
Valid Yes 72 72.0
No 28 28.0
Total 100 100.0
Table 4.6's findings demonstrate that every one of the 72% of tax payers surveyed can accurately
ascertain their tax liabilities and timely file their forms. This shows that the tax payers in the
Kinondoni tax zone are higher in compliance with the tax regulations and procedures of the tax
system. According to Brown and Mazur (2003), who categorize tax compliance into three multifaceted
components filing, reporting, and payment these manifestations have been put forth. As a result, this
suggests a thorough comprehension of the tax system and an improvement in tax compliance.
4.1.3 Accurate determination of tax obligation, timely filing and e-tax

Taxpayers were questioned about whether their accurate assessment and timely filing were due to the
e-tax system in order to determine whether the system was responsible for the prompt and accurate
calculation of tax obligation. The results are displayed in table 4.7
Table 4. 7 Accurate determination, timely filing and e-tax
Frequency Percent
Valid Yes 64 64.0
No 36 36.0
Total 100 100.0
According to Table 4.7's findings, 64 percent (64%) of the tax payers surveyed said they agreed,
while 36 percent (36) said they disagreed. Since the majority (64%) of respondents indicated yes,
it is implied that the taxpayer's accurate decision and timely filing are thanks to e-tax. The 36
percent suggests that there are additional variables, such as age, gender, business type, and
sanctions, that affect timely and proper filing of forms (Jackson and Million, 1986). Manly et al.
(2005) observed that such E-Systems are particularly advantageous for governments because
they avoid many of the mistakes taxpayers make in manual files and they aid in the prevention of
tax evasion through data matching. They follow this line of reasoning. One importer's comments
on the matter were as follows:
"I file on time not because of the new system but because it is my obligation to disclose accurate
and right tax information to escape the long hand of the law. Also, I file all my returns inducing
income tax returns, VAT returns, PAYE and withholding tax to TRA".
35
According to Jackson and Million (1986), age, gender, source of income, and sanctions are the main
determinants of tax compliance. The importer's declared dread of the consequences of non-compliance
is a manifestation of that fear.
4.2 The effect of online tax registration on tax compliance
4.2.1 Online tax registration (TIN)

The respondents were questioned about their use of the online tax system, as well as their level of
agreement with how it affects their ability to comply with tax laws. This research question was
addressed using questions of the Likert-scale variety.
Table 4. 8 Online tax registration

Statement SA A N D SD
I have registered my business with online tax system at TRA 35% 40% 11% 8% 6%
I use internet in my business 31% 39% 15% 7% 8%
The registration of online tax system has made easy reduction of 38% 33% 16% 6% 7%
compliance costs
Online registration has increased timely payment of tax 39% 37% 13% 7% 4%
Online registration facilitated timely filling of tax returns 47% 26% 8% 2% 17%
Table 4.8 shows that the majority of respondents, or 40% of the respondents, agreed to having
registered their firm with an online tax system. Only 39% of respondents said they would use the
internet for their business, but 38% firmly agreed that the cost of compliance had decreased since they
registered for an online tax system, 39% of the respondents strongly agreed that online registration has
increased timely payment of tax. The findings further indicated that online registration facilitated
timely filling of tax returns among tax payers at Kinondoni tax region.
The results agreed with Gitaru (2017) who established that majority of stakeholder register in tax
system influences tax compliance among business owners. Similarly, Karanja (2014) established that
sensitization to register in tax system was paramount in promoting tax compliance among taxpayers.
4.2.2 The effect of online tax return filling on tax compliance

Respondents were prompted to indicate if they had filed tax returns online using RGS, the types of
taxes they had filed, and their level of agreement with the impact of online filing on their ability to
36
comply with tax laws. To respond to this research topic, yes-or-no questions and Likert-scale questions
were both employed.
Table 4. 9 Online tax return filling

We file VAT return on-line by due date 39% 36% 10% 9% 6%
We file Corporate Tax Return on line by due date 34% 37% 13% 5% 11%
We file PAYE Return on-line by due date 30% 40% 14% 5% 11%
It is expensive to do manual filing of tax returns than online filing 46% 32% 7% 6% 9%
On-line filing of returns has improved our compliance levels 31% 41% 13% 4% 11%
On-line filing saves on money and time 35% 39% 11% 9% 6%
According to Table 4.9's findings, the majority of respondents—39 percent—strongly agreed that they
file their VAT return online by the deadline, along with 37% of respondents who also strongly agreed
that they file their corporate tax return online by the deadline and 40% of respondents who strongly
agreed that they file their PAYE return online by the deadline.
However, the findings indicate that majority of the respondents (46%) feels that it is expensive to do
manual filling of tax return than online filing, also 41% and 39% of the respondents indicated that
online filing of return has improved compliance level and saves money and time respectively.
The results were comparable to those of Le et al. (2021), who investigated the influences on small and
medium companies' (SMEs) electronic tax compliance in Vietnam and found that online tax return
filling has a favorable impact on SMEs' tax compliance.
4.2.3 The effect of online tax Payments (RGS) on tax compliance

