Tax Administration and Compliance of Small and Medium Enterprises in Uganda: A Case of Small and Medium Enterprises in Lira City
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Date
2023-09-25
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Uganda Christian University
Abstract
ABSTRACT
The challenge of development in Uganda is lack of financial support to enhance economic growth. The need for local revenue generation poses a big challenge as many people/ organizations tend to dodge payment of taxes. The purpose of this study was to evaluate the role of tax administration on tax compliance by SMEs in Lira city. The objectives of this study are (1) To analyze the effects of tax rates on the compliance of SMEs in Lira City, (2) To examine how tax knowledge influences tax compliance of SMEs in Lira City, (3) To explore the extent to which fines and penalties affect tax compliance among SMEs in Lira City.
The study was conducted using a triangulation of designs which included; a case study research design and an explanatory research design. A sample of 194 SMEs was used in this study selected purposively and simple randomly. Data was collected from the field coded and analyzed through descriptive statistics with the help of SPSS. Literatures both primary and secondary sources concerning the problem under investigation were got. Both questionnaire and an interview guide were employed to collect data from the respondents that composed of SMEs administrators, accountants, field workers, CEOs, owners and officials from URA who were conveniently selected to provide in-depth information about the problem under investigation.
The study findings revealed a significant effect of tax Knowledge on tax compliance among SMEs in Lira City (β=.819; p<.05). The regression results also revealed a significant effect of fines and penalties on tax compliance among SMEs in Lira City (β=.094; p<.05). The research findings also confirm an insignificant effect of tax rate on tax compliance in SMEs in Lira City (β=.204; p>.05). The study therefore concludes that tax knowledge and tax fines and penalties are very important variables for the success of tax compliance among SMEs in Lira City. The study therefore recommends that it is important that the rates be fair and affordable to the tax payers. The study also recommends that tax knowledge be enhanced by embracing government support in-terms of tax trainings.
Description
Masters dissertation.