research methodology
CHAPTER FOUR
ANALYSIS, PRESENTATION AND INTERPRETATION OF RESULTS
The chapter presents the analysis and interpretation of the study findings arising from the raw data collected from the field using questionnaires and interview guide. The following sections in this chapter therefore concentrate on the findings of this study on the Uganda’s tax administration system and tax compliance among SMEs, a case study of Lira municipality. The first section presents the response rate followed by background information about the respondents and results from the analysis of data gathered during the study and its interpretation in context of the research objectives.
The researcher expected to collect data from a total of 176 respondents. A total of 173 respondents were realized constituting of 98.3% as illustrated in table 4.2.1 below. Five URA staff were supposed to be interviewed but 3 senior staff were reached, constituting 60%.
Table 4.2.1 Response rate
| Instrument | Released number | Received number | Response rate (%) |
| Questionnaires | 176 | 173 | 98.3 |
| Interviews | 5 | 3 | 60 |
| Total | 181 | 176 |
Source: Primary data (2020)
Table 4.2.1 above shows that 60.0% of respondents participated in interviews and 98.3% of the distributed questionnaires were received . According to Amin (2005), a total response rate of 70% is a good representation of the study population. Therefore a rate of 98.3% is considered as good response as supported by Amin (2005). This shows that the study findings are representative enough of the population.
4.2.2 Matrix of qualitative results
| Questions | Responses |
| Tax education: 1. According to your opinion, how is tax education of tax payers associated with their tax compliance? | 1. When tax payers are made aware of the tax compliance concepts and their impacts on their businesses, they will comply voluntarily to taxes. 2. Tax education is very important because tax payers get to understand penalties of non-compliance. 3. Tax education is good but the channels used by URA should be improved so that different tax laws are communicated and interpreted to tax payers to improve their compliance |
| 2. Tax registration How is registration of tax payers related to their tax compliance? |
|
Please elaborate more on how tax assessment tend to improve tax compliance among the tax payers in Lira Municipality? How can tax assessment be helpful in boosting tax compliance among SMEs in Lira Municipality? | 1. URA normally assesses tax non-compliance when there is no proof of filing returns, reporting in accurate financial position and non-payment of taxes. So when a notice / warning is sent through emails to tax payers, they tend to wake up and look for tax consultants to file their returns and generate a payment reference number to pay taxes assessed . Therefore tax assessment is also positive related to tax compliance among SMEs in Lira municipality. 2. The online assessment method is very good since tax payers are informed first before an administrative follow up is done by debt collection department of URA. 3. Tax audits are normally conducted on clients who are extremely noncompliance. These audits help tax payers to correct the wrongly file returns, educates clients on other tax compliance areas and reconciles tax payers and the URA to a mutual understanding on tax position. |
4.3 Results on the background information of respondents
In this section, data is presented on the background information composition of the sample obtained through the questionnaire which included; gender, age group, level of education, nature of business veing carried out and number of years in business. All the tables are based on the 173 questionnaires filled and returned by the respondents, thus giving the quantitative data analysis and also 3 respondents were interviewed. The purpose of collecting background data on respondents was to help in establishing the respondent sample characteristics and be able to form appropriate opinions about the research findings. The detailed analysis of these characteristics and interpretation are presented in table 4.3.1 below:
Table 4.3.1: Background information of respondents
| SN | Variable | Value | Frequency | Percentage |
| 1. | Gender of the respondent | Male | 94 | 54.3 |
| Female | 79 | 45.7 | ||
| 2. | Age of the respondent | 18-25yrs | 24 | 13.9 |
| 26-30 yrs | 47 | 27.2 | ||
| 31-35 yrs | 49 | 28.3 | ||
| 36-40 yrs | 35 | 20.2 | ||
| 40 years and above | 18 | 10.4 | ||
| 3. | Marital status | Married | 66 | 38.2 |
| Single | 54 | 31.2 | ||
| Divorced | 20 | 11.6 | ||
| Widowed | 17 | 9.8 | ||
| Separated | 16 | 9.2 | ||
| 4. | Highest academic level | Primary education | 28 | 16.2 |
| O-Level | 49 | 28.3 | ||
| A- Level | 40 | 23.1 | ||
| Diploma | 32 | 18.5 | ||