Online tax payments were used by TRA as a further indicator of tax compliance. Five questions on a
Likert scale were used to measure this. Respondents were asked a series of questions to gauge their
level of agreement with the online tax payment system and their perception of how it affected their
overall compliance levels. For instance, the variable examined compliance in terms of the online
system's dependability, effectiveness, availability, and usability.
Table 4. 10 Online tax payments

TRA online has ease tax remittances 44% 39% 3% 1% 13%
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Paying tax online is more accurate 45% 26% 12% 5% 12%
Adopting online payments updates our ledger real time 36% 39% 13% 5% 7%
Accessing online payment enables timely filing of tax returns 52% 31% 7% 2% 8%
Accessing online tax payment enables timely payment of tax 42% 44% 4% 2% 8%
Respondents were asked if using an internet method would make sending tax payments to TRA more
efficient. Based on the results shown in Table 4.10, 44% of the respondents said they feel efficient
while sending the tax to TRA.
Also, majority of the respondents accounted for 45% strongly agreed that paying tax online is more
accurate as compared to manual system, The use of online payments, according to 39% of the
respondents, updates their ledger in real time. In addition, 44 percent of respondents and 52 percent of
respondents strongly agreed that accessing online payments helps timely filing of tax returns and
timely payment of taxes, respectively. This implies that online tax payments system is suitable for the
tax payers located at Kinondoni tax region. One of the respondents was heard saying that;
“The use of computer has made payment on-line so easy for each tax payer’s activities in the
system and this system is accurate and suitable for me because it simply doesn’t need to move to
the tax region for tax payment. However, most important aspect in electronic tax filing website is
the ease of use of the system.”
This situation may be explained by a number of complaints made against the online system's payment
mechanism, according to Eva (2010). This is consistent with Harold's (2011) results that electronically
sent, computer-generated returns were often simpler to process than paper returns.
4.3 Regression Analysis.
A multiple regression was carried out to determine the link between the independent and dependent
variables. The goal of the research project was to assess the relationship between tax payer compliance
and the implementation of online tax systems in the Kinondoni district (online tax registration, online
tax payments, and online filing of returns).
Table 4. 11 model summary
Model Summary
38
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .934a .873 .802 0.312
Source: Field Data (2022)
We can gauge how much variation in the dependent variable originates from changes in the
independent variable using the coefficient of determination known as modified R squared. The results
above show that the value of R squared was 0.873, which at a 95% confidence level means that there
was a variance of 87 percent in tax compliance as a result of changes in online registration, filing, and
payment. The relationship between the research variables is shown by the correlation coefficient, or R.
The research variables had a strong positive association (r = 0.934), as shown by the findings in the
table above.
4.3.1 Analysis of Variance

The relationship between the two variables is revealed by the analysis of variance. This section
displays the p-value for the influence of the predictors on the criterion variable (where "sig" stands for
"significance"). Generally speaking, "statistically significant" P-values are those below.05. In this
instance, the researcher will examine the connection between taxpayer compliance and the online tax
system.
Table 4. 12 ANOVA
ANOVA
Sum of Mean
Model Squares Df Square F Sig.
1 Regression 42.402 3 14.134 9.115 .000b
Residual 89.937 58 1.551
Total 132.339 61
a. Dependent Variable: Tax compliance
b. Predictors: (Constant), online tax registration, online tax return filing, online tax
payments
From the ANOVAs results, the probability value of 0.000 was obtained implying that the regression
model was statically significant in predicting the relationship between online tax system and
compliance of tax payers in Kinondoni district and the predictor variables as it was less than 0.05. with
39
an F value of 9.115 and P-value of 0.000 the model, shows that the regression is significant and the
variable have a positive influence on the compliance of tax payer.
Table 4. 13 Tests of Coefficients
Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .780 .411 1.897 .063
Online tax .276 .129 .285 2.146 .036
registration
Online Tax .354 .126 .362 2.817 .007
Return Filling
Online Tax .051 .155 .048 .327 .745
Payments( RGS)
a. Dependent Variable: Tax Compliance
Source: Field Data (2022)
The researcher conducted a simple regression analysis so as to determine the relationship between Tax
Compliance in kinodoni district (Dependent variable) and online tax system. The following regression
equation was obtained
Tax compliance=.780+.276X1+.354X2+.051X3
From regression model obtained above, holding all other factor constant, tax compliance in kinondoni
district. The obtained regression equation further implied that there was a direct relationship between
online tax system and compliance of tax payer in Kinondoni district.
It concluded that a unit change in online tax registration impacts tax compliance by 0.276, a unit
change in online tax return filling impacts tax compliance by 0.354, a unit change in online tax
payment impacts tax compliance by 0.051
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CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
In this chapter there is summary of the findings, conclusion and recommendation based on the study.
5.1 Summary of the findings

