THE IMPACT OF TAX ADMINISTRATION ON REVENUE

GENERATION IN THE FEDERAL GOVERNMENT OF SOMALIA

By

RAMLO MOHAMED HIRSI

ABDIRASHID OMAR HUSSEIN

A GRADUATION PROJECT SUBMITTED IN

PARTIAL FULFILLMENTS OF THE REQUIREMENTS

FOR THE DEGREE IN BACHELOR

OF ACCOUNTANCY

FACULTY OF ACCOUNTANCY

SIMAD UNIVERSITY

JULY, 2024

I
 DECLARATION (A)

We hereby declare that this graduation project is from our own hard work and tireless

effort

that has not been submitted from anywhere for any award. All other sources of

information

used have been acknowledged.

Name of the Candidate: RAMLO MOHAMED HIRSI

Signature:

Date: July, 2024

Name of the Candidate: ABDIRASHID OMAR HUSSEIN

Signature:

Date: July , 2024

II
 DECLARATION (B)
We gladly confirm here that this is a graduation project entitled the impact of Tax Administration

on revenue generation in the federal government of Somalia, which has been carried out by Ramlo

Mohamed Hirsi and Abdirashid Omar Hussein under the preparation of our direct supervision and

competence. We hereby also confirm that this graduation project has been conducted in accordance

with degree regulations and University Research Project Manual (RPM).

Name of the Supervisor: Mr. OMAR AHMED IBRAHIM

Signature:

Date: July, 2024

III
 DEDICATION
We would enormously like to make our sincere dedication of this book to our beloved parents
together with our dear siblings who without their full, moral support and encouragement would it
not be possible for us to achieve our last goal of our study. Surely, they determinedly and
optimistically stood by us with all possible means and made us competent, energetic, creative and
knowledgeable persons we are today. In return, May Allah reward and keep them in prosperity and
well-being here and hereafter.

IV
 ACKNOWLEDGEMENT
We would like to express our deepest thanks and heartfelt gratitude to not only our SIMAD
University lecturers in general but also accountancy program lecturers in the faculty of accountancy
in particular as well for their helpful advice, hard work and honest encouragement they responsibly
gave us whilst we were studying our bachelor degree in the university.

We are extremely indebted to them for the academic skills and knowledge we learned during
our stay in the university. We also would like to thank our Dean of Faculty of accountancy, Ustad
Ali Ibrahim for his exciting and endless encouragement he was standing with us during our four-
year study in SIMAD University. Surely, his lively advice and moral encouragement greatly
enabled us to excel in our study.

In particular, we are deeply thankful to our beloved supervisor and lecturer, Ustad Omar Ahmed
Ibrahim, for his careful supervision and fatherly assistance. He supported us in the course of our
preparation for this graduation thesis.

Finally, our special thanks and regards are also due to the SIMAD University rector , Ustad
Dahir Hassan Arab, and his deputies for their hard commitment, sincere professionalism,
responsible competence and deep honesty in their leadership of SIMAD University towards right
direction and tangible quality that SIMAD University is academically targeting.

V
 APPROVAL SHEET
This research project entitled “The impact of Tax administration on revenue generation in the
federal government of Somalia” prepared and submitted by Ramlo Mohamed Hirsi, and Abdirashid
Omar Hussein in Partial fulfillments of the requirements for the degree of Bachelor in Accountancy
is officially examined and approved by the panel on oral examination.

Name and Signature of chairperson of the Panelists

The Panelist’s name and Signature

The research coordinator’s name and Signature

Name and Signature of Dean, Faculty of Accountancy

VI
 Contents
CHAPTER ONE: INTRODUCTION........................................................................1
1.1 BACKGROUND OF THE STUDY............................................................1
1.2 PROBLEM STATEMENT......................................................................................................... 3
1.3 Purpose of the Study......................................................................................5
1.4 Research objectives........................................................................................5
1.5 Research questions.......................................................................................6
1.6 Research hypothesis.......................................................................................6
1.7 SCOPE of the study......................................................................................6
1.8 SIGNIFICANCE of the study.........................................................................6
1.9 Operational definitions of the study..............................................................7
CHAPTER TWO: REVIEW OF RELATED LITERATURE...............................8
2.0 INTRODUCTION.................................................................................................8
2.1.1 Effectiveness and efficiency of tax collection..................................................9
2.1.2 Tax control......................................................................................................11
2.1.3 Tax Avoidance................................................................................................12
2.2 MODELS OF TAX ADMINISTRATION........................................................14
2.3 CONCEPTS, AND DEFINITIONS OF REVENUE GENERATION..................15
2.4 Failure in Tax Enforcement and Administration...................................................17
2.5 Conceptual Framework.........................................................................................17
2.6 Summary................................................................................................................18
2.7 Conclusion.............................................................................................................18
CHAPTER THREE: METHODOLOGY...............................................................19
3.0 Introduction...........................................................................................................19
3.1 Research Design....................................................................................................19
3.2 Research Population..............................................................................................19
3.2.1 Sample Size....................................................................................................19
3.2.2 Sampling Procedure........................................................................................20
3.3 Research Instrument..............................................................................................20
3.4 Reliability and Validity of the Instrument.............................................................20
3.5 Data Gathering Procedure.....................................................................................21
3.6 Data Analysis.........................................................................................................21
3.7 Ethical Considerations...........................................................................................21
3.8 Limitations of the study.........................................................................................22
References...................................................................................................................23

VII
 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In Europe, the institutional arrangements of the OCTs with the relevant EU Member States directly
affect the possibility to establish policies and adopt regulations, including on taxation and money
laundering. Regardless of the level of control of the EU Member States over their OCTs,
implementation of the law by the local authorities is of concern in a number of the UK and Dutch
OCTs, and also because of limited financial and human resources. In the case of the French OCTs.
This ex-post impact assessment analyses EU-US trade and investment relations to assess whether
and. if so, to what extent these relations have impacted on tax evasion, money laundering and tax
transparency (SukContoh BIssa JTabarearno et al., 2019).
The study is to be guided by Milton Friedman’s theory of the Ability to Pay Theory. This theory
was developed due to inadequacies in benefit and sacrifice theories of taxation. This is the most
popular and commonly accepted principle of equity or justice in taxation, that is, citizens of a
country should pay taxes to the government in accordance with their ability to pay. It appears very
reasonable and just that taxes should be levied on the basis of the taxable capacity individual. For
instance, if the taxable capacity of a person A is greater than the person B, the former should be
asked to pay more taxes than the latter (SukContoh BIssa JTabarearno et al., 2019).
This study was anchored on the theory of Taxation and Ability to pay to theory of taxation
propounded and popularly called the curve is -a hypothetical drawing of the correlation between tax
revenue created by the government and all possible rates of taxation. It considers that at extreme tax
rates, no revenue would be created. This is due to the fact that, at extreme tax rates, taxpayers have
no reason to earn an income again. Likewise, a very low tax rate will bring absurd tax revenue and
the main reason for tax revenue would be far-fetched. It, therefore, informs that without a
reasonable tax rate, the importance of any tax policy or reform to improve the revenue base of the
government might be a mirage as taxpayers might find it burdensome to pay higher tax rate,
especially small businesses (Gideon et al., 2019).

