TABLE OF CONTENT

TABLE OF CONTENT ii

1.0 The Research problem 1

2.0 Description of the research problem and its significance 1

2.3 Negative effect of the tax evasion on the country development 2

2.4 Strategies to be implemented to combat the problem of the taxes evasion 2

3.0 Selection of a variable or variables that quantitatively measure the concept or concepts in the
question. 3

4.0 Explanation of the variables and the limitations of using the variables 3

5.0 Reason for the examination of the problem by using a method of analysis that investigates the
relationships between or among independent and dependent variables. 3

6.0 The research problem that lends itself to this type of analysis 4

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 FACTORS INFLUENCING TAXPAYERS TO ENGAGE IN TAX EVASION:
EVIDENCE FROM SMALL AND MEDIUM ENTREPRISES IN ZANZIBAR

1.0 The Research questions

i. What are the motive behind of the tax evasion among the tax payer in
Zanzibar SMEs

ii. What are the beheviour of the taxpayers toward the taxes evasion in Zanzibar
SMEs

iii. What are the negative effect of the tax evasion among the taxpayer in Zanzibar
SMEs on the country development

iv. What are the strategies that should be implemented to combat the problem of
the taxes evasion among the SMEs in Zanzibar

2.0 Description of the research problem and its significance

2.1 Motive behind of the tax evasion among the taxpayer in Zanzibar SMEs

From this research problem, the study aimed to explore out what are the reasons, what make
the taxpayer to evade the tax payment. In this situation it analyzed the reasons that influence
the situation of the tax evasion. Due to this it may be found that taxpayer are able and
willingness to pay their taxes voluntary but the presence of the some condition makes them to
evade from paying their taxes.

For instance, high estimate rate; through this it may lead to the taxpayer to diverge from
paying their taxes in a voluntary manner. Similar to poor administration of the taxes in the
country may also influence the taxpayer to evade from paying their taxes in the voluntary
way. Significantly, tis question will bring the alert situation on the respective manner that
why the taxpayer does are evade from paying their taxes. As well it will bring the appropriate
ways on how to handle the tax administration affairs in the ways that it will create a
conducive environment that will attract the taxpayer to pay their taxes, furthermore it through
this effective administration of the taxes it will reduce some operation costs associate to the
tax collection.

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2.2 Beheviour of the taxpayers toward the taxes evasion in Zanzibar SMEs

This research problem is intended to study the behaviour of the taxpayers toward the tax
evasion in Zanzibar. As the problem may be a crosscutting phenomenon that involve both
key parts of the business partners either Tax Administrators Officer or Taxpayer in the
country. It is through this question the Tax administration may determine and study the
cultural beheviour of the taxpayer on the paying taxes. Furthermore, the behavioral factors
may be linked with the gender, age, education level. Where by the statistical evidence may
portray which group are notorious in taxes evasion. How the level of education especially in
the taxes knowledge does may influence the tax evasion.

Significantly, this research question may come up with the solution and the best methods to
handle the problem of the tax evasion in the country. For instance Tanzania Mainland
through the fifth phase of the Government of United Republic of Tanzania has come up with
the implementation of “Kitambulisho cha mjasiriamali” with the purpose of motivating the
paying of taxes from informal group commonly known as “Machinga, Bodaboda,
MamaLishe etc”. These group may lack the taxes knowledge, though this research problem
the study may significantly understand the relationship between tax evasion and behaviour of
the taxpayers in the country.

2.3 Negative effect of the tax evasion on the country development

This research question purposive is aimed to identify the negative effects of the tax evasion to
the National development. It is through this question that one will be able to identify that if
the tax evasion has the negative effect to the development of the country. As well as it
through this one could be able to identify the importance of paying the tax through the
national development in both social, economic and political affairs in the country.

This study aimed to assess the employee satisfaction with the working place environment at
Iringa Municipal Council. It will contain background of the study, statement of the study,
research objectives, research questions, significant of the study and scope of the study.

2.4 Strategies to be implemented to combat the problem of the taxes evasion

As far as the problem of the tax evasion is existing among the tax payers in Zanzibar, this
research problem purposive is intending to provide the best solution to the authority,
government, Tanzania Revenue Authority (TRA) and Zanzibar Revenue Board (ZRB). The

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essence of this question is to suggest the best strategies to be implemented so as to solve the
problem of the taxes evasion some of the strategies could be provision of the education to the
taxpayers, amendment of the Tax Administration Acts, Comply with the code and ethics
among the Taxes Officers.

3.0 Selection of a variable or variables that quantitatively measure the concept or

concepts in the question.
The variables are tax fairness, tax knowledge, attitude toward the behavior and tax evasion.

4.0 Explanation of the variables and the limitations of using the variables
Tax evasion; the illegal non-payment or underpayment of tax
Tax fairness; This variable is associated to the tax evasion in such that if the tax rates are not
affordable taxpayer will tend to diverge from paying tier taxes voluntary vice versa of it
influence the effectively paying of the taxes. The fairness of tax is controversial and
argumentative because there may not happen a similar amount of tax for all payers. Thus,
based on this ground the study hypothesis would be: Tax fairness has a positive influence on
taxpayers to engage in tax evasion.
Tax knowledge; the knowledge of the taxes among the taxpayer has the significant role on
ensuring the effectively tax payment are implemented. Absence of the tax knowledge lead to
increase of the tax evasion among the taxpayer. If tax payers are well informed about tax
evasion, their participation in tax evasion would be infrequent; the reverse is true for a
taxpayer who is not well informed
Altitude toward the behaviour; If the attitude of taxpayers towards taxation is negative,
they will be reluctant to pay their obligation to the authority; the reverse is true when
taxpayers have positive attitudes towards taxation.
Therefore;
-Tax fairness, Tax knowledge and attitude toward the behavior are the Independent
variables
-Tax evasion is the Dependent variable.
Y= B0+β1 X1+β2 X2+β3 X3+e
where Y=tax evasion, X1=tax fairness, X2=tax knowledge, X3 =attitude towards the
behavior, β=beta coefficient, B0=constant, e = other factors not included in the study (0.05
random error).

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X1, X2, X3 are independent variables, they are not affected by Y.
Y is dependent variable because its depend on independent variables, as X1, X2, X3 changes it
cause an effect on Y( dependent variable)

5.0 Reason for the examination of the problem by using a method of analysis that
investigates the relationships between or among independent and dependent variables.
Correlation coefficient is suitable method for investigate the relationship between
independent variable and dependent variable influenced by the extent that the study intending
to measures. Correlation coefficients a measures how strong a relationship is between
these variables. There are several types of correlation coefficient, but the most popular
is Pearson’s. Pearson’s correlation is a correlation coefficient commonly used in linear
regression. The described independent variable in intending to identify how and in what ways
do they associate with the tax evasion as the dependent variable. Hence this
association/relation measure the validity and accuracy on the magnitude of the problem. The
result will always be between +1 and -1.

6.0 The research problem that lends itself to this type of analysis
The status of the research problem that lend to the this types of the analysis as described in
part 5.0 above is the due to the existence of the tax evasion behaviour in the country.
However the relationship above decided on the independent variables that are collated to the
dependent variable and in some extent the implementation of it has been taken like Tax
administration i.e. tax fairness, tax knowledge. Furthermore the problem in this case that
enhance the use of the this types of the analysis is the dependability between the independent
variable and dependent variable of the concept or problem.

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