APPLICATION OF ELECTRONIC TAX SYSTEM AND

APPLICATION OF ELECTRONIC TAX SYSTEM AND EFFICIENCY IN TAX ADMINISTRATION: A CASE STUDY OF UGANDA REVENUE AUTHORITY NAKAWA BY WAMBESYO JOEL ES14B41/079 A RESEARCH REPORT SUBMITTED TO THE FACULTY OF BUSINESS AND ADMINISRATION IN PARTIAL FULFILLMENT OF REQUIREMENTS FOR THE AWARD OF BACHELORS’ DEGREE IN INTERNATIONAL BUSINESS MANAGEMENT OF UGANDA CHRISTIAN UNIVERSITY MARCH, 2017 DECLARATION I, WAMBESYO JOEL, declare that this Research Report is my own work and it has never been submitted for any academic award in any Institution of higher learning. Signature ………………………………………… WAMBESYO JOEL Date …………………………………………. APPROVAL This research was carried out under my supervision on the topic “Application of Electronic Tax System and Efficiency in Tax Administration” and is now ready for submission with my approval. Signed: ………………………………….. Mr. MUBIRU RICHARD (Supervisor) Date……………………………………….. DEDICATION I dedicate this report to my beloved mother Mrs. Wambesyo Scovia and my father Mr. Wambesyo Isreal , my uncle Mr. Polycarp Kazoora who have laid for me an academic foundation that has led me to this level and lastly to all my friends for their motivation and developmental ideas. ACKNOWLEDGEMENT Before I explain my experience and work during my study, I would like to thank Mr.Mubiru Richard for his professional and parental guidance. Without his supervision and guidance, this piece of work would not have been a success. Then I would also want to recognize the presence of my beloved mother Mrs. Wambesyo Scovia and my father Mr. Wambesyo Isreal, my uncle Mr. polycarp kazoora, for the financial support and moral training rendered to me right from child hood to the time when I was carrying out my research, I pray that our Heavenly Father rewards my dear parents since not all parents do it for their children. The respondents who took part in this study especially the staff from Uganda Revenue Authority Kampala Nakawa Branch and other respondents from the different divisions in Kampala. I salute them for their courage, commitment and pioneering spirit. Everyone who assisted me through this study process, in ASINGYE PATRICK for the statistical processing, and organizing of this report. Sincere thanks also go to friends, for the support and encouragement that they always gave, which always gave me hope in all that I did during my study, God only knows how am grateful about what was rendered to me. Finally I cannot forget to thank the Almighty God for the protection knowledge and understanding that He gave me, and for this far He has carried me, since my first year to this date, and I say, He deserves the Praise and worship always. TABLE OF CONTENTS LIST OF TABLES Table 1: Sample size and Selection Method. 36 Table 2: Showing the users of E-tax according to gender. 42 Table 3: Showing How Long Tax Payers Have Been In Business. 42 Table 4: Showing Tenure of Service in Domestic Taxes Department. 43 Table 5. Showing the length of time E-tax services have been used. 43 Table 6 :Showing findings on the age bracket 44 Table 7: Showing findings on the qualification of the respondents 44 Table 8. The table showing the responses concerning the components of E-tax service system 45 Table 9. The level at which respondents comprehend the E-tax service systems. 45 Table 10 :Showing findings on training and education of URA staff and taxpayers on E Tax matters 46 Table 11: Showing findings on filing returns using E-tax system 46 Table 12 :Showing findings on payment of tax using E-tax system 47 Table 13 :Showing findings on if banks enhanced E-tax application 47 Table 14: Showing findings on power interruptions and low connectivity of internet on E-tax application 48 Table 15: Showing Major Weaknesses in the e-tax System. 48 Table 16: Showing how Problems can be overcome. 49 Table 17: Showing the efficiency of tax administration 50 Table 18: Showing URA staff views about e-tax. 51 Table 19: The table showing the view of respondents concerning the failures of E-tax service systems. 52 Table 20: Showing findings on whether E-tax being internet based and considering that not all businesses have internet services in their office premises has led to an increase in the cost of tax compliance 52 Table 21 :Showing findings on whether the E- tax being a 24-hour service had improved the ability to file returns on time 53 Table 22: Showing findings on whether procedures in E-Tax system required that respondents keep proper record of business transactions for easier assessment of returns 53 Table 23 :Showing findings on E- Tax has increased compliance due to reduced bureaucracies at URA offices 54 Table 24 :Showing findings on if application of E- tax had enabled URA handle more taxpayers in a given period compared to previous systems 54 Table 25 :Showing findings on if the E- tax had led to improved transparency in administration of taxes 55 Table 26 : Correlation between Application of E-Tax System and efficiency in Tax Administration 55 LIST OF ABBREVIATIONS ASYCUDA Automated System for Customs Data DFID British Department for International Development DTD Domestic Taxes Department of the Uganda Revenue Authority E-commerce Electronic Commerce E-filing Electronic Filing E-Tax Electronic Tax GDP Gross Domestic Product IT Income Tax LGFC Local Government Finance Commission NSSF National Social Security Fund PAYE Pay As You Earn PCA Public and Corporate Affairs PRS Payment Registration Slip TIN Tax Identification Number The Commissioner Commissioner General of Uganda Revenue Authority URA Uganda Revenue Authority VAT Value Added Tax ABSTRACT The purpose of the study was to establish whether the introduction of the E Tax system in Uganda enhanced the performance of the URA in relation to efficiency in tax administration following several claims of lack of transparency, inadequate education on tax matters and corruption in the assessment of taxes. The study objectives involved evaluating application of the E Tax system in Uganda, evaluating the efficiency of tax administration in Uganda and to establish the relationship between E Tax system and efficiency in tax administration in Uganda. The research was done by employing correlation and cross sectional research designs on a survey population that generally included finance officers who handle tax matters in different companies within Kampala district. These officers were arrived at using the purposive sampling method while the simple random sampling technique was used to select the various companies where the officers work. Data was collected from existing literature and by use of questionnaires. The data was measured using The Likert Scale and analyzed using SPSS Data Analysis program. This report goes ahead to give the recommendation which can be implemented by URA to better improve the compliance of the E-tax service systems and also gives conclusions after analyzing the finding which were given to the researcher when carrying out the study. The problem investigated was to do with challenges faced in efficient administration of taxes in Uganda and whether introduction of the E Tax system has brought about any improvements there in. Findings showed that there is general education about E Tax matters and the system is being used in areas where it is in effect despite its increase in the cost of compliance and low connectivity speed of internet; record keeping by Ugandan firms for purposes of tax assessment is insufficient, the public is not well educated regarding general tax matters and processes in the URA regarding tax exemptions are not very open. Recommendations basing on findings are that the authority takes measures to roll out the E Tax system to the rest of the country; there is need for additional education of the masses about general tax procedures besides E Tax. In conclusion study was beneficial and vital to the researcher for he got to know what happens with the E-tax services and how best they can be applied from the information provided, hope the readers of this information will also embrace it. CHAPTER ONE. INTRODUCTION AND BACKGROUND TO THE STUDY. 1.0 INTRODUCTION Electronic tax system: is a system for submitting tax documents to revenue service electronically, often without the need to submit any paper documents. Uganda Revenue Authority is a government revenue collection agency established by the parliament of Uganda. URA is responsible for enforcing, assessing, collecting and accounting for the various taxes imposed in Uganda. Efficiency in tax administration, here officers analyze the performance of the tax administration using data envelopment analysis and regression analysis in countries 1.1 Background of the study Before 1991, revenue collection was carried out by the former departments of Customs and Excise, Inland Revenue and Income Tax in the Ministry of Finance. Revenue collection was low and tax administration weak. The weakness included low tax collection, delays, poor record keeping and political interference. There was also low tax compliance, tax evasion, corruption and connivance between staff and tax payers, unmotivated workforce, inefficient and ineffective tax administration characterized by poor internal controls and inadequate accountability. Tax policy had become volatile, unpredictable and constituted a serious hindrance to trade, investment and enterprise (Mutebille, et al, 2009). Moreover, tax administration capacity had deteriorated greatly, smuggling and evasion were rampant and decision about tax issues were heavily influenced by rent seeking behavior (Mutebille, et al, 2009). Information about tax laws, rules, and regulations was not generally available or easily accessible even to policy makers and administration officials. This encouraged corruption, created serious inequities in tax outcomes and undermined revenue collection. Uganda Revenue Authority, a revenue collecting body established in 1991 to administer and give effect to the laws or the specified provisions of the laws set out in the First Schedule to this Act, and for this purpose to assess, collect and account for all revenue to which those laws apply, advise the Minister on revenue implications, tax administration and aspects of policy changes relating to all taxes referred to in the First Schedule, perform such other functions in relation to revenue as the Minister may direct, as according to Uganda Revenue Authority act 1991.The body also collects revenue on behalf of the Ministry Finance Planning and Economic Development from individuals and non-individuals in form of taxes. The body has been facing challenges for example where, Fjelstad (2005) indicated that URA had failed to meet its targets and revenue had dropped as a percentage of Gross Domestic Product (GDP) amidst accusations of increasing corruption. An evaluation commissioned by the British Department for International Development (DFID) points to the continued public perception of a high level of corruption, reflected in the widespread availability of duty free goods on local markets and arrests of senior URA office. In March 2000 President Yoweri Museveni is reported to have called the URA a den of thieves. Likewise, the former Commissioner General of the URA, Annebritt Aslund, listed corruption as problem number one in the organization. The Justice Julia Sebutinde inquiry that launched investigations into corruption at the URA unearthed gross violations of tax rules, including connivance of public officials with taxpayers leading to the loss of billions of shillings to the state poor quality of basic data ( Aguti, 2011). All these challenges are compounded by a general limited discussion among the different stakeholders (Government, Civil Society, Media and the general public) on tax issues and the contribution that taxes have on poverty eradication and sustainable development. Tanzi and Zee (2001) argued that tax policy in developing countries is often the art of the possible and also rather than the pursuit of the optimal given such circumstances (Seatini, 2011). Uganda Revenue Authority, the body introduced E-tax service system in 2009 which refers to the electronic filing of returns, in the bid to reduce the above challenges, risks involved and establish efficient tax systems. The system, commonly called E-Tax, was initiated by the Uganda Revenue Authority (URA) to allow the electronic mode of registrations, filings and payments related to tax to improve service delivery and boost revenue collections. At present, about 80 percent of Uganda’s domestic tax collections are made electronically. Under E-Tax, the URA has registered improved transactions for the first time ever at a rate of 4,980 online transactions. In the initial stages of E-Tax, the URA captured 99 percent of transactions online, amounting to over SH200billion (US$83.2 million). E-tax aids the URA in processing Income Tax, Value Added Tax (VAT), Local Excise duty, PAYE, vehicle registration, other fees, licenses and many more. Nevertheless the business enterprises’ (taxpayers) reasons, for the adoption of E-tax service systems, a system introduced by URA still has problems with the services. Uganda Revenue Authority in 2005 embarked on a modernization drive that has culminated into an ambitious computerized system dubbed electronic tax. The objective of the new system is to reduce the cost of the tax payer complying with URA (Musoke and Mugalu, 2010). The purpose of electronic tax system and the domestic tax modernization programme was to remove the inefficiencies associated with costs of movement by tax payers to URA offices to do business and present to tax payers a system that reduces their cost of compliance. However, since its inception in June 2009, it is not clear how the new system has improved tax collection, enhanced administration, reduced compliance costs and improved tax compliance hence necessitating this study. 