Factors Influencing Tax Compliance In Tanzania: A Case Of Tax Payers In Dodoma Municipality

ABSTRACT

The payment of tax by citizens and other members of community are termed as the main source of generating revenue for financing government expenditure. This study addressed three main objectives; the tax compliance level in Tanzania, the effect of perceived usefulness of tax design on tax compliance and factors that influencing usability of tax system. Data for the study was obtained by using structured questionnaire from 94 respondents in Dodoma, Tanzania. Descriptive survey research design was used to collect data through questionnaire and interview. The results show that, tax compliance level is generally affected by high tax rates, because of many forms of taxes. Compliance cost, nature of tax and enforcement of tax are generally affected by the moderate extent that are highly associated to compliance level. The tax design is highly useful due to the knowledge among tax payers on the relevant tax system. The tax compliance is generally affected by the amount tax payers required to pay. The extent to which compliance cost influences tax compliance among tax payers, there are existence of different forms of taxes, the different forms of tax could be a reasons for tax evasion in Tanzania. Income tax which is charged for business and employment, VAT is charged in purchase, stump duty tax is charged in stamp, business tax is charged in business and license and municipalities charged and license. Tax administration is basically the major obstacle to allow voluntary compliance. The study recommended that, government has to reduce tax levels and forms of tax for voluntary compliance.