Tax compliance in a developing country Understanding taxpayers’ compliance decision by their perceptions
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Date
2017
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Economic Studies
Abstract
The purpose of this paper is to establish the relationship between perceived grounds for tax noncompliance
or compliance behaviors and perceived tax compliance factors.
Design/methodology/approach – The study employed a correlational and cross-sectional survey design
seeking to understand tax compliance by taxpayers’ perceptions in Uganda. Data from 205 respondents to the
questionnaire were analyzed using Statistical Package for Social Scientists and structural equation modeling
with analysis of moment structures.
Findings – Governmental effectiveness, transparent tax system (TTS) and voice and accountability (VA) are
perceived grounds for tax compliance or non-tax compliance and, as indicators of tax administration
significantly influence variances in tax compliance. Tax compliance in Uganda is indicated by perceived worth
and distribution of public expenditure (WDPE), level of taxation, inequalities in the tax system and tax evasion.
Research limitations/implications – No distinction is made between actual and potential taxpayers. Still,
the results can contribute to our understanding of tax compliance puzzle from the behavioral angle. Factors
such as perceived WDPE indicate a taxpayer’s compliance decision and factors such as governmental
effectiveness explain that decision. Additional government policy requirements beyond greater enforcement
actions by the tax authorities should be cultivated.
Originality/value – Results contribute to extending the basic tax effort model by establishing the extent to
which VA, TTS and governmental effectiveness (GEF) matter in a developing country context. The study
presents tax compliance as a taxpayer’s decision that is informed by perceptions and shows that factors
increasing the taxpayers’ perceptions about VA and GEF relate to the importance that their perceptions have
in their tax compliance decisions.
Description
Keywords
Effectiveness, Voice, Developing country, Tax compliance, Tax administration
Citation
Nkundabanyanga, SK, Mvura, P., Nyamuyonjo, D., Opiso, J., & Nakabuye, Z. (2017). Tax compliance in a developing country: Understanding taxpayers' compliance decision by their perceptions. Journal of Economic Studies. DOI 10.1108/JES-03-2016-0061