1.2 Problem Statement Electronic tax system was introduced into the domestic taxes department to increase revenue collection, administration, avail services to the tax payers all the time from anywhere, reduce costs of compliance and improve tax compliance. However, tax compliance levels remain low and tax collections are below the targets set by URA (Kabafunzaki, 2010). Uganda Revenue Authority is facing a problem of tax payers failing to adapt to the new system of E-tax service system. Right now URA trains tax payers, organizes workshops and seminars, with an aim of informing the public about the adoption E-tax services systems. Unfortunately, tax payers still have not understood why they should adopt to the E-tax service system. The long lines are evident in the URA offices despites the existence of the E-tax system. Tax administration over the past years has been done amidst several challenges. Odd H. Fjelsdtad (2005) notes that “Despite quite comprehensive changes in the tax structure (rates and bases) in recent years, the tax system in Uganda is still complicated and non-transparent”. He adds that “Tax legislation is unclear and causes random and partly adhoc collection procedures”. 1.3 Purpose of the Study The main purpose of this study was to establish whether the introduction of the E- Tax system has improved performance of the URA as far as efficiency in tax administration. 1.4 Objectives of the Study To evaluate the application of the E -Tax system in Uganda To evaluate the efficiency of tax administration in Uganda To establish the relationship between E- Tax system and efficiency in tax administration in Uganda. 1.5 Research Questions How is the E -Tax system applied in administration of taxes in Uganda? What systems are in place to ensure efficiency in administration of taxes in Uganda? What is the relationship between E- Tax system and efficiency in tax administration in Uganda? 1.6 Scope of the Study 1.6.1 Subject scope: This study was focused on evaluating application of the E- Tax system in Uganda, Evaluating the efficiency of tax administration in Uganda and to establish the relationship between E Tax system and efficiency in tax administration in Uganda. 1.6.2 Geographic scope: The study was done among taxpaying companies in Kampala district, which accounts for a great portion of domestic taxes collected. URA Nakawa division is a first-order administrative division and is located in Kampala District, Central Region, Uganda. The estimate terrain elevation above sea level is 1445 Metres. Attitude: -0°36'31.14", Longitude: 32.619722 and the superior administrative division is Kampala District. Kampala district is mainly divided in three divisions which are Nakawa division, Kawempe division and Kira division. Kampala district has a number of streets which include Luwumu Street (named after the death of Janan Luwumu, Ben Kiwanuka Street (named after a former President of Democratic Party called Ben kiwanuka). 1.6.3 Time Scope The study considered a period of 9 years, between 2008 to 2016. To effectively capture the E-tax service system and its adoption among tax payers. The literature content included the period from 2008 up-to-date because this period had been relatively stable both economically politically and this was the period in which the E-tax service system was introduced to enhance further performance and growth in the country. 1.7 Significance of the study The research provided the business owners, managers and directors with the necessary information to enable them comply with the E-tax service system hence avoid any kind of penalties. The study generated knowledge for tax policy makers, administrators and revenue collectors of E-tax as it provided information on usage of the E-tax service systems and its adoption. The study increased on the existing literature on E-tax in Uganda where little research had been done, hence creating more knowledge and information to the future researchers and academicians. The study brought light details of the manual system of tax administration as well as those of the E Tax system; giving the merits and demerits of both systems. As such, taxpayers would benefit from this study because it gave details of why the revenue authority opted for modern technology to administer taxes and not the manual system hence grasp it wholeheartedly. The Uganda Revenue Authority would benefit from the study, as details of why it opted for modern technology to administer taxes have been brought to light for the taxpayers causing the taxpayers to cooperate more hence comply with the authorities requirements. The Government of Uganda largely benefited from this study, as more taxpayers were drawn to complying with the new system of tax administration, hence more taxes were collected at a lower cost. Students of taxation benefited from the study by having more knowledge about the current process involved in tax administration in comparison with the manual process. CHAPTER TWO LITERATURE REVIEW 2.0 Introduction This chapter critically presents the review of the existing literature related to E-tax system and efficiency in tax administration, and it explain the different objectives basing on the existing literature and they include Evaluating application of the E-Tax system in Uganda, Evaluating the efficiency of tax administration in Uganda and to establish the relationship between E-Tax system and efficiency in tax administration in Uganda. 2.1 To evaluate the application of the E-Tax system in Uganda This subsection primarily talks about the procedures followed in the E-Tax system, the format of its portal and factors that affect applicability of the system. 2.1.1 E- Tax Definition A publication by the URA (e-Registration, 2010) introduces E-Tax as a name given to an Integrated Tax Administration System (ITAS) that provides online services to the taxpayer on a 24 hour basis. The Stride Magazine (URA, 2009) reveals that the system was acquired by the Domestic Taxes Department (DTD) of the URA to modernize tax service and infrastructure, with the aim of reducing tax administrative and compliance costs, which is in concurrence with Tumuhimbise (2000) who recognizes low costs of compliance as an essential principle for tax administration. E-tax Service Systems: A tax is financial charge or other levy imposed upon a taxpayer (an individual or non individuals) by a state or functional equivalent of a state, such that failure to pay is punishable by law. Professor Seligman too defines tax as a compulsory contribution from the person to government to defray the expenses incurred uncommon interest of all without reference to special benefit concurred. It includes; income tax from the income tax Act (CAP.340 Laws of Uganda), Value Added Tax (VAT), property tax. Tax can be introduced so that it emitters face the full social cost of the emissions (Nicholas, 2006). At the national or regional level Government would want to choose a policy frame work that it’s suited to their specific circumstances, tax policy can all play a role (Nicholas, 2006). Therefore in an attempt to modernize operations to fulfill its revenue obligations, the Uganda Revenue Authority introduced the electronic system of taxation commonly known as E-tax to eliminate the different challenges faced by the revenue collecting body. Electronic refers to utilizing devices constructed of working, by methods or principles of electrons. E-tax refers to the electronic filing of returns, and it includes taxes imposed on goods and services traded on line among others. It offers faster-faster services than transactions via mail and they are safe and secure. Electronic tax filing, or e-filing, is a system for submitting tax documents to a revenue service electronically, often without the need to submit any paper documents. Electronic tax filing systems are an e-government application that is being utilized with increasing frequency all over the world. Such systems are particularly favorable for governments because they avoid many of the mistakes taxpayers make in manual filings, and they help to prevent tax evasion by data matching (Manly et al, 2005). The data houses developed using electronic tax filings can allow tax inspectors to analyze declarations more thoroughly, and enable policy makers to develop fairer and more effective. (Kun, et al, 2008). 2.1.2 Structure/Format of the Web Portal and E-Tax Application: URA publication on Frequently Asked Questions (FY: 2010-2011) reveals that the web portal (ura.go.ug) has been built to be viewed on Internet Explorer and returns are filed using a template based on Microsoft Excel (Excel). Being internet based and as indicated in e-Registration (URA, 2010), it is a 24 hour application. All procedures to do with filing of domestic taxes and monitoring their progress are handled by the E- Tax system. For web-based information systems to remain useful, they must contain new, enhanced attributes. Belanger, et al (2006) argue that they are several success criteria for a web site depending on the variety of goals such as selling, informing and advertising. The authors further argue that web site success is audience specific and it should take account of diverse perspectives of users and owners. It should be noted that sometimes these perspectives might be even competing. For example, in electronic tax filing systems users are usually unenthusiastic to pay tax and the site owner (government) is eager to collect it. 2.1.2 Transparency in E - Tax Application: The structure of the system allows users to openly interface with the URA considering that procedures to be followed are all given on the web portal. As stressed by Satish & Clive (1996) transparency is essential for an effective tax administration system and the ITAS, The Stride Magazine confirms, will provide an effective and transparent system across the domestic tax regimes, adding that it will include, among others tax registration and return processing. 2.1.3 Procedures in E Tax Application Procedures include registration for online service access, filing returns, registration for payment of taxes due as well as follow up of any matters relating to returns filed. Registration: For a taxpayer to be able to use the E-Tax, The Income Tax (Amendment) No.2 Act S.158A requires that a taxpayer is registered as a user of a computerized system. The Stride (URA, 2009) reveals that registration is the very first interface between the taxpayer and the URA. e-Registration (URA, 2010) notes that registration starts with an application to register for a Tax Identification Number (TIN) (a unique number assigned to every taxpayer registered by the URA). Under E-Tax, The Stride (2009) reveals, a taxpayer is able to register for all tax types. Filing Returns in E - Tax Application: E-Filing (URA) reveals that introduction of electronic filing in E-Tax facilitates the taxpayer to fulfill the obligation of submitting taxes they have registered for. In this process, it adds, the taxpayer obtains a return from the web portal (http://ura.go.ug), saves the template on any storage devise and takes time to file the return where after the return is validated before it is uploaded onto the web portal. Validation, according to the e-filing instructions, helps a taxpayer correct all possible errors. If successful, an auto-generated e-acknowledgement receipt is received by the taxpayer as evidence of submission. If, according to e-Filing (URA, 2010), it is on the contrary and the system detects and errors in the return, the taxpayer is given chance to amend the errors when they are issued a Return Modified Advise Notice. E-filing (URA, 2010), observes that the filing process has been separated from payment, thus ensuring confidentiality of data. The taxpayer can also submit the return at any time convenient for them though it should be before the due date for filing the return. Payment of Taxes in E -Tax Application: FAQs (URA, FY: 2010-2011, Issue 2) reveals that payment of taxes can be done via the web portal through the “payment registration link”. In this process according to FAQs (URA, FY:2010-2011), a taxpayer is required to fill in their details including amount to be paid, tax type, preferred bank and method of payment among others. The system automatically generates a Payment Registration Slip (PRS) with the details entered, which slip is printed and used for effecting payment at the bank. FAQs (URA, 2010), however, notes that some tax types may require a TIN on the PRS before the PRS can be generated. FAQs further reveals that on effecting payment at the bank, the taxpayer does not have to go to URA (to submit their documents) because the bank sends reconciliation reports to the authority and the taxpayers account is automatically updated before a receipt acknowledging payment is sent to the taxpayer’s web portal account and copied to their email address. The Law and E- Tax Application: The Income Tax (Amendment) Act (1997) requires that a taxpayer is registered for computerized services before they can use the system. The Information Communication Technology (ICT) Law, however, has not yet been enacted according to FAQs (URA, FY: 2010-2011); the law though, it says, is being developed and awaiting the President’s assent. E-Filing (URA, 2010) notes that due to the absence of a law governing electronic transactions, all returns and application forms submitted online have to be printed, signed and delivered to the nearest URA offices within ten (10) days of filing to confirm fulfillment of the taxpayer’s filing obligation. 