Factors Influencing Taxpayers’ Voluntary Compliance In Tanzania: A Case Of Dodoma Region

ABSTRACT

This study examined the factors influencing taxpayers’ voluntary compliance in Dodoma Region. The specific objectives of this were to find out the effect of cost on taxpayers ‘voluntary tax compliance, to determine the effect of the tax rate on taxpayers’ voluntary compliance, to find out the influence of the electronic tax administration system on taxpayers’ voluntary compliance, to determine the extent to which tax system promotes taxpayers’ voluntary compliance and to find out the relationship between tax transparency and taxpayers’ voluntary compliance. To attain these objectives, qualitative and quantitative research approaches were used. Cross-sectional survey research design technique of data collection method was used. Both primary data and secondary data in the form of interviews, document reviews and survey wereused. Questionnaires were used as a tool for collecting data, systematic and unsystematic random sampling, as well as purposive sampling, were used. This study drew a sample size of 99 small and medium taxpayers from a population of 12,670 small and medium taxpayers who are registered in the Dodoma Region(TRA, 2020). The results showed that when the taxpayers’ compliance cost is very high and causes a decreaseintaxpayers’ voluntary compliance. The high tax rate on the other handcausesa low level of taxpayer’s voluntary compliance. Taxpayers’ do not believe in tax administration systems leading toa low level of tax compliance. Other result indicated that improper electronic tax administration systems causea low level of taxpayers’ voluntary compliance.Finally, the finding shows that the level of tax transparency between taxpayers and tax officers is very low. This study recommended that the TRA should reduce the costs associating taxpayers’ voluntary compliance as much as possible by simplifying the procedures of paying taxes, theestimation of tax base should be reset in the tax rate, the TRA should ensure that the tax system is fair and simple to use by formulating the good tax policies. TRAshould reduce the costs of buying EFDs Machine, maintenances and repairing the EFDs machine and finally the level of tax transparency should be improved in both taxpayers and tax officers.