AN ASSESSMENT ON THE CHALLENGES FACING TAXPAYERS

IN E-FILLING TAX SYSTEM IN TANZANIA:

AN ASSESSMENT ON THE CHALLENGES FACING TAXPAYERS
IN E-FILLING TAX SYSTEM IN TANZANIA:

CASE STUDY OF LAKI ASSOCIATES, TANZANIA

By

JACKLINE URASSA

A Research Report Submitted in Partial/Fulfillment of the Requirements for the

Award of the Degree of Bachelor of Accounting and Finance in Business Sector
(BAF-BS) of Mzumbe University

2021
 CERTIFICATION
We, the undersigned, certify that we have read and hereby recommend for acceptance by
Mzumbe University, a research report entitled “An Assessment on the Challenges
Facing Taxpayers in E-filling Tax System in Tanzania at Laki Associates”, in partial
fulfillment of the requirements for the award of the degree of Bachelor of Accounting
and Finance of Mzumbe University.

________________________

Major Supervisor

_______________________

Internal supervisor

Accepted for the Board of

……………………………

Signature

_________________________________

DEAN/DIRECTOR, FACULTY/DIRECTORATE/SHOOL/BOARD

i
 ACKNOWLEDGEMENT
First and foremost, I thank God for his blessings throughout my research work who
enabled me to complete this research successfully.

I would like to acknowledge everyone who played a role in my research

accomplishment; however, it is not possible to mention all of them, mentioning a few as
follows,

I would like to express my sincere gratitude to my research supervisor, CPA (T) Stewart
Mbegu of Mzumbe University, for providing necessary information regarding this
research and also for the full support towards the completion of this research.

I am grateful to my loving mother for her endless material and moral support throughout
doing this research.

Lastly, deep gratitude goes to the management team of LAKI ASSOCIATES who never
seized giving encouragements on every step to the completion of this work.

May God bless you all.

ii
 DECLARATION
I, Jackline Exaud Urassa, declare that this research report is my own and has not been
presented and will not be presented to any other university for a similar or any other
degree award.

Signature

___________________________

Date

________________________________

iii
 COPYRIGHT
This research report is a copyright material protected under the Berne Convention, the
Copyright Act 1999 and other international and national enactments, in that behalf, on
intellectual property. It may not be produced by any means in full or in part, except for
short extracts in fair dealings, for research or private study, critical scholarly review or
discourse with an acknowledgement, without a written permission of the head of faculty
of Business studies, on behalf of both the author and Mzumbe University.

©2021

iv
 DEDICATION
This research is dedicated to all Accounting and Financecolleagues who made this work
complete. I believe I drew strength for this work from their ideas, support and unceasing
prayers.

v
 ABBREVIATIONS AND ACRONYMS
ANT Actor –Network theory

CIT Corporate Income Tax

COSTECH Commission for Science and Technology

E-FILLING Electronic Filling

ICT Information Communication Technology

IT Information Technology

PAYE Pay as You Earn

KRA Kenya Revenue Authority

SDL Skills Development Levy

TRA Tanzania Revenue Authority

US-IRS United States Internal Revenue Service

vi
 ABSTRACT
Most of the studies carried out discussed tax authority challenges instead of the
taxpayer’s perception and challenges. Therefore, this study was motivated because of the
absence of studies in the area of the challenges of e-tax filing system in Tanzania and
sought to fill the gap. The overall objective of this study is to assess the challenges
facing taxpayers in e-filling tax system in Tanzania using Laki Associates as a case
study. Specifically, the study intended to identify whether e-filing system is efficient to
be used by taxpayers in the study area, to know whether the tax payers have the
knowledge and facilities to use the e-filing system in the study area; and to investigate
whether the taxpayers face problems in using the e-filing system in the study area. The
population of the study was estimated to be 62 respondents but the sample size used was
of 53 respondents, whereby, Taro Yamane formula was used to determine the size.
Sample was drawn using purposive sampling technique and simple random technique.
Primary data collection method was used; it was collected using questionnaire.
Questionnaire was given to all 53 respondents, inclusive of Laki Associates employees
and clients. Data analysis was carried out through Statistical Package for Social Science
(SPSS) program where both descriptive and quantitative data analyses were employed.
The study findings revealed that there are numerous challenges faced by taxpayers in
using e-filing tax system including, e-filing is difficult to use without assistance, using e-
filing makes submission of tax returns difficult, lack of access to personal computers
discourages the use of e-filing as well as unreliability of internet access. The study
concludes that; it is very difficult for most taxpayers to use e-filing tax system which
may be because it is a new technology. This means that taxpayers need to attain
emergency assistance from the equipped personnel to quickly react to their problem of
using e-filing tax system to help them with filing their tax returns. The study
recommended that, the government should give more time for the tax payers that do not
know how to use computer and internet because e-filing tax systems can be more
convenient to the taxpayers that know how to use computer and internet but not for those
who do not know. The government should build full trust of the tax payers to use e-filing
tax system to create positive perception towards it.