2.1.4 Components of E-tax Computerization of the tax collection process enables easy detection of defaulters, and also helps to reduce corruption by reducing personal interaction between tax officials and taxpayers that is necessitated by inefficient manual systems (Kayaga, 2007). With that view, URA introduced E-tax and these are elements that constitute E-tax service system. The E-tax service system includes many components which enable tax payers to effectively use the system. These components are in most cases used by Business Enterprises. The major components of the E-tax service system include the following. Tax Content Services. This looks at the creation, maintenance and management of E-tax. This system is used for reference of the tax matters when dealing with the business enterprises. It has the tax application to model the details of the tax setup for all company’s tax requirements. Sub components include Basic tax configuration, tax jurisdictions, party tax profiles, and country default controls and many more. Tax Content Repository. This stores data from the tax content service, which would be used for reference in other components for easy management of the system. The faster returns can be processed then faster tax payments can be put to work managing cash flow, investing excess for a return (Hopkinton, 2010). Tax Service Request Manager. This requires only one representative who needs to register for everyone in the firm to be able to use the services. This component manages the access to all tax data and services, this enables Integration with E-tax services, integration with tax service providers and eventually there would be a Standard interface for E-tax Suite applications to add tax services to their business process flows, this will help tax agents and advisers deal with the department more effectively. Tax Determination Services. This looks at the different tax services and how best they can be applied. Every tax within a tax regime has its own regulations that determine when the tax is applicable, that is, when the tax needs to be charged or paid. The tax determination contains two components including Tax Determination Management and the tax rule management which manages the requirements and processes around automatic tax calculation based on transaction details and tax setup information (Stacey, 2010). Tax Record Repository. This contains the components used to record all the tax documentations and transactions, which makes reference easy incase the need arises (Stacey, 2010). Properties are conveyed free and clear of the tax and municipal claims, and charges of whatsoever kind, depending on how it is designed separately for tax issues. Tax Administration Services. This looks at the operations of the outstations to provide a convenient option for persons to pay their taxes, without having to visit a tax office or pay online. This one manages the accounting for all tax transactions. It would includes; Value Added Tax (VAT), Income Tax (IT) filings and property tax many more. Tax Reporting Ledger. This component manages the record Repository and the Tax Content to enable reporting where the need arises. This reduces the time that would be spent by the revenue officials preparing the reports for the stake holders. 2.2 To evaluate the efficiency of tax administration in Uganda “The aim of any tax administration is to promote voluntary compliance by creating a reasonable possibility that non-compliance will be detected and suitable penalties applied” (Uganda Revenue Authority, Towards VAT, February 1994). The URA discusses in its paper Towards VAT (1994) that to achieve a sufficiently high level of collection efficiency in tax administration, a responsible tax paying culture should be created. There should be paper based transactions at all levels, tax payers and tax collectors should be educated, sophisticated Information Technology is needed as well as adequate resources. Furthermore, adequate physical controls for example for exports, effective administrative support, strong legislation and political support are necessary. According to Kaujju (The New Vision, 8 March, 2011), some of the issues mentioned have been addressed, and others are being attended to while some are still a problem. Tax Administration: Silvani and Alberto (1992), and Mikesell (1998) point out what constitutes tax administration internationally; however, tax administration has not been defined. Tax administration may be referred to as dealing with taxpayers in order to collect tax and sanctioning non-compliance. However it largely deals with gathering and processing information. That is sensitization and providing taxpayer services to keep compliance, assessment and tax collection procedures (Gupta ,1997). In Uganda, Oriaro (1997), Abigaba (1998), Chen and Reinikka (1999) and Mulindwa (2000) have also pointed out the aspects they consider relevant in Uganda, and in summary these include locating of the taxpayer, checking on taxpayer compliance and collection of taxes. Although several writers have tried to explain the meaning of tax administration, Mulindwa (2000) cautions readers not to confuse tax policy, tax management and tax administration. Tax policy is like a law and its tax administration that brings tax policy into reality (Naimeede; 1998 and Mulindwa; 2000). Before the formation of the URA in 1991, tax administration was the responsibility of the Department of Income Tax in the Ministry of Finance. The department was headed by the Commissioner for Income Tax and the Commissioner was deputized by The Chief Assessor and The Chief Collector; each of whom had assistants in different administrative regions of the country like Mbale, Jinja, Masaka, Mbarara and Gulu (Bahemuka, 2006). On the creation of the URA, Bahemuka (2006) notes that a number of structural changes took place at the authority and Peter Kaujju (The New Vision 8March, 2011) reports that the authority has undergone structural changes with the aim of improving service delivery and increase collections. Prior to 2004, the authority was governed by a Board of Directors, which comprised a Chairman appointed by the Minister, the Commissioner General of the Authority a representative from Ministry of Finance, Ministry of Trade and Industry and Uganda Manufacturers’ Association as well as two representatives appointed by the Minister. The Commissioner General was in charge of the daily operations of the authority and was assisted by officers appointed by the Board. These included two Deputy Commissioner Generals – one in charge of Administration and one in charge of Revenue; the Secretary to the Board, Commissioners for Finance and Administration, Internal Revenue, Customs and Excise, Internal Audit and Tax Investigation, Large Taxpayers and Research and Development. This structure indeed served to improve performance compared to the previous set up, as Kaujju reported in the New Vision of 8thMarch, 2011, increments in taxes collected since Financial Year 1990/1991 when the URA was created. However, the authority is still wanting structurally, for instance considering the Ministerial appointments to the Board, a minister may choose to appoint individuals who will serve few individuals’ interests and not the whole country, much as the individuals appointed to the Board had to have knowledge and experience on tax matters. This even is more delicate because as Bahemuka (2006) notes, the minister has overriding powers over the Board. Richard M. Bird (1992) suggests that an appropriate organizational structure is necessary for effective tax administration. To concur with Bird’s view, the authority underwent restructuring which was concluded in 2004 and as Kaujju reports in the New Vision of 8th March, 2011, the restructuring “led to the merging of some departments from eleven to five and the number of employees also dropped to about 1,800 from slightly over 2,200 all in quest of efficiency”. Furthermore, as Bird (1992) agrees with the effect of the structure on efficiency in tax administration, Kaujju (New Vision 8 March, 2011) reports that since 2004 the URA has been performing above forecast as a result of administration efficiency among others. It is worth noting though that much as there have been structural changes over the years in as far as tax administration in Uganda is concerned and indeed there have been improvements in the performance of the same the URA still has some challenges to overcome: The current structure mainly serves in favor of taxpayers, whose businesses are located in urban areas, hence potential tax payers in rural areas are left out – a leakage in revenue for the government. The authority therefore needs to work towards a structure that will allow it to access those potential payers at a minimum cost. Bahemuka (2006) looks at two factors as functions of tax administration that is assessment and collection of taxes due. Before the URA was formed, assessment and collection of taxes was managed by the Chief Assessor and Chief Collector respectively, who each had assistants in the different administrative districts of the country. According to Bahemuka (2006), it was the duty of the Chief Assessor to issue tax returns, receive and examine completed returns and prepare and issue notices of assessments, showing tax payable. The Chief Collector, on the other hand, was to collect tax due and account for it. Having individuals separately in charge of assessment and collection was fair enough to ensure that funds collected were not misused or stolen. However, the workforce was not adequate enough to perform effectively the procedures in question. This was contrary to Bird (1996) who emphasizes the need for an appropriate organizational structure if a system of tax administration is to be efficient at all. On the other hand, Okello (2006) fears the tax officials could collude with taxpayers to falsify records submitted. Upon the establishment of the URA, tax identification numbers (TIN) were introduced, with the aim of the URA knowing the income and business transactions of a taxpayer. As a matter of fact, the Income Tax Act (1997) S. 135 (2) requires that a taxpayer shows the TIN in any return, notice or document used. Tax payer identification is one of the most important aspects of tax administration. This is because, as more taxpayers are located and registered, the taxpayers that would otherwise evade are reduced. Hence, (Bird, 1991) noted that if taxpayers are identified and registered, revenue collection would increases as was the case in Bolivia. Therefore emphasis should be on identifying new corporation tax bases, which is also taxpayer identification (Asher, 2001). Okello (2006) observes that the Income Tax Decree of 1974 assumed that all businesses can keep proper books of accounts from which taxable income can be deduced. A URA discussion paper of 1994 also recommended that a minimum number of records be kept by the tax payer in, for instance, administration of a tax like VAT. Some of these records include annual accounts, sales and purchase invoices serially numbered. However, not all registered and potential taxpayers practice that kind of record keeping as Okello (2006) laments that many companies do not keep proper books of accounts much as it is the basis used to assess taxpayers’ income hence determine taxes payable. The resultant here is that URA has wrong information, if any is available, such that the taxpayer is either over taxed or under taxed. Taxpayers are permitted to furnish returns of income for a period of income to the Commissioner. In such a situation and according to the Income Tax Act 1997 S. 95 (1) (2), the Commissioner is deemed to have made an assessment of chargeable income of the taxpayer as well as taxes payable. This return is treated as a notice of assessment served on the taxpayer by the Commissioner. A major shortfall here is that the taxpayer may falsify information given in the assessment and much as the ITA provides for penalties in case of false or misleading information, Income Tax Act (1997) S. 