| Bachelor’s Degree | 24 | 13.9 | ||
| 5. | Nature of business being carried out | Trade | 46 | 26.6 |
| Accommodation & food | 15 | 8.7 | ||
| Recreation and personal services | 19 | 11.0 | ||
| Agriculture | 21 | 12.1 | ||
| ICT | 26 | 15.0 | ||
| Insurance | 6 | 3.5 | ||
| Construction | 14 | 8.1 | ||
| Others | 26 | 15.0 | ||
| 6. | Number of years taken in business | 1-3 years | 62 | 35.8 |
| 4-6 years | 75 | 43.4 | ||
| 7-9 years | 22 | 12.7 | ||
| 10 years and above | 14 | 8.1 | ||
| Total | 173 | 100.0 |
Source: Primary data (2020)
Table 4.3.1 shows that 54.3% which was the majority of the respondents were male, 45.7% of the respondents were female. This finding implies that the study was representative since both female and male respondents were captured and there were more male employees than their counter parts. This is partly because of the nature of the work in some businesses that the company deals in which needs more energtic or male employee to achive the goals and objectives.
The findings in table 4.3.1 above illustrates that 28.3% of the respondents were between 31-35 years of age, 27.2% were between 26-30 years of age, 20.2% were between 36-40 years of age. This finding implies that this study was representative since the age category of respondents was regarded mature enough to understand and appreciate the issues of tax administration s and their relationships with tax compliance among SMEs.
The results in table 4.3.1 above indicates that 28.3% of the respondents have attained O-Level , 23.1% are A-level leavers, 18.5% have attaiined a diploma , 16.2% were primary leavers and only 13.9 % have acquired bachelors degree in various disciplines. From the majority of the respondents, the findings give indications that they are likely to have prior knowledge on tax administration concept and its impacts and relationships with tax compliance..
The results in table 4.3.1 above inidcate that 26.6% of the respondent were trading companies, 15% of them were carrying on busiesses involved in ICT and other busiesses that were not listed in the questionare (e.g schools, transport, NGOs, Accountancy firms,etc), 12.1% of the respondents were those involved in selling agricultural products and other agro-inputs, 11% were involved in hotel management and only 8.1 of the respondents were in construction busiesses. This implies that alomost all of the repondents qualify for tax purposes.
Table 4.3.1 above indicates that 43.4% of the respondents that participated in this study had spent over 4-6 years in their respective businesses, 35.8% had taken 1-3 years in operation, 12.7% had taken over 7-9 years and only 8.1% had operated for more than 10 years and above. This means that the businesses surveyed had registered for taxes and the information given for empirical data analysis will be relevant.
4.4 Empirical results from both the Quantitative and Qualitative Analysis
4.4.1 Analysis of relationship between tax education and tax compliance
This section presents description findings measuring the relationship between tax education and tax compliance. This research objective was conceptualized using questions which required each respondent to do self-rating in regards to their views on tax awareness, tax education channels and the skilled personnel used by Uganda Revenue Authority in conducting tax education. Responses are presented based on Likert scale ranging from 5 which reflected strongly agree, 4 agree, 3 undecided, 2 disagree and 1 strongly disagree. The average of the responses on the above three parameters of tax education (tax awareness, tax education channels and skilled personnel) was analyzed and correlated with the different tax compliance components (tax filing, tax reporting and tax payment). The results of the correlation analysis are summarized in Table 4.4.1.1
Table 4.4.1.1: Correlation analysis between tax education and tax compliance
| Variables | Statistics | TAX COMPLIANCE | ||
| Tax education | Tax filing | Tax reporting | Tax payment | |
| Tax payers’ awareness | Pearson Correlation | -.157(*) | -.180(*) | -.017 |
| Sig. (2-tailed) | .039 | .018 | .820 | |
| Tax education channels | Pearson Correlation | .156(*) | .160(*) | .134 |
| Sig. (2-tailed) | .040 | .036 | .079 | |
| Skilled personnel of URA | Pearson Correlation | .170(*) | .215(**) | .062 |
| Sig. (2-tailed) | .025 | .004 | .421 | |
| N | 173 | 173 | 173 | |
Source: Primary data (2020), significant at 5% level
According to Table 4.4.1.1 above, it shows that there is a negative significant relationship between tax awareness and tax filing and tax reporting since their respective p-values (0.039 and 0.018) are less than 0.05. Tax awareness is not significantly associated with tax payment since their p-value (0.820) is greater than the significant value of 0.05.