This study aimed at establishing the effect of online tax systems to compliance among taxpayers at
Kinondoni Tax Region. There were three research objectives presented by this study: what is the
extent of tax compliance among tax payers, to analyse the effect of online tax system to compliance
and to examine the challenges facing tax payers on using electronic tax system.
The findings from the first objective indicate that majority of the respondents indicated that they
noticed a change in tax assessment from using manual to electronic to perform self-assessment. The
extent of compliance level was also measured by the obligations of tax payers whereby majority of tax
payers are approached can accurately determine their tax obligations and file their returns on time.
This shows that tax payers are more compliant with the tax laws and procedures of the tax system at
Kinondoni tax region. The study further measured the extent of tax compliance as whether the
respondents can timely and accurate determine tax obligation was a result of e-tax system, tax payers.
Majority of tax payers indicated that they can accurate determine online tax system and timely filing.
The findings from the second objective aim to determine the effect of online tax system on tax
compliance. The effects were presented though the use of three variables such as online registration,
online tax filing and online tax payments and measured in Likert scales. The findings indicate that
majority of the respondents have registered their business online, they use internet in their business,
registration on online system reduced compliance costs, and registration has increased timely payment
of tax. This indicated that online tax registration has positive impact on the compliance of tax payers
through ensuring timely payment and timely in filling tax return as well as reducing costs. The
findings also indicate that majority of the respondents agreed that they fill their tax return online from
various taxes such as their return from income tax, PAYE, withholding tax, turnover tax, VAT and
corporate tax for those with companies. The findings further indicated that majority of the respondents
agreed that they use online tax payment and stated that paying tax online is more accurate as compared
to manual system, adopting online payments updates their ledger real time, accessing online payments
41
enables timely filing of tax returns, accessing online tax payment enables timely payment of tax. This
implies that online tax payments system is suitable for the tax payers located at Kinondoni tax region.
5.2 Conclusion
The research objectives were tested to establish the effects of online system on taxpayer compliance
behavior hence tax compliance in Kinondoni tax region. The findings confirm that online tax system
improves tax compliance.
The challenges faced by the taxpayers with respect to electronic tax filing could not entirely be traced
to the two key independent variables hence the conclusion that there are other underlying factors
which are not highlighted by the conceptual framework including education since tax compliance
among taxpayers in Kinondoni tax region is affected by tax education. The respondents lack training
exposure on electronic tax filing system.
5.3 Recommendations
Based on the findings and the analysis of the research done, it is recommended that more training and
or marketing of the online system should be done by TRA to ensure that taxpayers who embrace the
system increase. Internet is key for effective implementation and administration of online tax system,
despite this fact only majority of the respondents had internet connection. The government should
therefore improve connectivity to enhance compliance among tax payers. The more taxpayers are
brought on board to use the system, the more efficiency will be achieved in terms of tax administration
and more taxes paid to the government. This will increase the compliance level at Kinondoni tax
region.
The registration programs should be developed to the tax payers brings the high number of qualified
but non registered corporation tax payers into the tax net. Increasing corporation tax registration
threshold should be considered in order to have a manageable taxpayer register. This will encourage
more tax payers to comply with the tax system.
TRA should call the taxpayers for training at the different branches to enable sensitization about the
services that are rendered and therefore communicate all the reasons for the adoption of Online-tax
service as this will motivate the uses of the service, hence increase in the rate of compliances. This
means that TRA must provide education to taxpayers by preparations of seminars, leaflets and
brochures and even the can go further by preparation of bonanza based on reflecting the use of online-
tax systems. Also, TRA should inform the government to enable online-tax services to be extended to
higher institutions of learning, for effective training right from formal education level to the field.
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TRA should find ways of reducing the TRA web portal disturbances which is ever on and off
especially at the time of deadlines, that is when filing VAT, income tax returns and many others to
avoid penalties caused due to the web portal network.
Policy should focus on enhancing taxpayer education to instill taxpayers' duties and obligations under
Tanzania's numerous tax regimes. Understanding how to use electronic tax filing systems is essential
for achieving the goals set forth in their introduction.
Generally speaking, tax counseling offices should be set up all around the nation to offer guidance on
the interpretation and application of tax laws, as well as the steps involved in submitting returns and
applications. Additionally, this will improve tax compliance.
5.4 Suggestions for Further Research

