The Effects of Tax Compliance On Small and Medium Enterprises a Case Study of Hoima Minicipality's Industrial Area

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TABLE OF CONTENT

DECLARATION ............................................................................................................................ ii

DEDICATION ............................................................................................................................... iii

APPROVAL. .................................................................................................................................. iv

ACKNOWLEDGEMENT .............................................................................................................. v

TABLE OF CONTENT ................................................................................................................. vi

LIST OF TABLES .......................................................................................................................... x

LIST OF FIGURES ........................................................................................................................ xi

ABBREVIATIONS AND ACRONYMS ..................................................................................... xii

ABSTRACT ................................................................................................................................. xiii

CHAPTER ONE ............................................................................................................................ 1

INTRODUCTION ......................................................................................................................... I

1.0 Introduction ............................................................................................................................... 1

Ll Back ground to the study ........................................................................................................... 1

1.1.1 Historical perspective ............................................................................................................. I

1.1.2 Theoretical Perspective .......................................................................................................... 4

1.1.3 Conceptual Perspective .......................................................................................................... 5

1.1.4 Contextual Perspective ........................................................................................................... 6

1.2 Statement of the Problem .......................................................................................................... 6

1.3 Purpose of the study ........................................................................................ _ ..................... 7

1.4 Objectives of the Study ............................................................................................................. 7

1.5 Research Questions ................................................................................................................... 7

1.6 Scope of the study ..................................................................................................................... 8

1.6.1 Content scope ......................................................................................................................... 8

1.6.2 Geographical scope ................................................................................................................ 8

1.6.3 Time scope ............................................................................................................................. 8

1.7 Significance of the study ......................................................................................................... 8

1.8 Limitations of the study ............................................................................................................ 8

1.9 Conceptual Frame work .......................................................................................................... 10

vi

CHAPTETR TWO ...................................................................................................................... 11

LITERATUREREVIEW ........................................................................................................... 11

2.0 Introduction ............................................................................................................................. 11

2.1 Definition of Tax Compliance ................................................................................................ 11

2.1.1 Small a.'1d Medium Enterprises ............................................................................................ 12

2.2 Theoretical Framework ........................................................................................................... 15

2.2.1 The Tax Morale Theory ....................................................................................................... 15

2.3 Tax Rate and tax compliance among SMEs ........................................................................... 16

2.4 Tax Information available and compliance among SMEs ...................................................... 17

2.5 Taxpayer's Attitude and Tax compliance -····-··············-··-···-······················-····················18

2.6 Summary of literature review .................................................................................................. 20

CHAPTER THREE .................................................................................................................... 21

RESEARCH METHODOLOGY .............................................................................................. 21

3.0 Introduction ............................................................................................................................. 21

3.1 Research design ....................................................................................................................... 21

3.2 Target population .................................................................................................................... 21

3.3 Sample size ....................................................................... - ..................... - ... - ..................... 22

3.4 Sa.'11pling technique ................................................................................................................. 22

3.5 Data Source ............................................................................................................................. 22

3.6 Data Collection Instruments .................................................................................................... 23

3.6.1 Interviews: ............................................................................................................................ 23

3.6.2 Questionnaires ...................................................................................................................... 23

3.6.3 Observation .......................................................................................................................... 23

3.7 Data processing and analysis .................................................................................................. 23

3.8 Validity of Research Instruments ............................................................................................ 23

3.9 Measurement of Variables ...................................................................................................... 24

3.10 Reliability of research Instruments ....................................................................................... 24

3 .1.1 Ethical Considerations ......................................................................................................... 2 4

vii

CHAPTER FOUR ....................................................................................................................... 25

DATA ANALYSIS, PRESENTATION AND INTERPRETATION ...................................... 25

4.0 Introduction ............................................................................................................................. 25

4.1 Response Rate ......................................................................................................................... 25

4.2 Demographic infonnation ....................................................................................................... 27

4.2.1 Age ofBusiness ...........•.•......•.•..........................•..........................• - .................................... 27

4.2.2 Type of business activity ...................................................................................................... 28

4.2.3 Monthly turnover ................................................................................................................. 29

4.2.4 Personal Identification Number ........................................................................................... 29