It is described the tax as a compulsory contribution imposed by the government on citizens by the
legislative provision and paid by them through agents to defray the cost of administration. This
implies that taxes are backed up by laws enacted by the government about to each of the various
taxes respectively. Tax revenue all over the world plays a major role in the development of an

1
economy

2
through the financing of government expenditure. According to, a tax is a compulsory levy imposed
by the government through its agents on its subjects or his property to achieve some goals.
This means that taxation comprises all types of involuntary levies, from income to capital gains to
estate taxes imposed by a government. The Public Finance General, states that the purpose of
taxation as enshrined in the French laws is for the maintenance of public force and administrative
expenses (Adebayo et al., 2022).

The tax system in Nigeria is made up of the tax policy, the tax laws and the tax administration. All
of these are expected to work together in order to achieve the economic goal of the nation.
According to the Presidential Committee on National tax policy, the central objective of the
Nigerian tax system is to contribute to the wellbeing of all Nigerians directly through improved
policy formulation and indirectly through appropriate utilization of tax revenue generated for the
benefit of the people. In generating revenue to achieve this goal, the tax system is expected to
minimize distortion in the economy. provide economic stabilization, to pursue fairness and
distributive equity, and correction of market failure and imperfection (Adegbite & Fasina, 2019).

Revenue is the income that a business has from its normal business activities, usually from the sale
of goods and services to customers. Revenue is also referred to as sales or turnover. Some
companies receive revenue from interest, royalties, or other fees. Tax compliance is the provision of
tax information at the proper time and ensuring that returns accurately report the tax liability.
Therefore, compliance is a constant challenge for all companies in terms of accurate computation
and timely payment of tax (SukContoh BIssa JTabarearno et al., 2019).

Revenue generation in the context of this study could be viewed as the annual or periodical yield of
taxes, as well as other sources of income that a nation, state or public sector collects or receives into
their treasury for public use. sees revenue as all tolls, taxes, interests, rates, fees, duties, fines,
penalties, fortunes and all other receipts of government from whatever source arising for a period of
either one year or six months. opine that revenue generation is a way through which government
raises revenue to meet its capital and recurrent expenditure. Revenues earned by the government are
received from sources such as taxes levied on the incomes and wealth accumulation of individuals
and corporations and the goods and services produced, exports and imports, non-taxable sources
such as government-owned corporations' incomes, central bank revenue and capital receipts in the
form of external loans and debts from international financial institutions (Adebayo et al., 2022).

Tax revenue does not just make up the major means of revenue for the government but is in fact the
vital part of an effort to build societies, economies and even nations. In view of this, stated that
taxes make it possible to provide securities, provide the major needs or promotes economic

3
development

4
as well as validity and agreement (aiding to improve democratic, accountable and representative
government(Gideon et al., 2019).

In Uganda, Uganda revenue Authority was formed to perform the task of tax administration. It was
organized to accomplish the basic functions of tax collection agency, taxpayer audit, internal audit,
financial management, enforcement, legal and regulatory affairs and also central tax administration
and compliance. Tax administration is vital in that it influences taxpayers’ compliance in fulfillment
of their rights of paying taxes, hence increasing government revenue collection and improves the
national budget through maximization of revenue collection. In Uganda Small and Medium
enterprises are seen as critical for economic growth of the country. contributing 75% of (H)P and
constituting 90% of the private sector, creating employment estimated at 2.5 million, improving
standards of living and ensuring social (SukContoh BIssa JTabarearno et al., 2019).

The tax system in Nigeria is characterized by needless complexity, distortion, and generally unfair
tax rules that only have a minimal impact on the economy's informal sector. The tax structure in
Nigeria has recently undergone considerable adjustments. The tax system is the process of
collecting taxes that involves a number of rules, regulations, and processes, as well as interaction
between the administrative departments to produce money for the government (Adebayo et al.,
2022).
Nothing escaped the tax collectors of the past. Somalia’s tax system is characterized by weak
collection capacity and difficulties in controlling the tax revenue base. Public expenditure
management in Somalia is still affected by the volatility and low level of domestic resources
mobilization. In addition, the recurrent differences noted between forecast and actual revenue have
a negative impact on budget credibility (Ali Abdinur et al., 2020).

1.2 PROBLEM STATEMENT

Tax administration determines the taxpayer’s willingness to pay taxes especially when the taxpayer
is aware of the implications and costs of noncompliance. An inefficient tax administration weakens
the willingness of the taxpayers to comply and creates room for political manipulation and in the
process government loses revenue (Bird, 1 992). Uganda Revenue Authority has made significant
effort to increase VAT collections by performing above forecast as a result of administration
efficiency, enhanced integrity drives, public education programmers and other initiatives. Despite of
the measures taken by government in reforming tax administration in Uganda, tax compliance is
still low due to the fact that the tax system is still complicated and non-stransparent because of
comprehensive changes in the tax structure (rates and bases) in recent years.