Further research in the following areas may be recommended based on the study's findings,
conclusions, recommendations, and limitations in order to confirm the study's findings and further
knowledge in the field. In order to get a comprehensive conclusion on the impact of the online
system on tax compliance in Tanzania, additional research first needs to be conducted on taxpayers
in other tax regions that are either regarded to be more advanced or less advanced. The researcher
also proposes conducting additional research on issues like tax evasion and avoidance that affect tax
compliance.
43
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Besley, T. and T. Persson (2013). Taxation and development. In Handbook of public economics,
Volume 5, pp. 51–110. Elsevier
Collin, M., Di Maro, V., Evans, D. K., & Manang, F. (2021). Property tax compliance in Tanzania:
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SME's in Nairobi Central Business District). Nairobi, Nairobi.
Gwaro, O. T., Maina, K., & Kwasira, J. (2016). Influence of online tax filing on tax compliance among
small and medium enterprises in Nakuru town, Kenya. IOSR Journal of Business and
Management, 18(10), 82-92.
Karanja , E. K. (2014). Tax Compliance On Rental Income: A case Study of Nairobilandlords, Factors
Affecting Voluntary. Nairobi, Nairobi.
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Business, 8(1), 823-832.
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comparative study of South Korea and Turkey. Online information review.
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46
APPENDICES
APPENDIX I : QUESTIONNAIRES
Dear respondent
Elizabeth W. Msangi here, an undergraduate studying accounting and finance in the business field at
Ardhi University (Bs. BAF). I respectfully ask for your help in completing this questionnaire by
sharing your knowledge and ideas to help with a study on "the impact of the online tax system on
tax compliance in the Kinondoni Tax region." Your thoughts and ideas were handled with extreme
discretion and were only utilized for the intended purpose, I can guarantee you.
I want to say thank you in advance.
SECTION A: QUESTIONNAIRE FOR DEMOGRAPHIC DETAILS
Instructions: Please check the box next to the response of your choice, or, if applicable, write in
the space provided.
Information from Respondents
1. Kindly Tick against your Age bracket (Years)

i. Between 21 - 30 years
ii. Between 31 - 40 years
iii. Between 41 - 50 years
iv. Above 50 years
2. What gender are you?

i. Male ( )
ii. Female ( )
3. Were you a student?

i. Yes ( )
ii. No ( )
4. What level of education have you attained?
i. Primary education level ( )
47
ii. Secondary education level ( )
iii. Diploma education level ( )
iv. Degree level and higher education level ( )
SECTION B: LEVEL OF TAX COMPLIANCE
5. Has your tax assessment changed since 2021?
i. Yes ( )
ii. No ( )
6. Is the Tanzania Revenue Authority more likely to receive tax payments from taxpayers?
i. Yes ( )
ii. No ( )
7. If your answer is yes, is the willingness attributable to the electronic tax filing system
i. Yes ( )
ii. No ( )
SECTION C: ONLINE TAX REGISTRATION
8. Does your business have internet connectivity?
i. Yes ( )
ii. No ( )
9. Have your business embraced automation as a way of doing business?
i. Yes ( )
ii. No ( )
10. Have you heard about TRA online service portal (iTax)
i. Yes ( )
ii. No ( )
48
11. If yes in 10 above, have you registered as an online user with TRA?
i. Yes ( )
ii. No ( )
Item 1 2 3 4 5
I have registered my business with online tax system at TRA
I use internet in my business
The registration of online tax system has made reduction of
compliance costs
Online registration has increased timely payment of tax
Online registration facilitated timely filling of tax returns
SECTION D: FILLING OF TAX RETURNS
12. Have you been filing your tax returns online?
i. Yes ( )
ii. No ( )
13. If you checked "yes" in item 9 above, please check the box next to the taxes that your company or
you have recorded with TRA..
Services Kindly Tick

