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ELECTRONIC TAX MANAGEMENT STRATEGIES AND REVENUE PERFORMANCE IN UGANDA, A CASE OF UGANDA REVENUE AUTHORITY
CHAPTER ONE: GENERAL INTRODUCTION
This chapter will cover background to the study, statement of the problem, objectives of the study, research hypotheses, scope of the study, justification of the study, definition of key terms and conceptual framework
- Background
This section presents the background of study in areas of Historical background of the study, theoretical background, conceptual and contextual background.
1.1.1 Historical background of the study
A tiny test program with only 5 tax preparers from Cincinnati, Raleigh Durham, and Phoenix was the beginning of the electronic tax system’s history in 1986 (Allahverdi et al., 2017). Since that time, the use of computerized tax systems has increased to the point where millions of taxpayers benefit from them each year. Processing taxes grew more challenging in the 1980s. Tax preparers began using specialized computers and software to streamline their work, but they still needed to print and transmit all the documents to the Internal Revenue Service (IRS). The IRS alone spent a lot of money storing all the paper tax forms. Additionally, the IRS started using machines and computers to process the returns as new technology emerged in the decades before the 1980s. According to Wallace, (2015) Historically challenges in tax management is not a new practice. the first record of organized taxation comes from Egypt around 3000 B.C., the leader would send commissioners to take one- fifth of all grain harvests as a tax. Tax practice continued to develop as Greek civilization overtook much of Europe, North Africa and the Middle East in the centuries leading up to the Common Era, however although taxation has a long history, it played a relatively minor role in the ancient world, due to the practice of some of the traders and farmers not presenting the actual figures of their output to pay less grains (Olaoye , 2018).
1.1.2 Theoretical background
This study in understanding electronic tax management strategies and revenue performance in Uganda.
International Trade Theory
1.1.3 Conceptual Frame Work
According to Wasao (2014), an electronic tax system is an online platform that enables the taxpayer access tax services through the internet. Such services include registration for a tax identification number, filing of returns and registration of a payment and compliance certificate application. Electronic tax systems first started in the USA, where the Internal Revenue Services began offering tax return e-filing for tax refunds only (Muturi and Kiarie, 2015).
According to Kaplan (2012), performance is a way an organization measures its achievement in line to its strategy and objectives. In this study, performance means the ability of an organization to achieve its targets. Performance is a dependent variable and it has been interpreted to represent financial performance, customer satisfaction and growth.
1.2.4 Contextual background
According to Tanzi & Zee (2002), Governments worldwide have increasingly been demanding substantially more effective use of modern technology systems for the delivery of services to citizens. Getting citizens to pay their taxes in painlessly without hissing continues to be the dream of all governments the task has however, never been simple, until when there was the introduction of the modern information technology. As early as the 1980s the world has been experiencing an unprecedented pace of advancement in the field of information technology. Such technological innovations are continually having a profound impact on the administration of fiscal systems as well as the way in the administration of taxation is concerned (Nyongesa, 2014).
Uganda Revenue Authority for instance is one of the financial authorities in the world to conducts this Electronic tax system through the Business Process Improvement (BPI) and increases scope of electronic interaction with taxpayers to boost staff productivity and taxpayer service (Makokha, Alala, Musiega & Manase, 2014). Electronic tax system forms part of the revenue collection reforms by Uganda Revenue Authority whose main motive is enhancing tax collections and increase revenue collection and thus, tax revenues have been increasing rapidly due to the country’s rapid economic development accelerated by the new systems. In this regard, the planning and formulation phase of an elaborate electronic system strategy was done in the Uganda Revenue Authority Corporate Plan of 2009 and was implemented in the fourth corporate plan of 2011(Ngotho & Kerongo, 2014).
1.2 Statement of the problem
Electronic Tax Management Strategies are believed to have a significant boost on the performance of organizations worldwide as they grapple with new ways to generate revenue, engage customers and streamline time-consuming tasks. URA adopted electronic systems in 2003 into the domestic taxes department to increase revenue collection, improve quality of administration, reduce costs of compliance and provide services to the tax payers all the time from anywhere (Kangave et al., 2016).