Despite the implementation of modern systems and procedures for investor support, ranging from

5
introduction of c-tax, taxpayer’s education services and faster handling of complaints, the total

6
amount collected remains lower than the targeted. Probably this was attributed to non-tax
compliance of the taxpayers among other factors. Persistent low levels of compliance can cause
government’s failure to realize the required targets for financing the national budget. Unless this is
addressed, it may lead to a national crisis. Therefore, the study is prompted to assess the effect of
tax compliance on domestic revenue collection (SukContoh BIssa JTabarearno et al., 2019).
Somalia's tax administration doesn’t run smoothly, distinguished by lock of tax regulations,
effective methods of collection, and broad-based compliance. A clean, poor-functioning system
would minimize revenue generation. A culture of voluntary compliance is fostered by open
communication between tax officials and the public, which helps to maintain a stable fiscal
environment. In an ideal world, the government would have the authority to allocate resources
wisely, promoting economic growth and meeting pressing social needs for the good of the country.
At the moment, Somalia's tax administration system is having difficulties. Political unpredictability
and a largely unregulated economy make it difficult to collect taxes efficiently. Sector-specific
compliance differs, and corruption is still an issue. Revenue collection efforts are further
complicated by inadequate infrastructure and security concerns. The state of affairs now emphasizes
the necessity of extensive reforms to improve tax administration, guaranteeing improved
enforcement, more compliance, and eventually larger revenue collection for long-term economic
growth. The lack of revenue creation is a direct result of Somalia's present tax management issues.
When enforcement is weak and compliance is low, the government's ability to provide essential
public services is hampered. Developmental endeavors are hindered and socio-economic inequities
are made worse by this funding discrepancy. Effective tax reforms must be implemented to address
these effects in order to close the budget gap, promote economic stability, and satisfy the
population's urgent demand for continued prosperity and growth.
Given the seriousness of the problem, a comprehensive analysis that takes into account the opinions
of experts, scholars, and policymakers is necessary. Their opinions are crucial to comprehending the
subtleties of how tax management affects Somalia's ability to generate income. The study can
provide comprehensive solutions to handle the issues and optimize income potential by using their
views.
The nexus between tax administration and revenue generation in Somalia intersects with business,
technological, political, and social realms. By analyzing relevant data within these contexts, the
study elucidates the intricate dynamics shaping revenue collection and utilization. This
interdisciplinary approach facilitates a holistic understanding of the factors influencing Somalia's
fiscal landscape, guiding policy reforms and institutional improvements for sustainable economic
development.
In Somalia, there have been no well-prepared tax rules and regulations in place in the country since
7
the country gained its independence in 1960. As result, the country’s tax administration is obviously
believed to be in full mess and very weak and full of misadministration. The center point of
country’s

8
tax misadministration is the government unknowledgeable workers in the tax offices at federal,
state, and local levels. Small portion of taxes are collected such as premises taxes, importation &
exportation taxes, business taxes are levied on the taxpayers but the revenues from these taxes don’t
have an impact on the country’s economic growth and all-important infrastructures such as airports,
seaports, roads that make links in the country very effective.
It seems that most of the revenues from these taxes are on a large scale unaccounted for because of
tax misadministration of tax authorities and their subordinates. There is no good tax system that
properly functions to collect revenues to enhance the country’s revenue generation from individual
income taxes, cooperate income taxes and sales taxes. This means that there are no tax laws in the
country nor are there some of taxes levied on business advertisements in the public, market sales,
individual incomes. Taxes are levied on the imported goods in either seaport or airport according
to the size of the goods. Some small goods which are very expensive compared to the other items
are taxed the same way as the cheap items are taxed. Furthermore, some government workers who
are not related to the country’s tax collection are involved in tax issues, so this inspires them to fraud
revenues collected from the taxes. There is another tax problem that the country is facing. The
people want to get free health care, free education, good salaries, but they feel troubled to pay
taxes.
Therefore, the study of this research investigates the Impact o f tax administration on revenue
generation in the federal government of Somalia. Thus, the study hopes to investigate this
difference (gap) and finally to come up with real and satisfactory findings that will surely end in an
academic conclusion and recommendation that will avail those who will investigate this after us.
1.3 Purpose of the Study
The purpose of this study is to establish the impact of tax Administration on revenue generation in
the federal government of Somalia. The study aims to contribute to the existing literature by
examining the relationship between internal accountant competence and financial reporting quality,
and exploring the factors that may influence this relationship. The study aims to explore how tax
administration affects Somalia's ability to generate income. to establish the impact of tax
Administration on revenue generation in the federal government of Somalia.
1.4 Research objectives

The general objective of the study is to analyze the Influence of tax Administration on revenue
generation in the federal government of Somalia.

 To determine the effectiveness and efficiency of tax collection on revenue generation in the
federal government of Somalia.
 To assess the impact of tax control on revenue generation in the federal government of

9
Somalia.

1
  To examine the relationship between tax avoidance and tax evasion on revenue generation
in the federal government of Somalia.
1.5 Research questions

 What is the effectiveness and efficiency of tax collection on revenue generation in the
federal government of Somalia?
 What are the Factors that Influence the tax control on revenue generation in the federal
government of Somalia?
 What is the relationship between tax avoidance and tax evasion on revenue generation in
the federal government of Somalia?

1.6 Research hypothesis

H1: There is significant relationship between effectiveness and efficiency of tax collection and
Revenue generation.
H2: There is not significant relationship between tax avoidance and tax evasion and Revenue
generation.

1.7 SCOPE of the study

This study adopts Ability – To – Pay theory that was developed by Friedman, an American
Economist and statistician and Benefit Received theory that was also developed by two Swedish
Economists
- Johan Gustaf Knut Wicksell (1851 –1926) and Erik Lindahl (1891 –1960) to investigate the
relationship between Tax administration and Revenue generation in the federal government of
Somalia using cross sectional design through Questionnaire from September 2023 to July 2024.

1.8 SIGNIFICANCE of the study

This study has the ability to clarify a crucial component of Somalia’s revenue situation, its value is
immense. The study provides insights with broad implications by examining the impact of tax
administration on revenue generation. Policymakers can be better informed about the effectiveness
of current fiscal policies and administrative procedures by having a thorough understanding of the
complexities of tax collection techniques and their impact on revenue generation. Designing
focused interventions with the goals of improving total revenue collection, bolstering enforcement
mechanisms, and boosting tax compliance requires this knowledge. The government may lessen its
reliance on foreign help, more effectively allocate funds to important industries like healthcare and
education and promote economic growth by increasing income creation. In the end, this research
helps to promote financial sustainability, improve governance frameworks,
1
1.9 Operational definitions of the study

Tax administration is the framework upon which country’s tax system is based. It deals with the
powers and duties of relevant tax authorities as contained in the tax laws. Tax administration
involves the procedures, principles and strategies adopted by any government in order to achieve
effective tax planning, compulsory levying of tax, easy collection and proper accounting and
utilization of the revenue collected (Ogbonna & Appah, January 2016). Tax administration involves
a number of functions namely: planning, taxpayer’s identification, staff training, auditing,
inspection, enforcement investigation and accountability.
Tax collection refers to all the types of tax payments that country’s taxpayers make to support their
government’s operation on a daily basis without expectation of benefit return.