4.3 Tax rates .................................................................................................................................. 30

4.3.1 SMEs Perception of Ugandan tax rates ................................................................................ 30

4.32 SMEs Perception of the different types of taxes .................................................................. 31

43.3 Tax amount payable as a factor influencing SMEs tax compliance ..................... ·-···-······ 31

4.4 A vai!ability of Tax Infonnation .............................................................................................. 32

4.4.1 Ready availability of Information ........................•......................•........•............................... 32

4.4.2 How tax information affects SMEs tax compliance ............................................................ 32

4.4.3 Correct calculation of taxes based on available information ............................................... 33

4.5 SMEs attitude about tax .......................................................................................................... 34

4.5.1 Access to public utilities and services .................................................................................. 34

4.52 Value the company places on payment of taxes .................................................................. 35

4.5.3 Respondents view on the value other SMEs places on payment of taxes ............................ 35

4.5.4 Improving Ugandan tax system ........................................................................................... 36

4.5 Summary ................................................................................................................................. 3 7

CHAPTER FIVE ......................................................................................................................... 38

SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ........ 38

5. 0 Introduction ............................................................................................................................. 3 8

5.1 Summary of findings ............................................................................................................... 38

5.1.1 Taxrates ............................................................................................................................... 38

5.12 Availability of tax infonnation .................................................................... ·-··-··············· 3 8

5.1.3 Taxpayers Attitude towards tax ........................................................................................... 39

ABSTRACT Tax is an important stream of revenue for govemment' s development projects and therefore all efforts must be made by governments to ensure that it is accurately and efficiently collected so as to facilitate the government's operations. In an effort to maximize collection of revenue and efficiency in tax administration, key changes to tax policy evolving around ensuring equity, further widening the tax base, promoting increased investment and in so doing, reducing the tax compliance burden, have in the recent past been made by the Ugandan government. This study sought to identify the effects of tax compliance on SME's operating within Hoima's Industrial Area. The researcher will outline a detailed literature review and identified the variables for this research to be tax rate, availability of tax information, tax compliance cost ar1d attitude of SME's. The research will use a descriptive survey. Given the large population of registered taxpayers in Hoima, a sample size of 44 respondents was picked as representative, to be the focus of this study. To ensure that various diverse categories of taxpayers and business entities were to be included in the survey, stratified sampling technique will be adopted. Data will be collected using self-administered questionnaires and an interview guide. The collected data will be consequently analyzed using Statistical Package for Social Scientist software and the fmdings of the research presented using tables.

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APA

Frontiers, E. & SYLIVIA, A (2022). The Effects of Tax Compliance On Small and Medium Enterprises a Case Study of Hoima Minicipality's Industrial Area. Afribary. Retrieved from https://afribary.com/works/the-effects-of-tax-compliance-on-small-and-medium-enterprises-a-case-study-of-hoima-minicipality-s-industrial-area

MLA 8th

Frontiers, Edu, and AGANYIRA SYLIVIA "The Effects of Tax Compliance On Small and Medium Enterprises a Case Study of Hoima Minicipality's Industrial Area" Afribary. Afribary, 17 Aug. 2022, https://afribary.com/works/the-effects-of-tax-compliance-on-small-and-medium-enterprises-a-case-study-of-hoima-minicipality-s-industrial-area. Accessed 28 Sep. 2022.

MLA7

Frontiers, Edu, and AGANYIRA SYLIVIA . "The Effects of Tax Compliance On Small and Medium Enterprises a Case Study of Hoima Minicipality's Industrial Area". Afribary, Afribary, 17 Aug. 2022. Web. 28 Sep. 2022. < https://afribary.com/works/the-effects-of-tax-compliance-on-small-and-medium-enterprises-a-case-study-of-hoima-minicipality-s-industrial-area >.

Chicago

Frontiers, Edu and SYLIVIA, AGANYIRA . "The Effects of Tax Compliance On Small and Medium Enterprises a Case Study of Hoima Minicipality's Industrial Area" Afribary (2022). Accessed September 28, 2022. https://afribary.com/works/the-effects-of-tax-compliance-on-small-and-medium-enterprises-a-case-study-of-hoima-minicipality-s-industrial-area