It is also evidenced by the Pearson correlation coefficients that there is a weak positive relationship between tax awareness and tax filing as well as tax reporting.
From the above correlation matrix, tax education channels used by Uganda Revenue Authority are seen to have a significant relationship between tax filing and tax reporting. This relationship is supported by their p-values (0.04 and 0.036) being less than the significant level of 0.05. But this is not significantly associated with tax payment, since the p-value between them is 0.079 which is greater than 0.05.
However, much as there exists a significant relationship between tax education channels and tax filing and reporting, the strengths of their relationships are very weak .
Additionally, association exist between the skills of the tax enforcers and tax filing and tax reporting of the tax payers. Their significant relationships are supported by their p-values 0.025 and 0.004 which are less than the significant level of 0.05. This implies that the tax payers tend to develop other means of evading taxes if they are not approached well and sensitized to comply with the tax laws and tax compliance.
But we also see that there is no significant relationship between the skills of the URA tax officer and the ability of the tax payers to pay their taxes. This non significance is concluded based on the p-value of 0.421 being more than the significant level (0.05).
Hypothesis testing on tax education and tax compliance
- Ho: There is no significant relationship between tax awareness and tax compliance (tax filing, tax reporting and tax payment) among SMEs in Lira Municipality.
From the above analysis, there is a negative significant relationship between tax awareness and tax filing and tax reporting respectively, since their p-values (0.039 and 0.018) are less than 0.05. We therefore fail to accept the null hypothesis above and conclude that tax awareness as a component of tax education is significantly associated with tax filing and tax reporting which are major components of tax compliance.
- Ho: There is no significant relationship between tax awareness tax payments among SMEs in Lira Municipality.
From the analysis above, tax awareness is not significantly associated with tax payment since their p-value (0.820) is greater than the significant value of 0.05. We therefore fail to reject the null hypothesis that there is no significant relationship between tax awareness and tax payment among SMEs in Lira city.
4.4.2 Analysis of relationship between tax registration and tax compliance among SMEs in Lira Municipality
This section presents findings that seek to address the second objective of this research measuring the relationship between tax registration and tax compliance among SMEs in Lira municipality. This research objective was conceptualized using questions which required each respondent to do self-rating in regards to their views on identification of legal tax payers, issuing tax identification numbers, location and addresses of tax payers, registration procedures being implemented by URA. Responses are presented based on Likert scale ranging from 5 which reflected strongly agree, 4 agree, 3 undecided, 2 disagree and 1 strongly disagree. The average of the responses on the above four parameters of tax registration was analyzed and correlated with the different tax compliance components (tax filing , tax reporting and tax payment). The results of the correlation analysis are summarized in Table 4.4.2.1 below.