Tax control is defined as the orderly management of tax matters that require a tax control framework based
on tax strategy, tax principles, and values, and a code of tax best practices.
Tax avoidance is an act to minimize tax liability through legal methods. In other words, it is the
legal usage of the tax law to reduce the tam amount by means that are within the law. Tax
avoidance is not advisable as it could be used for person’s advantage to reduce the amount of tax
payable.
Tax evasion is an illegal activity in which a person or entity deliberately avoids paying a true tax
liability. Those caught evading taxes are generally subject to criminal charges and substantial
penalties. This involves dishonest tax reporting, such as declaring less income, profits, or gains than
the amounts earned, or overstating deductions. Tax evasion is a crime in almost all countries and
subjects the guilty party to fines, imprisonment, or both.
Revenue generation is a major function of any government that desires growth and improvement
on the well-being of its citizens. It refers to the totality of activities undertaken to increase the
revenue of a particular system, be it business or government.
The revenues generated by the government and its federating units are utilized in meeting the
infrastructural and developmental needs. Government revenues are typically from taxes, fees, rents,
loans, dues, rates as well as statutory allocations from government which increases the net worth of
government units. The essence of generating revenues at the local government is to gather enough
resources to attend to the basic amenities that improve the lives of the rural people (Goodness N.
Onwuegbuna, January 2024). In other words, revenue generation is a primary objective of a modern
tax system that generates revenues to help the government to finance ever-increasing public sector
expenditure.

1
 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.0 INTRODUCTION
This chapter shows concepts and definitions of tax Administration, Effectiveness and efficiency of
tax collection, Tax control, Tax avoidance and tax Evasion, Models of Tax administration,
Concepts and definitions of Revenue generation, failure of tax enforcement and administration , and
Conceptual framework.
2.1 CONCEPTS AND DEFINITIONS OF TAX ADMINISTRATION
Appah (2011) described the tax as a compulsory contribution imposed by the government on
citizens by the legislative provision and paid by them through agents to defray the cost of
administration. This implies that taxes are backed up by laws enacted by the government about to
each of the various taxes respectively. Tax revenue all over the world plays a major role in the
development of an economy through the financing of government expenditure. According to
Ariwodola (2001), a tax is a compulsory levy imposed by the government through its agents on its
subjects or his property to achieve some goals. These goals are usually centered on economic
growth and development. From the foregoing, it can be deduced that for a levy to qualify as a tax, it
must be compulsory and its burden must be imposed by a government on either its subjects or their
properties or both, and the aim must tailor towards economic development. Taxation on the other
hand is a system of imposing a compulsory levy on all income, goods, services, and properties of an
individual, partnership, trustees, executorships, and companies by the government (Samuel &
Simon, 2011).
In simple parlance, a tax administration is the whole organizational setup for the management of the
tax system.
The tax administrative set-up is a department of government and course works under regulations
prescribed by tax legislation. According to Afuberoh and Okoye (2014), tax administration is the
process of assessing and collecting taxes from taxable individuals and companies by authorities in such a
way that the correct amount is collected efficiently and effectively with minimum tax avoidance or tax
evasion. This is to say, it involves all the principles and strategies adopted by any government to plan,
impose, collect, account, control, and co-ordinate personnel charged with the responsibility of taxation. It
also includes the effective use of tax revenue for the efficient provision of necessary social amenities and
other facilities for the taxpayers (Aderemi Olalere Adebayo, July,2022).

Tax administration in Osun state is similar to what operates in order parts of the country. The tax
administration problems encountered in Osun State are also evident in other states of the federation.

1
The incessant review of revenue capacity of all revenue units is a major challenge that has impacted
negatively on efficient collection of tax (Enahoro & Jayeola, 2012).
Naiyeju (2005) cited Lanem, Jocelyn and Yua (2020) pointed out that most of the tax authorities in
Lagos state local government lack the desired institutional capacity to administer the tax system
effectively; this is also applicable to Osun state. In addition to this, Osunwole et. al., (2019)
Adedoyin and Adekanmi (2016) believed that other problems of tax administration centre on
inadequate personnel in terms of quantity and quality. Olajide (2015), opines that tax collectors in
the state and local government are mostly non-accountants who do not understand tax practice. So
also, is the challenge of corruption on the part of the tax practitioners? There is a high tendency for
them to exonerate eligible payers from paying tax by collecting bribes from them. While in practice,
some practitioners do not remit what they have collected as tax to the account of the state. The
problem of over-reliance on direct allocation, borrowing, and grant sover the years by governments
has made the state lose its sense of reasoning in exploring other sources of revenue generation.
The Ayoola Commission also provided sufficient evidence to show that tax clerks live above their
incomes and their ostensible are unrelated to their salaries and status (Aderemi Olalere Adebayo,
July,2022).