153 and Bahemuka (2006) too note that the Commissioner can ignore the self-assessment and raise an estimated assessment with reasons, Okello (2006) on the other hand believes that taxpayers may collude with tax officials to falsify records submitted to the authority. Assessment is another aspect of tax administration (Bird, 1992) which is the process of ascertaining / estimating a tax liability. With corporation tax, this is done by assessors who are usually the technical people in the tax bodies responsible for revenue collection. It is necessary that these charges should be updated, to take account of inflation, but most especially the current cost of providing such services. Without such measures, there would be no prospect of enhancing the contribution of corporate to the total budget revenue. Transparency in a tax system is “reflected in terms of completeness and quality of information available to the public and decision makers in tax administration, especially in regard to the nature, magnitude and consequences of tax evasion and non- compliance (Satish & Clive, 1996). Quality and completeness of information available to decision makers in the tax administration leads to internal transparency, while external transparency on the other hand refers to information available to the general public. Satish & Clive (1996) emphasize the importance of both types of transparency for a tax system to be efficient. They lay importance on openness in processes that enhance interaction and feedback between administration and the public, asserting that it gives checks and balances, besides giving the public confidence in the system’s propriety and credibility. Increased transparency and accountability in government processes goes a long way in depoliticizing public administration, and it secures consensus from the public on implementation of economic policies and programs; it also limits political and administrative discretion hence corruption in the mobilization and allocation of resources. The duo explains that in Sub-Saharan Africa, transparency in tax administration increases pressure on politically influential and financially capable taxpayers to meet their tax liabilities, arguing that when other tax payers see the former improving in tax compliance then they too are increasingly willing to comply hence reducing chances of corruption in revenue services. Tumuhimbise (2000) and Bhatia (2006) stress the need for taxpayers to understand matters about taxation and taxes easily. The case in Uganda has not been so, with Kaujju (The New Vision March 8, 2011) reporting that lack of information amongst the public regarding tax matters is the biggest challenges faced by the tax authority in some of the processes of tax administration. To this effect, the authority has put in place tax days, where it takes an opportunity to interact with the public, giving them more information about tax matters, thereby increasing transparency levels by the URA. Sensitisation of taxpayers refers to taxpayer education. As was noted by Bird (1989), it involves educating them as a means of shaping their attitudes. It is necessary to convince taxpayers to comply so as to enable government do its duties. Snarely (1988) asserts that the strive to reinforce tax compliance behaviour by sending messages in the media, leaflets, visual and audio media and bill boards stressing the benefits of compliance and the consequences of non-compliance do improve revenue collection. However, as Surrey (1974) and Thirsk (1991) pointed out, tax administration deals with a public that is unfamiliar with tax knowledge. Therefore, sensitizing the public may have little impact on revenue, since even the informed taxpayers may evade the tax for reasons ranging from ineffectiveness of monitoring structures (Chen and Renikka , 1999), to absence of benefits realized from taxes paid (Wentworth, 1985). They further noted that sensitization can go a long way to achieving compliance and improving revenue performance. Considering tax regimes that preceded the current URA, modes of operation all suggest lack of transparency in the way tax related transactions were conducted, more so before TINs were introduced. This lack of transparency is contrary to the expectations of Satish & Clive (1996) that an efficient tax system is facilitated by transparency in tax administration. Currently, looking at policies regarding tax exemptions and tax holiday and who qualifies for them, some taxpayers are not well-informed as to how these exemptions / holidays are reached and who qualifies for them. Actually Okello(2006) notes with concern that there are many tax exemptions in the Income Tax Act, with most of the exempt persons being the rich who can actually pay the tax. This only results in reduction of collection levels. The URA, in a bid to improve transparency, has put in place a modernization plan to improve services in the domestic tax area, customs, integrity, communication and taxpayer education areas among others as reported by Kaujju (The New Vision, March 8, 2011) – a positive step towards increased transparency. Much as Satish & Clive (1996) believe that enhancing transparency of tax administration through better compliance and enforcement improves revenue performance the URA is faced with challenges of smuggling while others fail to remit their tax returns for VAT and PAYE voluntarily as reported by Kaujju (The New Vision 8 March, 2011). This, the report explains, is regardless of the fact that there are some people who have complied because initially they were not informed. A weak administrative capacity of the tax authority – central or local – leads to low collection of taxes (Satish & Clive, 1996). This situation is worsened if taxpayers have no accounting systems because accounts cannot be verified, a notion agreed to by Okello (2006). Satish & Clive note that 80% of 10,000 businesses in a country like Madagascar are taxed on presumptive basis which may lead to underestimation of income; however, Okello (2006) observes that the Income Tax Decree of 1974 assumed that all businesses can keep proper books of accounts from which taxes can be deduced. This was a problem for the tax authorities as small taxpayers could not keep full / proper accounting records. Consequently, the presumptive tax was introduced in the Income Tax Act 1997 (S. 4) for administrative convenience. In Uganda currently, many businesses in the formal sector are making an effort to have proper accounting systems in place, but some tax payers do manipulate this system so as to have less income reflected, thus reduced taxes payable. Bhatia (2006) considers a tax structure as a set of all taxes and their rate schedules; the tax system chooses and adheres to certain principles. Bhatia (2006) believes that a good tax system is designed basing on an appropriate set of principles like equality and certainty, where he argues that the rich should pay more taxes. Indeed Tumuhimbise (2000) concurs with him, noting that good tax principles should include simplicity and equity. A tax structure, Bhatia (2006) asserts, is associated with the makeup of a country’s economy and should be approved by the legislature. Bhatia (2006) laments that in some cases theory and practice of tax structure and policy may vary with each other, therefore taxes should be designed in a way that reduces negative effects and strengthens positive effects. Bhatia (2006) introduces the single and multiple tax systems: the single tax system comprises one tax type and was advocated for in the past, he argues that this was because of “poor understanding of working of a complex modern economy”. He notes, among other issues, that a single tax system may not yield adequate revenue to meet a government’s needs hence may not help the economy in achieving its objectives of growth. In his book Public Finance Bhatia (2006) proposes that any modern economy should take on the multiple tax system because income for a modern economy originates from many sources; it permits equitable distribution of income and wealth and some taxes promote regional growth. Satish & Clive (1996), however, argue that a tax system should not be very complicated as its administration may become difficult while Okello (2006), on the other hand, argues that a structure like Uganda’s with a number of tax exemptions, more so being applicable to organisations which can pay the taxes, create a kind of inequity amongst the taxpayers; Tumuhimbise (2000) further points out that much as there was an increasing trend of increase in revenue collection in the early 1990’s, investments licensed by the Uganda Investment Authority during the first half of the decade affected collections because of tax holidays and concessions. He is of the view that income on profits and capital gains as well as domestic goods and services are popular taxable areas, hence concretized policies to tax both personal and corporate income and consumption taxes are worth pursuing. Tumuhimbise (2000) adds that Uganda has concentrated tax efforts in the area of taxes on international trade and transactions, a pattern proposing export taxes and high levels of imports or high tariffs on low volumes of imports and further points out that in Uganda little revenue is derived from taxation of domestic activities since most of them are not commercial transactions, blaming the country’s poor structure in the 1970’s on economic war policies characterized by expulsion of Asians, reduction of foreign investment and reduction in government tax revenue among others. Considering the small industrial base of our economy, Tumuhimbise (2000) is not optimistic that the structure of taxes in Uganda is going to change soon!. For a good tax system to be in place, Bhatia(2006) believes that taxes payable by an individual should be certain and not arbitrary. Satish & Clive (1996) too agree that tax payers ought to be educated about tax matters, a theory acceptable with the Uganda Revenue Authority as reported by Kaujju (The New Vision March 8, 2011). In addition to certainty, the mode and timing of payment should be – as far as possible – convenient to the taxpayer and the system should also be very easy to understand as noted by Bhatia (2006) and Tumuhimbise (2000), or else it will be difficult to administer the taxes and may breed problems of interpretation and legal disputes (Bhatia, 2006). To back this up, Kempaka and Muhumuza (1999) report that a difficult tax regime promotes corruption. A good tax system, Tumuhimbise (2000) and Bhatia (2006) argue, should be in such a way that the cost of collecting taxes should be lower than revenue collected, adding that taxes that are too widespread are difficult to administer and increase administrative expenses on the taxpayer. Tumuhimbise (2000) further recommends that costs of compliance are not too high for the taxpayer, or else the taxes will be resisted by the taxpayers. Kempaka & Muhumuza (1999) in a report, reveal that the more types of taxes a firm needed to pay the higher the probability that they would pay bribes. This is confirmed by Kaujju’s report in The New Vision of 8th March, 2011, where he reports that the URA was rated among the most corrupt entities in the country. 