Table 4.4.2.1: Correlation analysis between Tax Registration and tax compliance
| Variables | Statistics | Tax Compliance | ||
| Tax Registration | Tax filing | Tax reporting | Tax payment | |
| Identification of legal tax payers | Pearson Correlation | .280(**) | .242(**) | .237(**) |
| Sig. (2-tailed) | .000 | .001 | .002 | |
| Issuing Tax Identification number | Pearson Correlation | .352(**) | .223(**) | .090 |
| Sig. (2-tailed) | .000 | .003 | .240 | |
| Location & addresses of tax payers | Pearson Correlation | .415(**) | .335(**) | .369(**) |
| Sig. (2-tailed) | .000 | .000 | .000 | |
| Tax registration procedures | Pearson Correlation | .177(*) | .151(*) | .084 |
| Sig. (2-tailed) | .020 | .047 | .270 | |
| N | 173 | 173 | 173 | |
Source: Primary data (2020)
To establish the relationships between the dimensions of tax registration, a bivariate correlation analysis was done and the correlation matrix generated in Table 4.4.2.1 above was used for analysis.
According to the findings in table 4.4.2.1 above, identification of legal tax payers was established to be statistically significant and positively correlated to tax compliance (tax filing, tax reporting and tax payment) at 99% level of significance. Although there is a weak correlation between identification of legal tax payers and the tax compliance (tax filing, tax reporting and tax payment), there is a clear indication that identification of tax payers has a strong relationship with tax filing. Implying that, for the tax payers who have been identified and registered by Uganda Revenue Authority, tax filing and tax reporting must be complied with. Identification of legal tax payers is significantly associated with tax compliance (tax filing, tax reporting and tax payment) since their p-values (0.000, 0.001, 0.002) are less than the significant level 0.01 (1%) respectively.
Additionally, the above output revealed that issuing Tax Identification Number (TIN) is significantly related with tax compliance (tax filing and tax reporting). This is because their p-values (0.000 and 0.003) are less than 0.01. This is not statistically significantly associated with tax payment as shown by its p-values (0.240) which is greater than 0.01 and 0.05.
This above analysis implies that the tax payers that have been issued a TIN should file tax returns and report their income statement and statement of financial position to Uganda Revenue Authority (URA). Additionally, the insignificance of issuing tax identification number with tax payment means that having a Tax identification Number does not guarantee payment of taxes, but only that that is due upon tax computation. Thus, filing and reporting of tax position are the key compliance components to be adhered to by the registered tax payers.
While assessing the relationship between location and addresses of tax payers and their tax compliances in terms of tax filing, tax reporting and tax payment, it is evidenced from the above correlation matrix that location and identification of tax payers is significantly related to all the three components of tax compliance (tax filing, tax reporting and tax payment) , since their p-values (0.000, 0.000 and 0.000) are less than 0.01 respectively. This implies that location of tax payers determines their compliance. That is, businesses in Lira Municipality are likely to be taxed at a different rate than their counterparts in the rural areas. Different tax amount are levied to small business tax payers by Uganda Revenue Authority as shown in table 4.4.2.2 below;
Table 4.4.2.2 Traders in Kampala city and divisions of Kampala whose turn over exceeds 10 million shillings but does not exceed 50 million pay the following amounts as tax
| Business Trade | With turnover between (UGX 35,000,000 – 50,000,000) | With turnover between (UGX 20,000,000 – 35,000,000) | With turnover between (UGX 10,000,000 -20,000,000) |
| General Trade | 500,000 | 400,000 | 250,000 |
| Carpentry/ Metal Workshops | 500,000 | 400,000 | 250,000 |
| Garages (Motor Vehicle repair) | 550,000 | 450,000 | 300,000 |
| Hair and Beauty/ Salons | 550,000 | 400,000 | 300,000 |
| Restaurants and/or Bars | 550,000 | 450,000 | 300,000 |
| Clinics | 550,000 | 450,000 | 300,000 |
| Drug Shops | 500,000 | 350,000 | 100,000 |
| Others | 450,000 | 300,000 | 200,000 |
Source: Uganda Revenue Authority Handbook 2018
Table 4.4.2.3 Traders in municipalities whose turnover exceeds 10 million shillings but does not exceed 50 million pay the following amounts as tax.