2.1.1 Effectiveness and efficiency of tax collection

The Government’s ability to collect taxes is critical to fiscal viability in the medium-term. However, due
to unstable political and security situation, the Government has focused on the implementation of easy
to adopt measures to efficiently and effectively raise tax revenues without developing a robust revenue
mobilization strategy that would incorporate strong transparency and accountability. Somali tax system
is heavily dependent on custom duties, i.e seaports and airports. Almost over 80% of the total
government revenue consists of taxes on imports (MoF,2017). The efficiency of the tax collection
process plays a pivotal role in maximizing revenue generation. Streamlining collection methods
reduces administrative costs and enhances revenue collection effectiveness (Emmanuel, 2018).
In contrast, direct taxes on income including income from public enter-prises, account for less than 3%
of the total revenue for Puntland and Somaliland, while for the TFG is even less as there are no
permanent staff working for the government. This imbalance is inevitable in light of the limited
domestic resource base; it is also the result of structural and administrative deficiencies of the tax
system. Somalia had very low domestic revenue mobilization, even before the civil war, the
deterioration of domestic revenue began in the 1980s. In the first half of that decade, the tax to GDP
ratio was about 10 percent; it declined to 5–6 percent, one of the lowest rates in the world, in the second
half’s domestic revenue shrunk—mainly because of growing non-compliance by taxpayers—the
government became increasingly dependent on external support, which was often motivated by Cold
War geopolitical considerations (Mohamed A. Abdinur, Janauary 2021).
1
External flows into Somalia undermined revenue collection by crowding out domestic fiscal capacities,
(MOF, 2017). According to Naiyeju (1999) the tax administration involves three elements.
The taxpayers, the tax authority and tax law. The tax prescribes the right and obligations of the
taxpayer as well as the limits of the tax authority Tax Administration may be referred to as dealing
with taxpayers in order to collect tax and sanctioning noncompliance (Baingana, 2011).
Modern Tax Administrations seek to optimize tax collections while minimizing administration costs
and taxpayer compliance costs. Unlike the costs incurred by taxpayers, administration costs are also
incurred and financed from tax revenue; they are socially most costly. Thus, the Tax
Administrations was having a sense of how their costs are, comparing to the tax revenue raise
(Keen, et al., 2015) (Mohamed A. Abdinur, Janauary 2021).
In the context of reporting requirements and accountability, performance measurement plays a key
role. Performance measurement is a management technique which applies indicators to measure the
achievement of targets. It involves mechanisms to monitor the organizational targets and achieved
results, and the effectivity and efficiency of organizational processes. The results of performance
measurement are, however, only meaningful if the applied indicators provide valid, comparable and
time-related information. Tax authorities use a wide range of different performance indicators.
Compliance indicators measure the extent to which taxpayers meet their obligations, while cost
indicators cover operational efficiency and productivity (Gribnau, Janaury 2018).
An adequately functioning performance measurement system increases transparency in tax
administration and contributes to accountability. It is therefore also the role of the auditor general
to assess whether the performance indicators are adequate and whether the measurement systems
are credible. At the same time, the auditor general may also play a role in improving the tax
authority’s performance management system by identifying suitable indicators and promoting good
practices of performance measurement. Nevertheless, the results of performance measurement will
only have practical implications if there are consequences in the evaluation cycles for over- and
underperformance, and for the allocation of resources.
Another important area of ‘checks and balances’ are the rules on tax procedures. The procedural
rules govern the relationship between tax authority and taxpayers, and determine the rights and
obligations of all parties involved in the assessment and collection of taxes. The rules on tax
procedures are usually codified in a tax procedure code (TPC) but may also be included in different
tax laws. A TPC usually describes the tax authority’s powers and the rights and obligations of
taxpayers according to the key functions of tax administration (esp. registration, filing and payment,
assessment and audits, dispute resolution, collection and enforcement). The national TPC’s differ in
scope and content, but

1
these typically provide for the right of the taxpayer to be informed, to be assisted and heard, to
appeal, to be treated equally, and to treat his case confidentially (Gribnau, Janaury 2018).
Nevertheless, the results of performance measurement will only have practical implications if there
are consequences in the evaluation cycles for over- and underperformance, and for the allocation of
resources. Another important area of ‘checks and balances’ are the rules on tax procedures. The
procedural rules govern the relationship between tax authority and taxpayers and determine the
rights and obligations of all parties involved in the assessment and collection of taxes. (Gribnau,
Janaury 2018).
TYPES OF TAX COLLECTION
Tax is a mandatory, non-repayable remittance made to the government for products and services
intermittently. It is normally paid by private businesses and consumers to the government
(Agunbiade & Idebi, 2020). The government is empowered to control, administer and make
provisions for law, rules, regulations and policies that will regulate and guide tax system so as to
ensure that all taxes are properly administered, and all revenue generated is reimbursed to the
government.
Macek (2014) opinionated that utilizing taxation as a fiscal policy tool to help attain revenue
generation. Taxes can be grouped into direct taxes and indirect taxes (Omodero, August, 2022).
Direct tax
This type of tax is charged exactly on an individual or an organization, and which the individual or
organization is required to pay by way of a notice known as an assessment notice. A taxpayer must
have been informed of such tax payments. They are taxes that are remitted directly to the
government by companies and individuals (Omodero et al., 2021). Types of taxes that fall under
direct tax include Petroleum Profit Tax, Withholding Tax, Capital Gains Tax, Company Income
Tax and Stamp Duties (Omodero, August, 2022).
Indirect tax
These are taxes whereby the tax burdens are not borne by the individuals or organisation imposed
upon but are transferred to other individuals who will then bear the tax burdens. They are charged
on goods and services where tax burden doesn’t fall on the initial buyer but on the final consumers
(Abomaye Nimenibo, 2017b; Omodero, 2021). Indirect taxes include Value Added Tax, Custom
and Excise Duties (Omodero, August, 2022).
2.1.2 Tax control
It is necessary to distinguish between the concepts of "tax control" and "tax administration". If tax
control is part of the tax mechanism, then tax administration is part of taxation management.
Therefore, tax administration is one of the functions of state tax management (i.e. taxation
management). The purpose of tax administration is to achieve the maximum possible effect for the

1
budget system from tax revenues at the lowest possible cost. The very concept of tax control
implies

1
- a set of measures carried out by tax and other authorized bodies aimed at identifying violations of
the current legislation on taxes and fees, as well as their prevention, ”says M.M.Shadurskaya,
E.A.Smorodina, T.V.Bakunova in his textbook on the essence and forms of tax control
(A.J.Musagaliev, February 2022). A tax control framework is based on the following key pillars
which are necessary for the efficient handling of tax matters: Principles, values, and tax policy.
Tax planning, guiding principles, code of ethics, and integrated business management. Tax control
is an important support tool in the system of ensuring the financial security of the state, in
particular, in the field of tax administration. Tax control is an integral element of country’s financial
management, which is constantly evolving, both organizationally and methodically, in responding
to challenges faced by the country (A.J.Musagaliev, February 2022).

Tax control is a complex and purposeful system of economic and legal actions of competent state
authorities, which is based on legislation in the field of taxation. The main direction of tax control is
the collection and analysis of information on the fulfillment of taxpayers' obligations to pay taxes. It
is also an important condition for the functioning of the tax system. The growth of the state's
financial needs requires the smooth functioning of the tax collection mechanism. In practice, the tax
authorities reveal the facts of late payment of taxes and other mandatory payments by taxpayers,
which is currently a problem for such parties to financial relations as the state and taxpayers. For
this reason, the problem of efficiency and improvement of control over the correctness, timeliness
and completeness of tax collection becomes acute (A.J.Musagaliev, February 2022).
The need for tax control is caused by such negative qualities of individuals and legal entities as
unconsciousness, improper temporary payment of taxes established by law and other mandatory
payments in full. Currently, one of the main tasks of the state bodies of the tax service is to monitor
compliance with tax legislation. Ensuring the efficiency of the work of the state bodies of the tax
service and improving tax control contribute to an increase in the receipts of tax and other
mandatory payments in full. The development and improvement of tax control is a very time-
consuming and lengthy process.
After all, full tax control over the correctness of calculation and timely transfer of tax and other
mandatory payments has not yet been implemented, and taxpayers' evasion from paying tax and
other mandatory payments has also not been disclosed (A.J.Musagaliev, February 2022).
2.1.3 Tax Avoidance
Tax avoidance arises in a situation where the taxpayer arranges his financial affairs in a way that
would make him pay the least possible amount of tax without infringing the legal rules. in short it is
a term used to denote those various devices which have been adopted with the aim of saving tax and
thus sheltering the taxpayer’s income from greater liability which would have been otherwise
incurred (Kiabel, 2001). Ani (1983) had described tax avoidance as follows: the taxpayers knowing
1
what the

