ASSESSING THE IMPACT OF THE E-TAX SYSTEMS ON SMALL AND MEDIUM TAXPAYERS’ TAX COMPLIANCE IN DEVELOPING COUNTRIES. A CASE STUDY IN RWANDA

Abstract

There is underutilization of electronic tax filing systems in tax agencies despite the presence of electronic tax administration systems. Basically the general objective of this study was to assess the impact of e-tax systems to the tax compliance for Small and Medium Taxpayers in Rwanda. The study employed a descriptive analytical design that combines qualitative and quantitative methods. The study population consisted of SMT reports from both Kigali and upcountry location/business location/tax centers in Rwanda which totaling to 231,088 taxpayers. Census approach was employed by the study. The study only used secondary data from the RRA database. Analysis of data was done through SPSS Version 20 and Excel. The study concluded that electronic filing system actually influences tax compliance. The study revealed that holding electronic tax filing and Electronic Tax payment at zero constant, tax compliance would stand at .469. A unit increase in Electronic tax filing would result in an increase in tax compliance among small and medium taxpayer within Rwanda by a factor of .512 and similarly a unit increase in Electronic Tax payment would result in an increase in tax compliance by a factor of .099. Electronic tax filing system offers an option to the clients to file taxes like VAT, PAYE, income taxes electronically on RRAs website without having to visit a RRA premise especially if there is tax education, compliance aspect is guaranteed. The system managed to raise tax collection drastically in 2012 and 2013 by 48.1% and 42.9% respectively though still they were unable to meet the target. The study recommended that the government should improve the infrastructure that supports internet coverage across the country for electronic filing to be a success. It is Government that should ensure Internet connectivity for all