| Business Trade | With turnover between (UGX 35,000,000 -50,000,000) | With turnover between (UGX 20,000,000 – 35,000,000) | With turnover between (UGX 10,000,000 – 20,000,000) |
| General Trade | 400,000 | 300,000 | 150,000 |
| Carpentry/ Metal Workshops | 400,000 | 300,000 | 150,000 |
| Garages (Motor Vehicle repair) | 450,000 | 350,000 | 200,000 |
| Hair and Beauty/ Salons | 450,000 | 350,000 | 200,000 |
| Restaurants and/ or Bars | 450,000 | 350,000 | 200,000 |
| Clinics | 450,000 | 350,000 | 200,000 |
| Drug Shops | 400,000 | 300,000 | 150,000 |
| Others | 400,000 | 350,000 | 150,000 |
Source: Uganda Revenue Authority handbook 2018
From Table 4.4.2.1 and 4.4.2.3 above and from the significance of the relationship between location and compliance of the tax payers, Lira municipality recorded the highest number of respondents (26.6%) carrying on trade as their principal business activities within Central Division. Therefore, the above analysis is key in determining the level of tax compliance and the above tax rates per location supports the claim that location of business of tax payers is significantly associated with tax compliance.
From the above correlation matrix, tax registration procedures is seen to be significantly associated with tax filing and tax reporting. This is shown by their p-values of (0.020 and 0.047) being less than 0.05. The strengths of correlation are relatively very weak, though significant in this study. Tax registration procedures is not significantly associated with tax payment as shown by their p-value (0.270) > 0.05. This analysis implies that the guidelines determined by Uganda Revenue Authority matters a lot in enforcing tax registration of tax payers and hence compliance.
Hypothesis testing for tax registration and tax compliance
Ho: Tax registration is not significantly associated with tax compliance among SMEs in Lira Municipality.
From the above analysis, identification of legal tax payers’ location and addresses were found to be statistically significantly related to the three components of tax compliance (tax filing, tax reporting and tax payment). This is so, because their p-values were seen to be all less than the significant level of 0.01. Therefore we reject the null hypothesis and conclude that tax registration (identification of legal tax payers and location and addresses of tax payers) are significantly related to tax compliance.
Issuing of tax identification number (TIN) was also revealed to be significantly related to tax filing and tax reporting, since their p-values (0.000 and 0.003) were less than 0.001. However, this was not confirmed to be significantly associated with tax payment by tax payers at 0.01, since the p-value (0.240) > 0.01. This also implies that issuing a TIN does not necessitate payment of all the taxes, but determines tax filing and disclosing tax payer’s financial position to the Revenue Authority.
Additionally, tax registration procedures are also significantly associated with tax filing and tax reporting as revealed by their p-values (0.020 and 0.047) which are all less than 0.05. Tax registration procedures is seen not to be significantly related to tax payment since the p-value (0.270) > 0.05. Therefore, the way a tax payer is registered for taxes does not dictate how much taxes should be paid and when it should be paid to the revenue authority.
Table 4.4.3: Correlation analysis between Tax Assessment and tax compliance
| Variables | Statistics | Tax Compliance | ||
| Tax assessment | Tax filing | Tax reporting | Tax payment | |
| Record keeping | Pearson Correlation | .310(**) | .265(**) | .256(**) |
| Sig. (2-tailed) | .000 | .000 | .001 | |
| Skilled personnel of URA on tax assessment | Pearson Correlation | .183(*) | .191(*) | .149 |
| Sig. (2-tailed) | .016 | .012 | .051 | |
| Information requirement by tax payers | Pearson Correlation | .544(**) | .593(**) | .415(**) |
| Sig. (2-tailed) | .000 | .000 | .000 | |
| Tax assessment methods used by URA | Pearson Correlation | .435(**) | .375(**) | .342(**) |
| Sig. (2-tailed) | .000 | .000 | .000 | |
| N | 173 | 173 | 173 | |
Source: Primary data (2020), significant at 5% level
** Correlation is significant at the 0.01 level (2-tailed)
*Correlation is significant at the 0.05 level ( 2-tailed)
According to the findings in Table 4.4.3 above, record keeping was established to be statistically significantly and positively correlated to tax compliance (tax filing, tax reporting and tax payment) at 1% level of significance. Their p-values (0.000, 0.000 and 0.001) are all less than 0.01, thus, record keeping of tax payers are statistically significant to tax compliance.
