Causes of Low Presumptive Tax Compliance in Uganda A Case Study of Nakawa Division

ABSTRACT
On its inception and adoption, thereafter, presumptive tax became controversial and very difficult tax head to administer and collect. Government through the Uganda Revenue Authority has taken steps to sensitize the taxpayers about the implications, benefits verses costs and why it decided to introduce this tax head. Contemporarily it is evident that presumptive tax maintained a very low growth rate pf presumptive tax compliance against the expectation of the Uganda Revenue Authority forecast and targets. Consequently a survey research was done on purposively selected categories of presumptive taxpayers and randomly selected from the Nakawa suburbs to establish causes of low voluntary compliance and identify the most prudent combination of strategy approaches that would help to reverse the trend. Observation and questionnaire methods of data collection were consequently used on the samples of 50 traders within Nakawa area. The data gathered was analyzed, tabulated and the key findings listed. The findings on the study indicated that the taxpayers’ knowledge had a negative with voluntary compliance implying that the higher the number of people who lacked tax knowledge the lower the rate of voluntary compliance. The findings on the relationship between the tax rates applicable and voluntary compliance was negative implying that the higher the tax rates applicable the lower the rate of voluntary compliance. The study discovered that compliance costs were not significant at 5% level. Indicating that compliance costs were not considered a major player in voluntary compliance since compliance costs. The recommendations focused mainly on the way of improving the tax payers knowledge of taxation on presumptive tax.