1
law is decide not to be caught by it, arranges his business in such a manner as to escape tax liability
partially or entirely. It is a lawful trick or manipulation to evade the payment of tax. Thus, it is clear
that tax avoidance is legal or at least not illegal since one is mostly probably using the tax laws to
limit his tax liability under the same laws. Examples of tax avoidance include: Seeking professional
advice; reducing one’s income by submitting claims for expenses in earning the income: increasing
the number of one’s children (in Nigeria the maximum allowable is four) and taking additional life
assurance policies. Tax avoidance is thus considered to be a matter of being sensible. While the law
regards tax avoidance as a legitimate game tax evasion is seen as immoral and illegal. Tax evasion
is an outright, dishonest action whereby the taxpayer endeavours to reduce his tax liability through
the use of illegal means. According to Farayola (1987), tax evasion is the fraudulent, dishonest,
intentional distortion or concealment of facts and figures with the intention of avoiding the payment
of or reducing the amount of tax otherwise payable (Sunarto SUNARTO, February 03, 2021).
Since tax avoidance is the use of legal methods to minimize the amount of income tax payable by
an individual or business (Oktaviani et al., 2019; Richardson & Lanis, 2007). It is generally done by
claiming as many deductions and credits as allowed. It can also be achieved by prioritizing
investments that have tax advantages, such as buying municipal bonds (Salehi, Khazaei, & Tarighi,
2019). Besides, tax avoidance is manipulating the amount of tax payable or setting an event to
minimize taxes under taxation provisions (Dewi & Jati, 2014; Richardson & Lanis, 2007).
Tax avoidance is not prohibited according to tax regulations, even though it often receives
unfavorable attention because it is considered to have negative connotations or is considered less
nationalistic.
Tax avoidance by company management is done to minimize corporate tax obligations. Millions of
taxpayers use some form of tax avoidance, including taking out child tax credits, investing in
retirement accounts, or taking out mortgage tax deductions (Sunarto SUNARTO, February 03,
2021). TAX EVASION
Tax evasion is accomplished by deliberate act of omission or commission which in them constitutes
criminal acts under the tax laws. These acts of omission or commission might include: failure to pay
tax e.g. withholding tax; failure to submit returns; omission or misstatement of items from returns;
claiming relief (in Personal Income Tax), for example, of children that do not exist; understating
income; documenting fictitious transactions; overstating expenses; failure to answer queries
(Aguolu, 1999) (Onyeka Virginia Nnenna, 2016).
The tax evasion is through failure to render tax returns to the Relevant Tax Authority. A tax evader
may be charged to court for criminal offences with the consequent fines, penalties and at times
imprisonment being levied on him for evading tax (Faseun, 2001). And as observed by Sosanya

2
(1981): Tax evading has become the favourite crime of the Nigerian, so popular that it makes armed
robbery seem like minority interest. It has become so widespread that there now exist a cash
economy of vast proportions over which the taxman has no control and which is growing at several
times the rate of the national economy. No doubt, tax evasion and avoidance had robbed the
substantial government tax revenue.
According to the Stock Exchange, 85 percent of corporate tax revenue accrues from the companies
listed on the exchange compared to the many companies registered with the Corporate Affairs
Commission. This is a serious indictment of the administrative machinery and capacity of the tax
authorities (Onyeka Virginia Nnenna, 2016).
Tax evasion can be partial or total and its degree varies from company to company. There is partial
evasion when a company under declares its profits for tax purposes and total evasion of income tax
occurs when a company which is already qualified to pay tax refuses to get its name registered in
the tax roll. From the above mentioned, evasion of income tax is a serious problem in Nigeria, more
so as there is a big gap between actual and potential tax collections by the various levels of
government. The criminal act in Nigeria is perpetrated through these medium: total ignorance of the
law, lack of faith in the ability of the government to use the money well, high tax rate which makes
evasion more attractive and economical, absence of visible benefits accruing to the taxpayers,
outright unwillingness to contribute towards the development of the society, and the ridiculous low
penalties prescribed in the laws for late payment of tax (Ojo).
2.2 MODELS OF TAX ADMINISTRATION
Tax administration by the central government alone should be distinguished from a structure that
allows other levels of government full or partial control of collection. From a macroeconomic
perspective, centralized tax administration has clear advantages.
If the central government manages all tax administration, tax policies aimed at stabilization of the
economy have a higher probability of being implemented as intended. If other levels of government
are involved, control over the implementation of tax measures to promote stabilization can be
weakened.
However, the above argument applies mainly to a subset of taxes, such as the corporate and
personal income taxes, and the value-added tax (VAT). Some taxes, such as property taxation, are
amenable to local administration without loss of macroeconomic control.

There are four basic conceptual models for tax administration among different levels of government:
(1) central government tax administration only, with provision of revenue sharing and transfers; (2)
central government tax administration only, with assignment of different taxes to different levels of
government; (3) multilevel administration, with revenue sharing and transfers; and (4) each level of
government administering the taxes assigned to it. The first two options centralize tax
2
administration

2
by maintaining central government control over all tax offices, including tax offices at the regional
and local level. The third and fourth options permit tax collection by subnational governments.
Whether tax administration is centralized, allocated to one level other than the central level, or
spread over various levels of government is as likely to depend on political realities as on technical
considerations, but there are technical implications associated with different tax administration
structures. The purpose of this chapter is to analyze the advantages and disadvantages of centralized
versus subnational or mixed forms of tax administration. Examples of country experiences will be
drawn on where appropriate.

