Tax compliance in an EFD-enabled environment: Evidence from a developing economy

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The focus of this study was to assess the contribution of Electronic Fiscal Devices (EFDs) to ensuring tax compliance among small business owners in the Arusha Region in Tanzania. The study was motivated by the fact that the government of Tanzania has invested effort and funds to ensure that revenue adequately supports development projects. Regardless of effort, there is continued reliance on external sources of funds to support development projects. This poses a question on how the introduction of EFDs would increase tax compliance and eventually impact the government income for development projects. The main objective of the study was to determine whether the rate of using EFDs, the level of transparency, fairness in tax procedures, and the perceived audit effectiveness affect the level of tax compliance. Data was analyzed using descriptive procedures, One Way ANOVA, Chi-Square, and ordinal regression. Findings of the study are as follows: First, fairness in tax procedures, the perceived level of transparency and the rate of EFD use had no impact on the level of tax compliance; second, business and EFD use experience, audit effectiveness, and the use of EFDs in tax audits have impacted tax compliance. The study recommends other government departments to consider adopting relevant technology in operational areas where transparency, fairness and compliance are required. The inclusion of other sectors not currently captured by EFD use will be a step in the right direction.

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    • Figure 1. The perceived level of tax compliance
    • Table 1. Multicollinearity coefficients of equation 1
    • Table 2. Demographic variables and tax compliance – ANOVA extracts
    • Table 3. Business experience and tax compliance-descriptive extracts
    • Table 4. Demographic variables and level of compliance – ordinal regression extracts
    • Table 5. Tax compliance and other variables – ANOVA extracts
    • Table 6. Ordinal regression results between different variables and tax compliance
    • Table 7. EFD use experience and tax compliance – descriptive information extracts
    • Table 8. Audit effectiveness and tax compliance – one-way ANOVA mean extracts
    • Table 9. Ordinal regression between different variables and tax compliance
    • Table 10. EFD use in audit and tax compliance mean extracts
    • Table 11. Ordinal regression analysis between different variables and the level of tax compliance
    • Table 12. Fairness and tax compliance – mean extracts
    • Table 13. Transparency and tax compliance mean extracts
    • Conceptualization
      Agnes Elson Malima, Surendran Pillay, Adefemi A. Obalade
    • Data curation
      Agnes Elson Malima, Surendran Pillay
    • Formal Analysis
      Agnes Elson Malima, Surendran Pillay
    • Investigation
      Agnes Elson Malima, Surendran Pillay
    • Methodology
      Agnes Elson Malima, Surendran Pillay, Adefemi A. Obalade
    • Project administration
      Agnes Elson Malima, Surendran Pillay, Adefemi A. Obalade
    • Resources
      Agnes Elson Malima, Surendran Pillay
    • Software
      Agnes Elson Malima, Surendran Pillay
    • Supervision
      Agnes Elson Malima, Adefemi A. Obalade
    • Validation
      Agnes Elson Malima, Surendran Pillay, Adefemi A. Obalade
    • Writing – original draft
      Agnes Elson Malima, Surendran Pillay, Adefemi A. Obalade
    • Funding acquisition
      Surendran Pillay
    • Writing – review & editing
      Adefemi A. Obalade