2.3 To establish the relationship between E-Tax system and efficiency in tax administration in Uganda. E Tax, being a web-based application can be accessed at anytime and anywhere at the taxpayer’s convenience. Since the taxpayer does not have to be at URA office premises to file returns, it greatly reduces the level of bureaucracy and time wasting because of very long queues at offices and banks, which previously was synonymous with any matters to do with taxation. The Taxman (URA, 2010), reports that processes which used to take two days previously now can be done within 15 minutes. Because of its format and structure, procedures are clearly laid out on the web portal such that any transactions being done are performed with utmost transparency, which Satish & Clive (1996) believe to be necessary for effective tax administration. With the E-Tax application, basically most transactions can be done at the taxpayer’s desk, a move which greatly reduces compliance costs and improves enforcement. In regard to the tax structure, the E-Tax application applies mainly to domestic taxes and non-tax revenues like motor vehicle registration, licensing services but currently does not apply to customs and excise taxes. This leaves a gap and creates a loophole for loss of revenue, much as the URA has acknowledged an improvement in domestic tax collections with the introduction of E-Tax (URA, 2010). Assessment process under the E-Tax is automatic, but depends on the information availed by the taxpayer. If the taxpayer gives wrong information then the system in turn gives a wrong assessment; this poses a challenge despite the fact that the law calls for penalties in case a taxpayer gives misleading information, as tax officials may still go ahead and collude with the taxpayers to give wrong or misleading information. The URA frequently assesses tax returns submitted by tax payers. These assessments are typically desk reviews of self declarations and supporting documents. The tax officer may accept the tax payers’ declaration as it is or assesses an additional tax to be paid. The government of Uganda through Uganda Revenue Authority established in 1991 has been able to further strengthen tax administration through a series of institutional reforms (Mutebile, 2001). URA administers different types of taxes under different Laws (Acts) such as Income Tax, Value added tax, Customs duties and Excise tax among many others, Hence URA is supposed to ensure taxpayers comply with the respective tax law It is necessary to mention Kaldor's statement (1980) that the efficiency of a tax system is not determined only by appropriate legal regulation but also by the efficiency and integrity of the tax administration. In many countries, especially in developing countries, small amounts of collected public revenue can be explained by either incapability of the tax administration in realization of its duty, or with some degree of corruption. Regardless of how carefully tax laws have been made, they could not eliminate conflict between tax administration and tax payers. Tax administration with a skilled and responsible staff is almost the most important precondition for realization of "tax potential" of the state. It is generally known that tax laws and tax policy are as good as the tax administration. Jenkins (1992) emphasizes that the tax system can never work better than its tax administration, but even the best tax administration would certainly fail to turn a bad tax system into a well-operating one. He also warns that many ambitious tax reforms failed because of the inefficient tax administration. Without the permanent reorganization of the tax administration and almost daily improvements in methods of its management, it is impossible to expect that tax reforms could be realized successfully (Quintana, 1986). In tax reforms there is a close correlation between successful tax policy and efficient tax administration. In other words, there is no good tax policy without efficient tax administration (Jenkins, 1994). CHAPTER THREE METHODOLOGY 3.0 Introduction This chapter shows a description of research design, study population, sampling design which includes the sampling method, sampling procedure and sample size, sources of data collection, data collection methods, data processing, analysis and presentation and the problems encountered. 3.1 Research Design A research design is a detailed plan which guides the study. Dalton L. R. and Todor, C (1979) defines it as the plan and structure of investigation so conceived as to obtain answers from research questions. To determine the approach and strategy that was to best meet the objectives and answer the questions researcher mainly use, cross-section research was used since the research is to be carried out once in which both qualitative and quantitative techniques were utilized. Exploratory research design, since little is known about the phenomenon in question, explanatory research to explain the different E-tax service systems and later predictive research to enable the researcher predict the outcomes of the study. 3.2 Area of Study. The research was carried out in Kampala district most especially in the Kampala Nakawa division. Research was therefore carried out with the URA officials, supervisors and managers of the Uganda Revenue Authority, and the Business Enterprises’ managers, directors and employees, in URA Kampala division. 3.3 Study Population The study population included 10 staff from Uganda Revenue Authority and 70 tax payers (market vendors, property tax payers, boda boda cyclists, UTODA officials and tax authority). Also the Researcher went to different offices where URA services are used visit the directors, managers and employees, URA officials, commissioners when discovering the population to be used when carrying out his research. 3.4 Sample Size and Method In the sample size determination (the act of choosing the number of observations to include in the sample) is important feature of any empirical study. Therefore the researcher used 50 respondents to be able to acquire information and also to determine the expense of data collection as illustrated below. Table : Sample size and Selection Method. Population Size Method Why Tax payers 30 Cluster sampling Simple random This is because tax payers were selected from different areas of Kampala that is, Kampala town and the central business district. This method was used to give equal chance of selection of respondents in order to get accurate results. Worth noting though is that this group is the most affected since they are the end users of the service. Clearing agents 8 Simple random These are among the end users of the service in the sense that most tax payers always run to them for assistance and hence they use the service more frequently. So they are also interested parties in this new implemented system. IT Personnel in URA 2 Purposive sampling Given that they are at the fore front of the application of the system, it is wise to include them. They run the system, correct errors and complaints from the tax payers and handle any filing related queries. URA supervisers, officials and managers 10 Snowball Sampling This method was used to enable the researcher get information from the right people (the professionals). These officials inform one another about the existence of the questionnaire and therefore give feedback accordingly. 3.5 Source of Data 3.5.1 Primary Data Primary data was collected by use of questionnaires and interview guides in the field and this assumed to give first hand information on the subject under study. 3.5.2 Secondary Source Secondary data was got from sources like; Annual reports, Journal articles, internet, magazines, newspapers and books related to the subject of the study and these were consulted at length to extract the information required to support the findings from the study respondents. The researcher visited such places and got information that was related to the study variables as presented in literatures review. 3.6 Data Collection Methods The study was incorporated the use of various methods in the process of data collection in a bid to come up with sound, concrete and credible research findings. The researcher therefore amalgamated the use of questionnaire, interviews and documentary analysis in the process of collecting primary data. 3.6.1 Self administered questionnaire; An open and close ended questionnaire were constructed and this was self administered where the researcher allowed the study respondents to fill the questionnaire in the study field. The questionnaire were divided into sections including the title, purpose of the study, explanation about the research and the researcher; a section concerning the respondent’s demographics, for instance their age, level of education, period taken in the current position / office (experience). The main section contained questions and statements designed to collect data on application of the E Tax and questions relating to efficiency in administration of taxes in Uganda, including challenges faced in tax administration; questions on factors that the respondents believed are needed for efficient tax administration and statutory requirements as well were sought after in the questionnaire. 3.6.2 Interview guide; an interview guide was also drafted with a set of questions that the researcher asked respondents during an interview and this was open ended in nature. The researcher personally recorded the provided responses as per study respondents during the process of carrying out an interview. These tools were used to collect information from respondents selected from head of departments at Uganda Revenue Authority. 3.6.3 Discussion. The researcher discussed the different issues with the different people who are informed about the existence of E-tax services, as it gave these individuals who are knowledge about tax to give their views. This enabled the researcher get variety of information in relation to the study. 3.6.4 Review of Documentation: The researcher got information from existing documentation about the E -Tax, general tax administration including factors required for efficiency in the same; this documentation included reports, study texts and publications by the Uganda Revenue Authority and other authors. 3.7 Research Procedure The study observed all those procedures followed in research. Using the letter of introduction obtained from the Dean Faculty of Business and Administration, the researcher was introduced to every respondent reached to, fully explaining the purpose of research. After getting their consent, he conducted the research. The researcher also built the confidence of the respondents by assuring them that their views were confidential and was used only for academic purposes. 3.8 Methods of Data Handling Data collected was handled as follows; 3.8.1 Data editing; This involved the process of examining collected data to correct errors and omissions from the results that were obtained and hence communicate the findings. The researcher then classified the data in process of arranging in groups or class on basis of common characteristics for example according to different opinions from different people, say whether the agree, disagree, strongly agree. Or strongly disagree and many more. The research was tabulating the data in process of summarizing raw data and displaying the information for further analysis where necessary. 3.8.2 Data presentation: The edited data was ready for presentation. Presentation of data involved the use of tables that were generated from the questions relevant to the study variables. 3.8.3 Data analysis In data analysis, I used SPSS system which was a comprehensive system for analyzing data,SPSS can take data from almost any type of file and use them to generate tabulated reports, charts and plots of distributions and trends, descriptive statistics and complex statistical analysis, the researcher used both qualitative and quantitative data analysis. The researcher needs a rough process content analysis of information from the discussion in the analysis, in order to identify the main theme that emerges from the response given by the researcher. Therefore the researcher went through the following process. Identify the main theme, by carefully going through descriptive response given by the respondents to the given questions. For the researcher to simplify her work, by assigning percentages to the main theme, where he needed to account for the number of times a theme had occurred in an questionnaire for example, how many times the respondents say to a statement given in the questionnaire. The researcher classifies the response under the main theme, analysis of transcripts of all the questionnaires and classifies their response under different themes and finally the researcher integrated themes into a report. Where the number of respondents was small, the researcher used quantitative method of data analysis which include; manual data analysis and computerization since he is familiar with the computer skills. 3.8.4 Interpretation of the study results Interpretation and discussion of the results were done by the researcher explaining the strength of the study variables basing on the frequencies and percentages, charts and graphs. Statistical conclusions were further made during the interpretation of the study results. 3.9 Ethical Consideration Before commencing the research, an introductory letter from the University sought and the purpose of the study explained to the authorities to avoid inconveniences and misunderstandings about the purpose. The information collected was kept highly confidential 3.10 Limitations of the study The study involved the following constraints; The Researcher was limited by financial resources such as the transport costs and stationery to carry out her research effectively. In an effort to mitigate this shortcoming, the researcher sourced for funds from a few sponsors. The researcher faced a problem of limited time since part this research is carried out during that time when preparing for examination. Since there is limited research done on the E-tax application and its efficiency in tax at URA, literature and measurement scales for the variables was not easy to obtain. But the researcher endeavored to use literature from developed countries and also carried out E-tax service profiling to obtain the measures. The study was affected by non – response from some of the business enterprises’ directors to be contacted most especially the small firms which are very much sensitive to taxation issues and consider the information required private. The researchers obtained a letter of introduction and try to convince the respondents that the research was for study purposes and their responses will be kept confidential. The cross-sectional research method was used may have a limit on the accuracy of the results to be portrayed in this study. Since the adoption of E-tax is not only studied at a time but experiments could provide better results, thus affecting findings had the study used longitudinal approach. CHAPTER FOUR DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF RESEARCH FINDINGS 4.0 Introduction. This chapter presents the findings of the study on the E-tax system and efficiency in tax administration, and it explains the different objectives basing on the existing literature and they include Evaluating application of the E- Tax system in Uganda, Evaluating the efficiency of tax administration in Uganda and to establish the relationship between E- Tax system and efficiency in tax administration in Uganda. The findings were presented with the help of tables for purposes of easier understanding, clarity and interpretation. The response to the study consisted of 30 taxpayers. This chapter therefore covers the presentation, analysis and interpretation of the findings the researcher obtained from the field based on the above research objectives. It is against this analysis that the researcher based on to make conclusions and recommendations. 