This was supported by respondent that “Good record keeping and well prepared financial statement improves tax compliance and vice versa. The revenue authority will always use the submitted returns and the source documents to do tax assessment”.
Generally, from the correlation matrix above, tax assessment components (record keeping, skilled personnel of URA on tax assessment, information requirement by tax payers and tax assessment methods used by URA) are seen to have a significant relationship with tax compliance (tax filing, tax reporting and tax payment). Their significances are backed by their respective p-values which are 0.000 and (0.016, 0.012 and 0.051) which are less than the 0.05.
It can also be seen that among the four components of tax assessment (record keeping, skilled personnel of URA staff , information requirement by tax officers and tax assessment methods used by URA) , information requirement needed by the URA officers during the assessment have positive correlation between tax assessment and tax compliance among the SMEs in Lira municipality.
Hypothesis testing:
Ho: There is no significant relationship between tax assessment and tax compliance among SMEs in Lira municipality
From the correlation matrix above, tax assessment components (record keeping, skilled personnel of URA on tax assessment, information requirement by tax payers and tax assessment methods used by URA) are seen to have a significant relationship with tax compliance (tax filing, tax reporting and tax payment) since their respective p-values which are 0.000 , 0.016 and 0.012 are less than the 0.05. We therefore reject the null hypothesis and conclude that tax assessment is significantly associated with tax compliance in Lira Municipality.
4.5 Linear Regression Analysis
A multiple linear regression analysis was conducted to establish the effect of the independent variables (tax education, tax registration, tax assessment) on expected tax compliance (tax filing, tax reporting and tax payment).
In order to determine the effect of tax education, tax registration, tax assessment and tax compliance on tax compliance (tax filing , tax reporting and tax payment), inferential analysis was conducted using regression analysis to predict the value of one variable based on the value of the other, a simple liner regression model below is used:
E( Tc) = β0 + β1Te+ β2Tr + β3Ta + β4Cc + ϵ
Where
E(Tc) = dependent variable ( Expected Tax compliance)
Te = independent variable 1 (Tax education)
Tr = independent variable 2 (Tax registration)
Ta = independent variable 3 (Tax assessment)
Cc = Cost of compliance
β0 = intercept (value of E(Tc), when Te=0, Tr=0, Ta= 0, Cc = 0)
β1,2,3,4 = Coefficients of the independent variables
ϵ = random error
Fig 10: Diagrammatical presentation of the inferential statistics of the study variables.
IV1 DV
IV2
IV3
IV4
4.5.1 Regression analysis of tax education, tax registration, tax assessment and tax compliance costs on tax filing
Analysis using regression analysis technique was made to check the effect of tax education, tax registration, tax assessment and compliance cost on tax filing.
Much as correlation analyses were conducted the relationships between the independent variables and the dependent variables, a further analysis to investigate the effects the independent variables have on the dependent variables were tested using a multiple linear regression as shown below.
