Tax administration and taxpayers’ perceived fairness as determinants of VAT compliance
Mugisa, Amumpaire Audrey
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This research was induced by the increased fluctuations in the levels of VAT revenues collected in the different financial years as indicated by the Uganda National budgets, and other research studies. Specifically, a continued short fall in the amounts of VAT revenues collected compared to the expected/budgeted revenues has been reported amidst complaints that the administration system in place was not meeting the taxpayers’ expectations. This research examines the effect of tax administration and taxpayers’ perceived fairness on VAT compliance levels. A cross sectional and descriptive survey design was adopted using a representative sample of 124 out of population of 180 drawn using Krejcie & Morgan (1970) method of sample selection. Self-administered questionnaires were used to collect data. The usable instruments collected represented 83% response rate which was considered. Chi-square, correlation and regression tools were used in the analysis of the data. The findings indicate that a well structured administrative system; improved taxpayer services, and punishing non compliant taxpayers significantly correlate with VAT compliance, where as auditing does not significantly correlate VAT compliance. Further, taxpayers’ perceived fairness in terms of providing public goods using VAT collections significantly correlate with VAT compliance, where as tax rate equity does not correlate to VAT compliance. Therefore, management and staff of URA should pay attention to ensuring that an appropriate administration system is in place and taxpayers should be made aware of the benefits derived from complying with the VAT law.