4.1 Background Information on the Respondents. 4.1.1 Gender of the respondents. In order to identify the gender that is efficient with the use of E-tax system and efficiency in tax administration, the respondents were asked to indicate their gender when giving responses. .the results are presented in the pie chart below. Table : Showing the users of E-tax according to gender. Gender Frequency Percent Valid Percent Cumulative Percent Valid Male 14 46.7 46.7 46.7 Female 16 53.3 53.3 100.0 Total 30 100.0 100.0 Source: Primary Data2015 Table above shows that majority of the respondents were female representing 53.3% of the respondents. Since the respondents were only those who were using the E-tax since system, results in the table imply that there are more female users than males. This is because the females embrace the technology than the men. Laura (2007) says that more girls than boys (53.3% vs 46.7%) report experience with computer programming. This implies that companies do not discriminate against gender when it comes to employment. 4.1.2 Tenure in Business. In order to establish how long tax payers have been paying taxes and doing business with URA, tax payers were asked to state the period spent in business. The results are presented in table 1. Table : Showing How Long Tax Payers Have Been In Business. Tenure in business Frequency Percent Valid Percent Cumulative Percent Between 5 -10 years 20 71.4 71.4 71.4 Above 10 years 8 28.6 28.6 100.0 Total 28 100.0 100.0 Source : Primary Data2015 Results in Table 3 show that 71.4 %( 20) of the respondents have been in business for a period between 5 to10 years and 28.6 %( 8) have been in business for a period exceeding 10 years. This implies that majority of the tax payers have been in business for a considerable time hence, they understand all the dynamics involved in tax payment and administration with URA. 4.1.3 Tenure of Service in the Domestic Taxes Department. In order to establish how well URA staff is acquainted with internal process operations, they were asked to state how long they have served in the domestic taxes department and the results are shown in table 4. Table : Showing Tenure of Service in Domestic Taxes Department. Frequency Percent Valid Percent Cumulative Percent 1 year 4 40.0 40.0 40.0 Between 2-5 years 4 40.0 40.0 80.0 Between 6-10 years 1 10.0 10.0 90.0 Above 10 years 1 10.0 10.0 100.0 Total 10 100.0 100.0 Source : Primary Data2015 Results in Table above show that 40% of the respondents in URA have served in the domestic taxes department for one year and between 2 to 5 years respectively while 10% have served between 6 and 10 years and above 10 years respectively. Majority of the staff have served between 1 and 5 years. This could probably be attributed to the organization policy of recruiting new people every year. It can further be argued that respondents who have served beyond 10 years are least presented because of the continued job switching in country. This implies a balanced share of competences as there is a fair distribution of tenure of office between those who have spent one year and those that have spent more than 1 year. This therefore enables ease of work among the staff as there is increased interaction among the staff hence achieving the goal and aim of revenue administration through improved internal processes and operations. 4.1.4 Length E-tax has been used. In order to establish how long the respondents have been using E-tax services the respondents were to show how long, by ticking were it was appropriate for them. Results were recorded as indicated in the table. Table . Showing the length of time E-tax services have been used. Number of years Frequency Percent Valid Percent Cumulative Percent 1 2 07.0 07.00 07.00 Between 2 and 5 14 47.0 47.00 54.00 Between 5 and 10 08 26.0 26.00 80.00 Above 10 years 6 20.0 20.00 100.00 Total 30 100.0 100.00 Source: Primary Data2015 The majority of the respondents (47%) have used E-tax services for a period between two to five years. This could be probably because E-tax being new system and therefore has a few respondents who have used it for more than five years, meaning a few people are using the system. This could be because E-tax has probably been introduced and therefore many or large population has not used it. 4.1.5 Findings on age bracket of the respondents Table :Showing findings on the age bracket Frequency Percent Valid Percent Cumulative Percent 20-30 7 23.3 26.9 26.9 31-40 13 43.3 50.0 76.9 41-above 6 20.0 23.1 100.0 Total 26 86.7 100.0 Missing System 4 13.3 Total 30 100.0 Source : Primary Data2015 Table above indicates that majority of the respondents were in the age range of 31-40 years, implying that many companies employ fairly young, energetic and fresh staff to handle tax matters. 4.1.6 Findings on the qualification level of the respondents Table : Showing findings on the qualification of the respondents Frequency Percent Valid Percent Cumulative Percent Diploma 5 16.7 18.5 18.5 Bachelor’s Degree 17 56.7 63.0 81.5 post graduate 5 16.7 18.5 100.0 Total 27 90.0 100.0 Missing System 3 10.0 Total 30 100.0 Source : Primary Data2015 Table above shows that majority of the respondents were Bachelor’s Degree holders, signifying that companies employ an educated class of people who can ably handle tax matters. 4.2 Application of E- Tax System 4.2.1 E-tax service system components. To identify the components that are commonly used by taxpayers and URA officials, the respondents were asked to find out where there existed components of which many respondents suggest there existed some and therefore ticked yes as their responses are indicated in the chart of results below. Table . The table showing the responses concerning the components of E-tax service system Frequency Percent Valid Percent Cumulative Percent Yes 27 90.0 90.00 90.0 No 03 10.0 10.00 100.0 Total 30 100.0 100.00 Source: Primary Data 2015 As indicated above in table above, many of the responses (90%) indicated that there are many components of E-tax service system and went ahead to suggest some and among the many components suggested included the following. Online VAT filing which they say has saved much of their time, online income tax filing, online payment, NSSF (National Social Security Fund), component of not filing current return before previous return, integration of E-tax to ASYCUDA used by customs department. 4.2.2 Comprehending of E-tax Service system. In order to establish whether the respondents are at ease with the E-tax service ensure that the respondents were asked whether they really find it easy to understand and also whether they comprehend the E-tax service system which they adopted. The response and therefore result to the response were as follows. Table . The level at which respondents comprehend the E-tax service systems. Frequency Percent Valid Percent Cumulative Percent Yes 18 60 60.0 60.0 No 12 40 40.0 100.0 Total 30 100 100.0 Source: Primary Data 2015 From table 9, the results indicate that for some reason however not stated the taxpayers a percentage (60%) of tax payers do understand what to do when it comes to E-tax and therefore the need for research. The respondents went ahead to give reasons as to why they are finding it easy to comprehend, and among the reason given include, easy to understand the language used on the URA web portal, many computations are done automatically, less tiresome mandatory fields are clearly shown by the asterisk. Saves time, the versions for E-tax have guide lines to guide the used. This implies that the tax payers a reasonable percentage comprehends the E-tax services. 4.2.3 URA staff and taxpayers are trained and educated on E tax matters Table :Showing findings on training and education of URA staff and taxpayers on E Tax matters Frequency Percent Valid Percent Cumulative Percent strongly agree 5 16.7 17.2 17.2 Agree 14 46.7 48.3 65.5 not sure 3 10.0 10.3 75.9 Disagree 5 16.7 17.2 93.1 strongly disagree 2 6.7 6.9 100.0 Total 29 96.7 100.0 Missing System 1 3.3 Total 30 100.0 Source primary data 2015 Table above shows that 46.7% of the respondents agreed that URA staff and taxpayers are trained and educated on E-tax matters. This has been because of the sensitization that URA has been carrying out since the introduction of the E Tax system. 4.2.4 As a registered taxpayer I file returns using E tax system Table : Showing findings on filing returns using E tax system Frequency Percent Valid Percent Cumulative Percent strongly agree 16 53.3 53.3 53.3 Agree 10 33.3 33.3 86.7 not sure 3 10.0 10.0 96.7 Disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source primary data, 2015 Table above shows that 53.3% of the respondents strongly agreed that as registered taxpayers they filed returns using E - Tax system and 33.3% agree with the statement. This was because it is mandatory to use the system in the area of research. 4.2.5 I pay taxes using the E tax system as a registered taxpayer Table :Showing findings on payment of tax using E tax system Frequency Percent Valid Percent Cumulative Percent strongly agree 17 56.7 56.7 56.7 Agree 12 40.0 40.0 96.7 not sure 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source: Primary Data, 2015 Table above shows that 56.7% of the respondents strongly agreed that they used the E Tax system as registered taxpayers to pay taxes and 40% agreed. This proves that most if not all taxpayers in areas where E-Tax is in use indeed pay their taxes using E-Tax system. 4.2.6 Banks are enhancing E -Tax application for me as a taxpayer Table :Showing findings on if banks enhanced E- tax application Frequency Percent Valid Percent Cumulative Percent strongly agree 7 23.3 23.3 23.3 agree 15 50.0 50.0 73.3 not sure 3 10.0 10.0 83.3 disagree 5 16.7 16.7 100.0 Total 30 100.0 100.0 Source :Primary Data 2015 From table above 50 % of the respondents agreed with the statement that banks enhanced E-Tax application for them as tax payers owing to the fact that URA is implementing the E-Tax system through banks as well. 4.2.7 There is a negative effect of power interruptions and low connectivity speed of internet on the application of E -tax Table : Showing findings on power interruptions and low connectivity of internet on E- tax application Frequency Percent Valid Percent Cumulative Percent strongly agree 13 43.3 43.3 43.3 Agree 15 50.0 50.0 93.3 not sure 1 3.3 3.3 96.7 strongly disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source primary Data2015 From table above, it is clear that 50% of the respondents agreed that power interruptions and low connectivity of internet speed had negatively affected the application of E -Tax while 43.3% strongly agreed. 4.2.8 Major Weaknesses of the e-tax System. In order to establish the loopholes in the e-tax system, tax payers were asked to state the major weaknesses in the e-tax system. The results are indicated in table below. Table : Showing Major Weaknesses in the e-tax System. Frequency Percent Valid Percent Cumulative Percent System always slow at the filing date 5 17.9 17.9 17.9 Serve is ever busy 15 53.6 53.6 71.4 It's expensive 2 7.1 7.1 78.6 Not user friendly for computer illiterates 5 17.9 17.9 96.4 Fails to use Firefox/Mozilla browser while filing 1 3.6 3.6 100.0 Total 28 100.0 100.0 Source: Primary Data 2015 Results in Table show that majority of the respondents signaled a problem of servers as being the major weakness of the electronic tax filing system. This is depicted by majority of the respondents (53.6%). The poor cyber infrastructure in the country can further be seen coming into play again as a major weakness in the e-tax system as 17.9% observed the same. One important aspect to be observed is that towards the 15th day of filing, the system is down and too slow. This implies that the system in place is not good enough to handle all the users at the same time. This greatly undermines compliance levels as tax payers become disgruntled with the system hence leading to non- compliant behaviors. This goes ahead to further show that the system is overwhelmed by the number of users. 