Table 4.5.1.1: effects of tax education, tax registration, tax assessment and compliance cost on tax compliance
| Unstandardized Coefficients | Standardized Coefficients | ||||
| Model | B | Std. Error | Beta | t | Sig. |
| (Constant) | .879 | 0.285 | 3.088 | .002 | |
| Tax education | -0.168 | 0.063 | -0.175 | -2.686 | .008 |
| Tax Assessment | 0.720 | 0.089 | 0.059 | 0.780 | .000 |
| Tax Compliance costs | 0.200 | 0.101 | 0.558 | 7.129 | .000 |
| Tax Registration | 0.070 | .043 | 0.275 | 4.622 | .436 |
| MODEL SUMMARY | |||||
| R | .673 | ||||
| R Square | .453 | ||||
| Adjusted R -Square | .440 | ||||
| Std. Error of the Estimate | .51799 | ||||
| Durbin Watson | 1.582 | ||||
- Predictors: (Constant), Tax education, Tax registration, Tax assessment
- Dependent Variable: Tax compliance
The study results in Table 4.5.1.1 above, indicate that the four independent variables identified in this study under tax administration (tax education, tax registration, tax assessment and compliance costs) are presented to show their significance impact on tax compliance (Tax filing, tax reporting and tax payment). From the above output, the regression model can be fitted as follows;
E (Tc) = 0.879 – 0.168 Te + 0.720 Ta + 0.200 Tcc
Basing on the first variable which was tax education, the results indicate that it has a negative effect and significantly predicts Tax compliance since the p-value of 0.008 < 0.05 .This implies that as the cost of implementing tax awareness, tax education channels and skilled personnel of URA to educate tax payers increase by a unit, this will on average lead to a fall in tax compliance by 16.8%. Tax payers will not incur any additional cost of receiving training on tax matters and hence, noncompliance. Therefore the tax authority (URA) should make the cost of getting tax knowledge as cheap as possible, in any case it must be freely sponsored by the government through local radio stations and including tax compliance as a course unit in the syllabus at the higher institution of learning.
The results also indicate that, tax assessment has a positive effect and significantly predict tax compliance of SMEs in Lira municipality as revealed by the p-value (0.000) < 0.05. This implies that a unit increase in tax assessment of SMEs in Lira Municipality would lead to an improvement in tax compliance on average by 0.72. Therefore, this analysis implies that tax payers tend to comply when they are issued with notice of assessment for non-compliance.
Tax compliance cost was used to evaluate its effect on tax compliance. The findings indicate that, cost of compliance has a positive effect on tax compliance and it does have a significantly predication on tax compliance since its p-value (0.000 < 0.05). Therefore, a unit increase in the cost of filing a return would lead to an increase in the compliance rate on average by 0.20. This implies that tax payers who incur cost of hiring tax consultants in filing and assessing tax payable would always be compliance, other than their counterparts who don’t invest in tax consultants.
Finally, tax registration is seen not to have a significant effect on tax compliance. This is evidenced by their p-value of 0.436 > 0.05. We therefore conclude that, there is no significant effect of tax registration on tax compliance pf the SMEs in Lira municipality. This findings further implies that, tax payers who are not registered for taxes will not be in the tax register of Uganda Revenue Authority, hence they would have no need to file tax returns, report any taxes and pay taxes to the Revenue Authority.
Referring to table 4.5.1, the Durbin-Watson d = 1.582, which is between the two critical values of 1.5 < d < 2.5. Therefore, we can assume that there is no first order linear auto-correlation in our multiple linear regression data.
It is also indicated in the ANOVAa table that the F-test was found significant at (F=34.807, Sig=0.000, p<0.05) showing that the regression coefficient was significantly different from zero. Therefore, tax education, tax assessment, tax compliance costs and tax registration were found to be significant predictors of tax compliance among SMEs in Lira Municipality, implying that tax compliance is explained by 44% increases in tax education, tax assessment, tax compliance costs and tax registration and 56% of the variation in tax compliance is explained by other factors not considered in this study, hence a weak fit.
4.5.2 Hypothesis Testing on Cost of compliance and tax compliance
Hypothesis 1:
Ho: Tax compliance cost have no significant effect on tax compliance
The results that were obtained revealed a positive effect since the p-value of 0.000<0.05, Therefore the null hypothesis (H0) was rejected and the alternative hypothesis (H1) accepted, that cost of compliance have a significant effect on tax compliance among SMEs in Lira municipality.