Revenue Tax (TOT)
Pay as You Earn (PAYE)
Value Added Tax (VAT)
Withholding Taxes
49
Income Tax Company (Corporate Tax)
Income Tax Individual
14. Please indicate how much you agree or disagree with the following claims. Strongly Agree (1),
Agree (2), Not Sure (3), Disagree (4), and Strongly Disagree are the four options on the scale (5)
Item 1 2 3 4 5
By the deadline, we submit our online VAT 3 return.
By the deadline, we submit our corporate tax return online.
By the deadline, we submit our PAYE Return online.
Manually filling tax return is more expensive than doing so online.
Online return filing has increased our compliance rates.
Online filling reduces costs and save time
50
SECTION E: ONLINE TAX PAYMENTS (RGS)
Please indicate how much you agree or disagree with the following claims. Strongly Agree (1), Agree
(2), Not Sure (3), Disagree (4), and Strongly Disagree are the four options on the scale (5)
Item 1 2 3 4 5
Tax payments have become easier because to TRA online.
Online tax payments are more precise.
Utilizing online payments causes a real-time update to our ledger.
Accessing online payment enables timely filing of tax returns
Accessing online tax payment enables timely payment of tax
SECTION F: CHALLENGES OF USING ELECTRONIC TAX SYSTEM
15. Which of the aforementioned problems have you ever had with online filling services?
Please check any appropriate boxes.
1. Lack awareness (low knowledge on online tax systems)
2. Network instability (no-connectivity)
3. Poor reading and writing skills
4. It is too costly for the tax payers
5. There is a lack of management support for online filing
51

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EFFECT OF ONLINE TAX SYSTEM ON TAX COMPLIANCE

A CASE STUDY OF KINONDONI TAX REGION

YEAR III, SEMISTER II

DEPARTMENT OF BUSINESS STUDIES

SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS

AND INFORMATICS ARDHI UNVIVERSITY

DAR ES SALAAM JULY 2022

EFFECT OF ONLINE TAX SYSTEM ON COMPLIANCE OF TAX PAYERS

A CASE STUDY OF KINONDONI TAX REGION

YEAR III, SEMISTER II

DEPARTMENT OF BUSINESS STUDIES

SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS

AND INFORMATICS ARDHI UNVIVERSITY

DAR ES SALAAM JULY 2022

Department of Business Studies

School of Earth Science, Real Estate, Business Studies and Informatics

CPA(T) EPHRAIM NDARO DR. SALANANGA SANGA

SEMESTER PROJECT SUPERVISOR HEAD OF DEPARTMENT BUSINESS STUDIES

SCHOOL OF EARTH SCIENCES REAL ESTATE

BUSINESS AND INFORMATICS

EFDMS Electronic Fiscal Devices Management System

TIN Taxpayer Identification Number

TRA Tanzania Revenue Authority

VAT Value Added Tax

RGS Revenue Gateway System

I-TAXS Integrated Tax System

VRN Value added tax Registration Number

INTRODUCTION AND BACKGROUND OF THE STUDY..............................................................2

1.1 Background to the Study...................................................................................................2

1.2 Statement of the problem.................................................................................................3

1.3.1 Main objective.......................................................................................................4

1.3.2 Specific objectives..................................................................................................4

1.4 Research questions...........................................................................................................4

1.5 Significance of the study...................................................................................................4

1.6 Scope of the study.............................................................................................................4

1.7 Limitation and delimitation of the study...........................................................................5

1.8 Organization of the study..................................................................................................5

2.1 Definitions of key concepts...............................................................................................6

2.1.3 Tax Revenues.........................................................................................................6

2.1.4 Tax compliance......................................................................................................7

2.1.5 Online tax systems.................................................................................................7

2.2 Theoretical review.............................................................................................................7

2.2.1 Technology acceptance model (TAM)....................................................................7

2.3 Empirical Literature Review..............................................................................................7

2.4 Conceptual framework....................................................................................................10

3.1 The research design........................................................................................................12

3.2 Study Area.......................................................................................................................12

3.3.1 Targeted population of the study........................................................................13

3.4 Sample size and sampling techniques.............................................................................13

3.4.1 Sample size..........................................................................................................13

3.4.2 Sampling techniques............................................................................................14

3.5 Data collection instruments............................................................................................15

3.5.2 In-depth Interview discussion..............................................................................16

3.5.3 Documentary Source...........................................................................................16

3.6 Data processing and analysis technique..........................................................................16

3.6.1 Quantitative analysis............................................................................................16

3.6.2 Qualitative Data Analysis Method........................................................................16

3.7 Data validity and reliability..............................................................................................17

PRESENTATION OF FINDINGS AND DISCUSSION OF FINDINGS.............................................18

4.2 Reliability of the study.....................................................................................................18

4.3 Respondents general information...................................................................................19

4.3.1 Gender of respondent........................................................................................19

4.3.2 Respondents Age groups.....................................................................................19