4.2.9 How Weaknesses can be overcome. In order to establish how the weaknesses in the e-tax system could be overcome, tax payers were asked to state solutions. The results are shown in the table below. Table : Showing how Problems can be overcome. Frequency Percent Valid Percent Cumulative Percent Continued educating of taxpayers 13 46.4 46.4 46.4 Setting up various URA centers across the nation 2 7.1 7.1 53.6 Server should be upgraded 10 35.7 35.7 89.3 Using it as an alternative to the manual one 1 3.6 3.6 92.9 Installation of a user friendly system 1 3.6 3.6 96.4 Provision of e-tax clinics 1 3.6 3.6 100.0 Total 28 100.0 100.0 Source: Primary Data 2015 Table above indicates that majority of the tax payer’s advocate for continued education about the use of the e-system whereas a considerable number advocates for the upgrading of the current servers. Setting up various URA centers across the country is also suggested and a few also suggest installation of a user friendly system and provision of e-tax clinics around the country. In their view, Belanger, et al (2006) argue that they are several success criteria for a web site depending on the variety of goals such as selling, informing and advertising. The authors further argue that web site success is audience specific and it should take account of diverse perspectives of users and owners. Installation of user friendly systems is very vital given the state of the cyber infrastructure in the country and the literacy levels. Presenting to tax payers a system that can easily be used in fulfilling their tax obligations gains the country and the URA as an organization in the achievement of its goals and targets. 4.3 Efficiency in Tax Administration Table : Showing the efficiency of tax administration Efficiency of tax administration Frequency Percent Valid Percent Cumulative Percent Record/book keeping in Ugandan firms is sufficient enough for adequate assessment of income 09 30 30.0 30.0 Taxpayers and tax officials are well educated regarding tax matters 03 10 10.0 40.0 The organizational structure of the URA is sufficient enough for effective administration of taxes in Uganda 09 30 30.0 70.0 The current tax structure enables URA to assess business in rural areas 03 10 10.0 80.0 Uganda’s current tax structure allows for adequate collection of taxes 03 10 10.0 90.0 Processes of tax administration in URA are open enough and they give the public confidence in the system’s propriety and credibility 03 10 10.0 100.0 Total 30 100 100 Source: Primary Data 2015 From table above, 30% of the respondents agreed with the statement that record/book keeping in Ugandan firms is sufficient enough for adequate assessment of income. This is in line with Chapter Two of this report where it is noted that record keeping by firms is poorly done in Uganda more so for tax assessment purposes. Table above indicates that 10% of the respondents agreed with the statement that taxpayers and tax officials were well educated regarding tax matters; that taxpayers and tax officials are well educated as far as tax matters are concerned. The majority here, however, differs from Section Table above indicates that 30% of the respondents agreed that the organizational structure of the URA is sufficient enough for effective administration of taxes in Uganda. This concurs with the Literature Review (chapter 2.7) of this study which indicates that URA has undergone many changes in its organizational structure for purposes of improved tax administration. This equal disparity of uncertainty and disagreement suggests inadequacy in education of the public concerning general tax matters. From table the above, 10% of the respondents said that the current tax structure enables URA to assess business in rural areas. This suggests that URA is failing to capture tax from businesses in rural areas and thus reducing on the country’s tax base seems and also that taxpayers are not well informed about the country’s tax structure. Table above indicates that 10% of the respondents said that the Uganda’s current tax structure allows for adequate collection of taxes and This is another implication that taxpayers are not much informed about the country’s tax structure, a scenario similar to that in objective two of this chapter. From table above 10% of the respondents mention that processes of tax administration in URA were open enough and they gave the public confidence in the systems propriety and credibility, implying that there is need for more openness in processes in the tax administration system. 4.3.1 URA staff Opinion about the use of e-tax. In order to establish the attitudes of URA staff towards the use of e-tax system, URA staff where asked their views about the use the e-tax. Results are shown in table below. Table : Showing URA staff views about e-tax. Response Frequency Percent Valid Percent Cumulative Percent Very good 8 80.0 80.0 80.0 Good 1 10.0 10.0 90.0 Fairly good 1 10.0 10.0 100.0 Total 10 100.0 100.0 Source: Primary Data 2015 Table 18 shows that 80% of the respondents view the use of the e-tax as being very good while 10% view it as being good and fairly good respectively. This indicates that the attitude of URA staff towards the system is good as majority of the respondents view its use as being very good. This can probably be attributable to the level of training that URA management has put in place to equip all the staff with the necessary skills to attain efficiency. 4.3.2 Failures established though there is the adoption of E-tax service system. In order to establish the failures of the E-tax service System the respondents were asked to give their views toward failures URA has faced despite the adoption of E-tax service system Table : The table showing the view of respondents concerning the failures of E-tax service systems. Response Frequency Percent Valid Percent Cumulative Percent Yes 10 33.3 33.30 33.3 No 20 66.7 66.70 100.0 Total 30 100 100.0 Source: Primary Data 2015 Table 19; indicate that 66.7% that there are a few failures that URA has experienced during the process of adapting to the E-tax service system. This could be probably because many of the respondents were informed about the existence of the new system of E-tax service system and how to use it. Therefore they could not identify any kind of failure due to the adoption of E-tax service system. However a few respondents of about 33.3% could easily identify the failures. The respondents went ahead to give the failure of E-tax serve system and among the failures included unwillingness of clients to learn the system, internet failures especially in the far upcountry stations. This implies that there is a need for URA to rectify the problem with since they have been identified. 4.4 Application of E -Tax and Efficiency in Tax Administration 4.4.1 E- tax is internet based and considering that not all businesses have internet services in their office premises it may lead to an increased in the cost of tax compliance. Table : Showing findings on whether E tax being internet based and considering that not all businesses have internet services in their office premises has led to an increase in the cost of tax compliance Frequency Percent Valid Percent Cumulative Percent strongly agree 16 53.3 53.3 53.3 agree 12 40.0 40.0 93.3 not sure 1 3.3 3.3 96.7 disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source: Primary Data2015 Table above shows that 53.3% of the respondents strongly agreed that E tax is internet based and considering that not all businesses have internet services in their office premises it may lead to an increase in the cost of tax compliance, and 40% simply agree. The statement therefore holds true. 4.3.2 The E –Tax being a 24-Hour service has improved my ability to file returns on time Table :Showing findings on whether the E - tax being a 24-hour service had improved the ability to file returns on time Frequency Percent Valid Percent Cumulative Percent strongly agree 13 43.3 43.3 43.3 agree 15 50.0 50.0 93.3 disagree 1 3.3 3.3 96.7 strongly disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source :Primary Data 2015 Table above shows that 50.0%% of the respondents agreed that the E- Tax being a 24-hour service had improved their ability to file returns on time and 43.3% strongly agreed. This finding is true because indeed E- tax is a 24-hour service and thus the services can be accessed anytime and anywhere. 4.4.3 Procedures in E- Tax system require that I keep proper record of business transactions for easier assessment of returns Table : Showing findings on whether procedures in E- Tax system required that respondents keep proper record of business transactions for easier assessment of returns Frequency Percent Valid Percent Cumulative Percent strongly agree 13 43.3 43.3 43.3 Agree 16 53.3 53.3 96.7 strongly disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source primary data2015 Table above indicates that 53.3% of the respondents agreed that procedures in E tax system require that they keep proper record of business transactions for easier assessment of returns, 43.3% agree. However, this finding contradicts with finding on table, but the requirement may help companies undertake proper record keeping procedures to ease their work more so where tax assessment is concerned. 4.4.4 E -Tax has increased compliance due to reduced bureaucracies at URA offices Table :Showing findings on E-Tax has increased compliance due to reduced bureaucracies at URA offices Frequency Percent Valid Percent Cumulative Percent strongly agree 7 23.3 23.3 23.3 agree 13 43.3 43.3 66.7 not sure 6 20.0 20.0 86.7 disagree 3 10.0 10.0 96.7 strongly disagree 1 3.3 3.3 100.0 Total 30 100.0 100.0 Source: Primary Data 2015 Table above shows that 43.3% of the respondents agreed that E- tax had increased compliance due to reduced bureaucracies at URA offices and 23.3% strongly agree. This finding is true since one can access the services anywhere via the internet. 4.4.5 Application of E - Tax has enabled URA handle more taxpayers in a given period compared to previous systems Table :Showing findings on if application of E- tax had enabled URA handle more taxpayers in a given period compared to previous systems Frequency Percent Valid Percent Cumulative Percent strongly agree 8 26.7 26.7 26.7 agree 18 60.0 60.0 86.7 not sure 4 13.3 13.3 100.0 Total 30 100.0 100.0 Source: Primary Data2015 From table above, 60.0 % of the respondents agreed that application of E -tax had enabled URA handle more taxpayers in a given period compared to previous system. 4.4.6 The E-Tax has led to improved transparency in administration of taxes Table :Showing findings on if the E-tax had led to improved transparency in administration of taxes Frequency Percent Valid Percent Cumulative Percent strongly agree 4 13.3 13.3 13.3 agree 14 46.7 46.7 60.0 not sure 9 30.0 30.0 90.0 disagree 3 10.0 10.0 100.0 Total 30 100.0 100.0 Source: Primary Data2015 Table above indicates that 46.7% of the respondents agreed that E-tax had led to improved transparency in administration of taxes. Considering responses in Section two above, the result in this section indicates that the introduction of E-Tax has led to more transparency in tax administration. 4.4.6 Correlation between Application of E-Tax System and efficiency in Tax Administration Correlations Table : Correlation between Application of E-Tax System and efficiency in Tax Administration APPLICATION OF E -TAX EFFECIENCY OF TAX ADMINISTRATION APPLICATION OF E TAX Pearson Correlation 1 .513(**) Sig. (2-tailed) . .004 N 30 30 EFFECIENCY OF TAX ADMINISTRATION Pearson Correlation .513(**) 1 Sig. (2-tailed) .004 . N 30 30 ** Correlation is significant at the 0.01 level (2-tailed). From table 4.6 above, it is evident that there is a significant positive relationship between application of E- Tax and efficiency in tax administration indicated by Pearson’s coefficient r = 0.513 (**), p>0.01. This means that as long as E -Tax is well applied; there will be efficiency in tax administration. CHAPTER FIVE DISCUSSION OF THE STUDY FINDING, CONCLUSIONS AND RECOMMENDATIONS 5.0 Introduction This chapter outlines the researcher’s summary of findings, conclusion and recommendations on findings of the research; they are based on the findings given in Chapter Four of the study are and related to Chapter Two of the study; they are also based on comments given by some of the respondents during the course of gathering the data. The research project has in general achieved its aims. The goal of the study was to establish the effect of application of the E- Tax system on the efficiency of tax administration processes in Uganda considering that there had been claims of no transparency in tax administration processes, inadequate education of taxpayers about tax matters, too many bureaucracies at the URA among others, before the introduction of E Tax. The research process included reviewing several pieces of literature and gathering information from respondents directly concerned with tax matters at their places of employment. Results from the study largely concur with already written materials except in a few instances. 5.1 Discussion of Findings Most respondents were female, within the age bracket of 31-40 years, have had experience in their current offices for 1-5 years and hold qualifications suitable enough to handle taxation issues. 