1.3 General objective of the study
The general objective of the study is to examine the influence of electronic tax management strategies and revenue performance in Uganda.
1.4 Research Objectives
1.6 Justification of the study
The study will be carried out because of the following reasons. Uganda revenue authority being a tax collection body is responsible to deliver the targets and enable the government to meet its expenses.
Revenue collection remains a key challenge in African and Uganda in particular (Mukunda, 2017). This is mainly on account of limited tax compliance. In the last three decades, Uganda has embarked on improvements to broaden the tax base and increasing domestic revenue mobilization. Modernizing the tax administration systems is among the initiatives (World Bank, 2018b). In comparison with regional neighbours, Uganda’s tax revenue to GDP is still below the 16 per cent Sub-Saharan average and lags behind her East African Community (EAC) neighbors too (World Bank, 2018b).
1.7 Significance of the study
The findings of the study are expected to be significant in the following ways;
This study is intended to provide policy makers, that is the Ministry of Finance Planning and Economic Development and tax law makers in parliament insights to base any possible amendments to suit the local needs. This will drive voluntary compliance among tax payers.
The Uganda Revenue Authority has so far tried several means to enforce tax compliance. This study will provide additional information to URA to understand how best to enhance tax compliance among business.
To other researchers, it is important to tell the nature of the relationship between tax administration systems and tax compliance, thus this study will provide a current reference material.
To the researcher, this study will boost the knowledge on taxation and hence be a milestone in the career growth as well as academic achievements.
1.8 Scope of the study
The scope of this study will be confined to the geographical, subject and time scope. The study will concentrate on tax audit and tax evasion control and will be carried out from Uganda Revenue Authority (URA). URA is one of the subsections under the Ministry of finance and it is located at plot 95 Kampala road, Nakawa Industrial Area, Kampala, Uganda. URA is found in Nakawa Division of the city of Kampala, approximately 6.5 kilometers (4 miles), by road, east of the city centre, off of the Kampala-Jinja Highway.
The period of data to be considered from Uganda Revenue Authority will be from 2017 to 2022 this is because, during this period, Uganda Revenue Authority adopted several strategies to enhance its tax auditing strategies.
1.9 Organization of the study
The study will describe the Background, the problem statement, objectives of the study, research questions, research hypothesis, significance of the study, scope of the study justification of the study and organization of the study.
1.9. Justification of the study
Numerous studies have emerged concerning e-tax systems and their contribution to tax compliance and revenue performance. Haryani et al. (2015), Wasao (2014), Muturi and Kiarie, 2015). Maisiba and Atambo (2016); Simuyu and Jagongo, (2019); Ondara et al., (2016). It can be noted that, these studies were conducted outside Ugandan context which leaves a literature gap which this study intends to address. A study by Night and Bananuka,. (2020) examined the mediating role of adoption of an electronic tax system in the relationship between attitude towards electronic tax system and tax compliance; Nakitende (2019) focused on electronic tax system and tax compliance. These studies focused on electronic tax systems and tax compliance and did not focus on how e-tax strategies contribute to performance at Uganda Revenue Authority.
Thus, the purpose of this study is to examine how e-tax strategies has enhanced revenue performance at Uganda Revenue Authority.
1.10 Scope of the Study
The scope of the study includes the geographical scope, content scope and time scope.
1.10.1. Geographical Scope
The study will be carried out at Uganda Revenue Authority headquarters at Nakawa in Kampala. This case study was chosen because URA has reported on how internal controls have helped the organization achieve effective revenue performance.
1.10.2 Subject and content scope
The content of the study will focus on e-tax strategies and revenue performance. This will involve doing an assessment on how e-tax payments, e-tax filling, electronic invoicing and receipting influence revenue performance.
1.10.3 Time scope
This study covered a period of five financial years from 2018/2019, 2019/20, 2021/22. This period was considered because it was the period when URA increasingly rolled out e-tax strategies.
1.11. Operational Definitions of key terms
Electronic tax systems: This refers to the practice of using electronic means to file tax returns, carry out tax payments and issue electronic receipts and invoices.
Revenue Performance: This is a measure of an organizational revenue performance in terms of quarterly and annual tax collection.
1.12 Conceptual Framework
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