2.3 CONCEPTS, AND DEFINITIONS OF REVENUE GENERATION

Revenue generation involves the process of creating income or financial resources for an
organization, entity, or government through various means (Owenvbiugie & Owenvbiugie, 2020).
These encompass the sale of goods or services, investments, taxation, grants, or other sources of
income, etc. It constitutes a foundational element of financial management and the sustainability of
organizations and governments, as they heavily rely on revenue to cover expenses, invest in growth,
meet financial obligations, and ensure operational viability (Akinadewo et al., 2019). Effective
revenue generation holds paramount importance for the fiscal sustainability of organizations and
governments (Theobald, 2018). It serves as a means to secure adequate income for covering
operational expenses, facilitating future growth endeavors, and servicing debts. Furthermore,
revenue generation is integral to strategic planning, as it necessitates the forecasting and
management of income to attain predefined goals and objectives (Salawu, 2023).
Maximizing revenue generation frequently entails optimizing revenue collection processes,
enhancing sales and marketing strategies, and ensuring adherence to tax and financial regulations
(Umaru et al., 2019). Revenue generation, essentially, represents the process of procuring income or
funds from diverse sources to maintain and foster the operations and expansion of organizations,
entities, or governments. It constitutes a critical aspect of financial management and is
indispensable for achieving financial stability and fulfilling financial objectives (Aminu & Eluwa,
2023). In the realm of tax administration, revenue generation takes on a specific role. It pertains
specifically to the procedures involved in gathering taxes and obligatory payments from individuals,
businesses, and entities within a particular jurisdiction. This revenue is subsequently allocated to
finance governmental operations and public services. Tax authorities and agencies responsible for
enforcing tax laws are primarily concerned with this objective (Afuberoh & Okoye, 2014;
Akinadewo et al., 2023).
Tax authorities engage in the collection of various taxes, encompassing income tax, sales tax,
property tax, corporate tax, and other levies and duties as mandated by tax legislation. Central
2
to revenue

2
generation is the encouragement and assurance of taxpayer compliance with tax regulations (Abiola
& Asiweh). This involves promoting the timely and accurate submission of tax returns and the
payment of owed taxes. In instances of non-compliance, tax authorities may resort to various
enforcement mechanisms, such as audits, penalties, and legal actions against tax evaders and
individuals who fail to fulfill their tax obligations (Akinadewo et al., 2019).
The primary purpose of revenue generation is to provide the necessary financial resources to
support government activities, public services, and infrastructure development. Taxes are typically
the most substantial source of revenue for governments at various levels (local, regional, and
national). Effective tax administration is essential to ensure that tax revenues are collected
efficiently, accurately, and in a timely manner, contributing significantly to overall revenue
generation (Etale et al., 2021) (Israel S. Akinadewo, September 27 , 2023).
Tax policy decisions, such as setting tax rates and identifying taxable entities, directly influence
revenue generation. Governments strategically design tax policies to achieve specific revenue goals
while considering economic and social objectives. Efficient tax administration processes and
effective enforcement mechanisms are critical for maximizing revenue collection. Encouraging and
ensuring taxpayer compliance is essential for achieving revenue targets, and tax authorities play a
central role in these efforts (Emmanuel, 2018). Revenue generated through taxation is a key
component of government budgets. Accurate revenue forecasting and financial planning are reliant
on efficient tax administration and compliance to allocate funds for public expenditures
(Owenvbiugie & Ownvbiugie, 2020).
Tax administration is the operational aspect of managing tax collection and compliance, while
revenue generation encompasses the broader goal of securing funds for government operations and
public services. The effectiveness of tax administration directly impacts a government's ability to
meet its revenue generation targets, fulfill its financial obligations, and contribute to economic
development (Salawu, 2023). This also shows where the total tax collected by the State Internal
Revenue Service (SIRS) for Ekiti and Kano states, and the percentage contribution for 2015 to
2021. This indicates that the highest revenue generated by ESIRS is in year 2021 and the lowest
value was generated in 2016 while in the case of Kano state, 2018 was the year in which the State
inland revenue service had the highest value and the lowest value generated was in 2015 (Israel S.
Akinadewo, September 27 , 2023).

2
2.4 Failure in Tax Enforcement and Administration
Failures in tax law enforcement and administration are inter-related. Each of them originates from
the ineffectiveness and/or lack of transparency of government agencies responsible for the
management of each type of tax.
A failure in tax law enforcement arises whenever there is improper tax assessment. In theory, the
problem could result from over assessment or under assessment. The more common case in practice
is deliberate under assessment of tax triggered by fraudulent collaboration between tax enforcement
officer(s) and the taxpayer. It is fraudulent because the tax assessor is most often compromised to
“co-operate” with the tax payer to reduce tax liability. To improve tax enforcement, Nigerian tax
payers (both individual and corporate entities) are now compelled to produce three years` tax
clearance certificates to access various types of public services. The strategy has, to some extent,
improved tax collection, but has obviously not eliminated tax dodging because the range of services
covered by the “show your tax clearance certificate” requirement is limited.

Moreover, taxes extracted under such conditions of duress are notorious for under assessment.
Another aspect of failure in tax administration is delayed assessment and late collection of taxes.
Under the tax laws, the initiative to start the tax assessment and collection process rests with the
taxpayer who is expected to file the relevant tax returns within a stipulated period after the relevant
fiscal year. There is a high incidence of late filing of returns as well as falsification of accounting
information of such returns. For instance, many companies are known to prepare two sets of annual
accounts for each year, one for the company and the other for the tax assessment authority.
In each of such cases, the accounts for “tax purposes” clearly understate the tax assessable income.
Such malpractices are tax offences for which clearly detained penalties exist. Sec. 13(3) of the
Companies Income Tax (Amendment) Act. 2007 has specifically increased (by ten fold) the fine for
late filing of returns and by over five fold the penalty for falsified accounting information on tax
returns (Okafor, 2012 ).

2.5 Conceptual Framework

In accordance with the above-mentioned Ability – To - Pay theory developed by Milton Friedman
an American economist and statistician. An analytical framework has been developed containing
one independent variable that is tax administration and the only dependable variable which is
Revenue generation.

2
Table 2.6.1

Tax Administration (IV)

Tax collection

Tax Control Revenue Generation (DV)

Tax Avoidance and Tax Evasion

2.6 Summary

This chapter of literature review has in fact demonstrated the definitions and concepts pertaining to
tax administration and also deeply discussed the three categories of Tax collection, Tax control, and
Tax avoidance/evasion that were the measurements of tax administration. It also highlighted the
models of tax administration. Likewise, it has identified the definitions and concepts on Revenue
generation.
It also discussed about not only the tax revenue but also failure in tax revenue generation as well.
Failure in tax enforcement and administration and strategies for tax revenue generation were also
talked about at length in chapter two. This chapter paid clear picture of conceptual framework.
2.7 Conclusion
This chapter initiated by providing a brief discussion on key approaches and findings reported in
earlier related studies on tax administration and revenue generation. This study seeks to bridge the
gap. The studies done on tax administration will show that revenue generation can be influenced by
tax collection, tax control and tax audit and investigation. Therefore, the study of this research will
investigate the Impact of tax administration on revenue generation in Somalia.