5.1.1 Evaluating Application of the E- Tax System The researcher’s findings show that most respondents agreed that URA staff and tax payers are educated on E -Tax matters and that most registered taxpayers use the E-Tax system to file their returns as well as make payments for the same; banks are also enhancing E-Tax services since payments of taxes has to be done through designated banks. It is, however, clear that power interruptions and low connectivity speed of internet negatively impact application of the E-Tax. The researchers findings indicate that URA has successfully implemented the adopted E-tax program as most of the respondents sampled were aware about the existence of E-tax services. However despite the existence of the success achieved by URA the failures still exist as respondents could not easily give reasons for the adoption of E-tax. Respondents still say they lack computer knowledge and through training about the E-tax service system and its use. Findings also indicate that there are many components in the E-tax service system which can be used by both the taxpayers and the URA officials and therefore the only need that is required is to inform their users about the E-tax services’ existence and importance to enable the rate of use to increase. 5.1.2 Evaluating Efficiency in Tax Administration in Uganda The study has shown that there is insufficient record keeping by Ugandan firms for purposes of tax assessment. It has also shown that contrary to the general consensus that tax officials and tax payers are educated on E-Tax matters; the same people are not well educated regarding general tax matters. Findings also showed that most taxpayers are satisfied with the organizational structure of the URA as far as being effective in administration of taxes in Uganda is concerned but many others are dissatisfied with it or are not sure of the structure. The structural changes mentioned in Chapter 2.7 of this report indeed seem to have enabled the URA administer taxes better. The current tax structure, however, does not allow the URA to assess businesses in rural areas and respondents agreed that the authority should take measures to assess businesses in these areas. Many people though, were not sure whether Uganda’s current tax structure allows for adequate collection of taxes and this in itself is an indicator in line with Section 4.4.2 of this study that tax payers are not very well educated on general tax matters. Besides the majority being uncertain about the tax structure, equal proportions of the public agreed as well as disagreed that the country’s tax structure allows for adequate collection of taxes. Findings of the study showed that processes in the URA are not open enough and these processes do not give the public confidence in the system’s propriety and credibility; there is also uncertainty regarding transparency in procedures followed when awarding tax holidays and tax exemptions, an issue cited in Chapter 2.9 of this study. Much as a majority is uncertain about transparency in procedures for awarding tax holidays and exemptions to organizations, majority of respondents agreed that tax exempt organizations are indeed suitable for exemption; yet again many people were not sure whether all tax exempt organizations are actually suitable for exemption. Considering that many people were uncertain about awarding of tax holidays and an almost equal number disagreed, it is not surprising that equal percentages of the population agreed and disagreed that 50% of exempt organizations deserve it. 5.1.3 Application of E -Tax System and Efficiency in Tax Administration The research findings indicate that there is an increase in the cost of tax compliance since E-Tax is internet based and not all businesses have internet services in their office premises; E-Tax system has however, enabled taxpayers file returns on time and the fact that procedures in the system require that taxpayers maintain proper records for tax assessment purposes. Compliance has also increased because of reduced bureaucracies at URA offices and the URA now handles more taxpayers in a given period of time with the E-Tax system. Findings further show that there is more transparency in administration of taxes with the E-Tax system in place. The research findings generally indicate a significant positive relationship between E-Tax application and efficiency in tax administration. 5.2 Conclusion The E-Tax system generally has improved tax administration in areas where it is applied; however the research has shown that there are still challenges faced in applying it, like power interruptions, poor internet connectivity, and lack of internet access in office premises for some businesses. Other hurdles to be overcome by the authority include tax education of the masses, the need for more transparency by the authority, poor recording keeping in firms and how to tax businesses in rural areas. 5.3 Recommendations System monitoring, this should be done at the implementation stage to enable the URA review all that is on the URA web portal and therefore change where the need arises and for better service delivery to the users of the E-tax services. System testing and validation, this should be done to enable checking for any kind of errors that would be within the system, to avoid inconveniences with the user (the tax payers and the URA officials). URA should call the taxpayers for training at the different branches to enable sensitization about the services that are rendered and therefore communicate all the reasons for the adoption of E-tax service as this will motivate the uses of the service, hence increase in the rate of compliances. URA should inform the government to enable E-tax services to be extended to higher institutions of learning, for effective training right from formal education level to the field. URA should find ways of reducing the URA web portal disturbances which is ever on and off especially at the time of deadlines, that is when filing VAT, income tax returns and many others to avoid penalties caused due to the web portal network. Measures should be taken by the authority to roll out the E-Tax system to the rest of the country and to other departments of the authority. URA could work more with the banks to further the aspect of online banking to make the payment process easier. URA should endeavor to have the legislature expeditiously enact the Information and Communication Technology law to govern electronic businesses in order to reduce the cost of stationery printing on the taxpayers. URA needs to add more effort in educating the masses about general tax procedures besides E- Tax; these may include issues like the country’s tax structure and how it is beneficial to the country and to the individuals, procedures in awarding tax exemptions and holidays and who qualifies for them. The authority needs to regularly publish organizations which are exempt from taxes and how the exemption was arrived at. The authority needs to educate taxpayers on the benefits of proper record keeping in relation to taxation. The authority should take measures to assess businesses in rural areas for tax purposes to widen the country’s tax base. URA should at the onset upgrade the e-tax servers to calm down the pressure on the current servers. URA should install user friendly features on the filing websites as to increase the tax payers’ interest of use of the system. URA should embark on a country wide sensitization of the system and increase on both print and electronic adverts about the use of the system so that the best can be got from it. URA should also provide e-tax clinics around the country. 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(2004). Analysis of norm processes in tax compliance. Journal of Economic Psychology, 24(6), 213-22. APPENDIX I: QUESTIONNAIRE Dear Respondents I am Kansiime Alex a student of the bachelor of Business Administration degree at Bishop Stuart University and am carrying out my research about the influence of the Application Of Electronic Tax System And Efficiency In Tax Administration: A Case Study Of Uganda Revenue Authority Mbarara Branch. This is one of the requirements to get this degree. Please kindly help the researcher in this study by answering the following questions in a way you feel appropriate. Your response will be only for academic purpose and will be treated confidential. Questionnaire to investigate the Application Of Electronic Tax System And Efficiency In Tax Administration to be filled by Uganda Revenue Authority Staff. SECTION: BACKGROUND INFORMATION 1. Name of the station……………………………………………………………………. 2. Sex a. Male : b. Female : 3. How long have you served in domestic taxes department (please tick what applies to you) a. 1 year : b. Between 2 and 5 years c. Between 6 and 10 years : d. Above 10 years 4. The qualification level of the respondents a. Diploma (b) Bachelor's Degree (c) Post graduate SECTION B: EVALUATING APPLICATION OF THE E TAX SYSTEM IN UGANDA 5. What is your view about the use of the electronic tax filing system? (a) Very Good (b) Good (c) Fairy Good (d) Others (Specify)…………………………………………………………………. 6. Could E-tax service system be having several components? (a)Yes (b) No 7. If yes, suggest some components of E-tax service system. a) ____________________________________________________ b) ____________________________________________________ c) ____________________________________________________ d) ____________________________________________________ e) ____________________________________________________ 8. Are the components of E-tax service system easy to comprehend? (a) Yes (b) No 8. If yes, give reasons as to why the components are easy to comprehend. a) ____________________________________________________ b) ____________________________________________________ c) ____________________________________________________ d) ____________________________________________________ e) ____________________________________________________ 9. If no, give reasons why. a) ____________________________________________________ b) ____________________________________________________ c) ____________________________________________________ d) ____________________________________________________ e) ____________________________________________________ 10. The URA staff and taxpayers are trained and educated on E tax matters Strongly Agree Agree Strongly Disagree Disagree Not Sure 11. As a registered taxpayer I file returns using E- tax system Strongly Agree Agree Strongly Disagree Disagree Not Sure 12. I pay taxes using the E- tax system as a registered taxpayer Strongly Agree Agree Strongly Disagree Disagree Not Sure 13. Banks are enhancing E -Tax application for me as a taxpayer Strongly Agree Agree Strongly Disagree Disagree Not Sure 14. There is a negative effect of power interruptions and low connectivity speed of internet on the application of E- tax Strongly Agree Agree Strongly Disagree Disagree Not Sure 15. Please state in your view the major weaknesses of electronic tax ……………………………………………………………………………………………………………………………………………………………………………………………………………… 16. How can the above weaknesses be overcome? ………………………………………………………………………………………………………………………………………………………………………………………………………………SECTION C: EVALUATING THE EFFICIENCY OF TAX ADMINISTRATION IN UGANDA 18. What is reason to evaluate the efficiency of tax administration? __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 19. What is your view about the use of the electronic tax filing system? Very Good Good Fairy Good Others (Specify)…………………………………………………………………. 20. Are there sucesses achieved with the adoption evaluating the efficiency of tax administration using E-tax service system by URA? (a) Yes (b) No 21. If yes, suggest any sucesses achieved with the adoption evaluating the efficiency of tax administration using E-tax service system? a)…………………………………………………………………………………………………. b)………………………………………………………………………………………………… c)…………………………………………………………………………………………………. d)…………………………………………………………………………………………………. SECTION D: TO ESTABLISH THE RELATIONSHIP BETWEEN E TAX SYSTEM AND EFFICIENCY IN TAX ADMINISTRATION IN UGANDA 22. E tax is internet based and considering that not all businesses have internet services in their office premises it may lead to an increased in the cost of tax compliance Strongly Agree Agree Strongly Disagree Disagree Not Sure 23. The E -Taxbeinga24-Hour service has improved my ability to file returns on time Strongly Agree Agree Strongly Disagree Disagree Not Sure 24. Procedures in E- Tax system require that I keep proper record of business transactions for easier assessment of returns Strongly Agree Agree Strongly Disagree Disagree Not Sure 25. E- Tax has increased compliance due to reduced bureaucracies at URA offices Strongly Agree Agree Strongly Disagree Disagree Not Sure 26. The E -Tax has led to improved transparency in administration of taxes Strongly Agree Agree Strongly Disagree Disagree Not Sure 27.Correlation between Application of E Tax System and efficiency in Tax Administration Strongly Agree Agree Strongly Disagree Disagree Not Sure PAGE 0