2
 CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter laid emphasis on research methodology including research design such as explanatory
design, cross-sectional time horizon, research strategies (survey); likewise, research population
including sample size and sampling procedure, research instrument, reliability and validity, data
gathering procedure, data analysis, ethical consideration and limitation of the study will be
developed.
3.1 Research Design
This study focuses on relationship between the Tax administration and Revenue generation.
Therefore, the research adopts correlational research design to strengthen the studying a situation or
a problem in order to explain the relationships between the Tax administration and Revenue
generation in the federal government of Somalia. The study wills employ quantitative research
approach. The quantitative approach will use because it allow for collecting numeric data on
observable individual behavior of samples, then subjecting these data to statistical analysis (Amin,
2005).According to research strategies, survey research design specially questionnaires will be
adopted for the purpose of this study together with cross-sectional because the cross-sectional is
cost and time effective and also data will be gathered just once perhaps over a period of days, weeks
or months, in order to answer research questions (Sekarana, 2003).
3.2 Research Population
A study population can be defined as the entire collection of cases or units about which the
researchers wish to draw conclusions. The study will conduct at ministry of finance Mogadishu
The target population in this research includes selected administrative workers in public sector in
the two financial institutions of Somali federal government. The researchers will choose portion of
the civil servants of different categories, who are involved in Tax administration from the country’s
civil servants in general. The target population of this study is 80 employees from two vital
financial institutions in the federal government of Somalia.
3.2.1 Sample Size
A sample was part of the target population that was procedurally selected to present it. The sample
consisted of 72 participants selected from selected financial institutions in the federal government
of Somalia. These participants will be chosen according to the possibility of getting accurate
information. To determine the ideal sample size for a population, the study use Slovent formula
which is n= sample size, N= population size, (e)^2 = margin of error (100% - 95% = 5% ^2 which
means 0.0025). Slovent formula n= N/ (1+ N(e)^2. n= 80/ 1+ 80 (0.0025) = 72 participants.

2
 NO Category Target Population Sample Size
1 Customs taxation Authority 30 28
2 Inland taxation authority 50 44
Total 80 72
3.2.2 Sampling Procedure
Sampling is a process of selecting a number of individuals or objects from the population such that
the selected group contains elements representative of the characteristics found in the entire group
(Orodho and Kombo, 2002). The researcher used probability sampling techniques were every
member was given an equal chance of participating in the study.
Simple random sampling was used to get the specific members to be studied from the entire
population. Simple random sampling was used because it allocated equal chances for each
respondent during the selection process (Mugenda et al., 2007). The main stratum was the taxation
servants’ demographics of two financial institutions in the federal government of Somalia
(Saunders, 2000).
3.3 Research Instrument
The study employs questionnaire as the major tool for collecting data. The main purpose of the
questionnaire is to collect a lot of information in a short period because it is suitable if a population
is large and time is limited. This instrument has the advantage of having its external validity tested
and verified in many countries of the world (sounders, 2009). Questionnaire refers to a set of
questions designed to generate data necessary for accomplishing the objectives of the research
project (Sounders, 2009). Researchers select questionnaire as it has the following advantages: first.
It provides efficient way for collecting responses from a large sample. Second, it requires less skills
and sensitivity than semi-structures and in- depth interviews. Therefore, the structure of this
questionnaire is two parts. In the first part, there are five questions, and another part is composed of
twenty questions which makes twenty-five questions in total. The following likert scales such as
strongly disagree, disagree, Agree, and strongly agree will be used as a tool in the process of
questionnaire.
3.4 Reliability and Validity of the Instrument
Reliability is trustworthiness of a measuring the instrument; it is the degree to which the instrument
consistently measured whatever it was meant to have measured. The researchers conduct a pilot
study before the final collection of data. Data collection tools will be pilot tested to ascertain their
ability to solicit the relevant responses to support the instrument. The justification for establishing
the reliability of the instrument will be determined by the consistency, relevancy and clarity of the
instruments. The reliability test will become

2
Validity refers to the extent to which research instrument measure what they will be intended to
measure, and reliability refers to the extent to which data collection method accurately measured
what

3
it is intended to measure or to the extent to which research findings are about what they are claimed
to be about (Oso&onen, 2008). This study is based on questionnaire which will be used by a lot of
other researchers on tax administration and revenue generation.
3.5 Data Gathering Procedure
Permission to conduct the research will be obtained from relevant authorities, the respondents are
requested to answer completely and when finished the questionnaire respondents make sure that all
questions got answered. The research will be presented when the questionnaires are filled out to
clarify any doubts and ensure confidentiality.
3.6 Data Analysis
In most types of research studies, the process of data analysis involved the following three steps: (1)
preparing the data for analysis, (2) analysing the data, and (3) interpreting the data. The research
data will be analysed with the usage of Statistical Package for Social Scientist (SPSS). After that,
the analysed data will be interpreted into a meaningful and systematic manner.
In this study, the researchers use descriptive technique as data analysis. In the questionnaire, each
selects one to four likert scale tool for where, 1=Strongly disagree, 2= Disagree; 3= Agree, 4=
Strongly agree.
Table 2: 3.2: THE INTERPRETATIONS OF THE MEAN VALUES

Mean Range Respondents Mode Interpretation

3.26 up to 4.00 Strongly Agree Very good
2.51 up to 3.25 Agree Good
1.76 up to 2.50 Disagree Poor
1.00 up to 1.75 Strongly disagree Very poor

3.7 Ethical Considerations

To ensure the confidentiality of the information provided by the respondents, this study will only be
used for an academic purpose, the report of the respondents and sample of the two financial
institutions will be coded instead of naming and during the data collection the research asks for
permission through a written request to the concerned officials who includes in the study.
Acknowledgement will be made to everyone participated in this study and the authors quoted
through their citations and referencing.

3
3.8 Limitations of the study
First the limitation of this study will be a language barrier to the respondents as well as a limited
expense to use facilities. Second, we believe that an important subject like the impact of tax
administration on revenue generation is rarely studied to some extent and could have involved in
more financial government institutions and participants in order to get a better generalization of the
study. Third, the measurement of the construct can be more rigorous with the infusion of pre-
existing scale items. Nevertheless, as an explanatory study with a specific focus on how tax
administrators from the two financial government institutions by representing other remaining
financial institutions perform their assigned duties to generate a lot of revenues to allow the federal
government od Somalia to meet its finance needs to provide much needed services in the country.

3
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