vii
 TABLE OF CONTENTS
CERTIFICATION ............................................................................................................i

ACKNOWLEDGEMENT ...............................................................................................ii

DECLARATION ............................................................................................................ iii

COPYRIGHT ..................................................................................................................iv

DEDICATION .................................................................................................................. v

ABBREVIATIONS AND ACRONYMS .......................................................................vi

ABSTRACT ....................................................................................................................vii

LIST OF TABLES ..........................................................................................................xi

LIST OF FIGURES .......................................................................................................xii

CHAPTER ONE............................................................................................................... 1

INTRODUCTION ............................................................................................................ 1

1.1 Background of the study........................................................................................... 1

1.1.1 Background of the organization ......................................................................... 2

1.2 Statement of the problem.......................................................................................... 4

1.3 Research Questions .................................................................................................. 6

1.4 Objectives of the Study ............................................................................................ 6

1.4.1 General objective ............................................................................................... 6

1.4.2 Specific objectives ............................................................................................. 6

1.5 Significance of Study ............................................................................................... 7

1.6 Scope of the Study .................................................................................................... 7

1.7 Limitations of the study ............................................................................................ 7

CHAPTER TWO ............................................................................................................. 8

LITERATURE REVIEW ................................................................................................ 8

viii
 2.0 Introduction .............................................................................................................. 8

2.1Theoretical literature review...................................................................................... 8

2.1.1 Definition of key terms and concepts ................................................................ 8

2.1.2The Theory of Innovation Diffusion................................................................. 10

2.1.3 Theory of Innovation Translation .................................................................... 11

2.2 Empirical Literature Review .................................................................................. 12

2.2.1 Efficiency of e-filling system to taxpayers ...................................................... 12

2.2.2 Knowledge level of taxpayers and facilities to use the e-filling system .......... 13

2.2.3 Problems faced by tax payers in using the e-filing system .............................. 14

2.3Conceptual framework ............................................................................................ 15

2.4 Researchgap............................................................................................................ 16

CHAPTER THREE ....................................................................................................... 17

RESEARCH METHODOLOGY ................................................................................. 17

3.0 Introduction ............................................................................................................ 17

3.1 Research Design ..................................................................................................... 17

3.2 Study Area .............................................................................................................. 17

3.3 Sampling ................................................................................................................. 17

3.3.1 Target Population............................................................................................. 17

3.3.2 Sample size ...................................................................................................... 18

3.3.3 Sampling techniques ........................................................................................ 18

3.4 Data Collection Techniques and Instruments ......................................................... 19

3.4.1 Primary data collection techniques .................................................................. 19

3.5 Data Analysis Techniques ...................................................................................... 20

CHAPTER FOUR .......................................................................................................... 21

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PRESENTATION AND DISCUSSION OF FINDINGS ............................................ 21

4.1 Introduction ............................................................................................................ 21

4.2 Socio-demographic Profile of Respondents ........................................................... 21

4.2.1 Sex of the respondents ..................................................................................... 21

4.2.2Education level of respondents ......................................................................... 22

4.2.3 Age of respondents .......................................................................................... 23

4.2.4 Marital status of respondents ........................................................................... 23

4.3 Efficiency of Using E-filling Tax System to Taxpayers ........................................ 24

4.4 Knowledge and Facilities to Use E-filling Tax System ......................................... 27

4.5 Problem of Using E-filling Tax System ................................................................. 30

CHAPTER FIVE ............................................................................................................ 34

SUMMARY, CONCLUSION, AND RECOMMENDATIONS ................................. 34

5.1 Introduction ............................................................................................................ 34

5.2 Summary................................................................................................................. 34

5.2.1 Efficiency of using e-filling tax system to taxpayers ...................................... 34

5.2.2Knowledge and facilities to use e-filling tax system ........................................ 34

5.2.3 Problem of using e-filling tax system .............................................................. 35

5.3 Conclusion .............................................................................................................. 35

5.4 Recommendations .................................................................................................. 36

REFERENCES ............................................................................................................... 37

APPENDICES ................................................................................................................ 40

Appendix1 ....................................................................................................................... 40

QUESTIONNAIREFOR CLIENTS (TAX PAYERS) ................................................ 40

x
 LIST OF TABLES
Table 4.1: Sex of the respondents .................................................................................... 21
Table 4.2: Education level of respondents ....................................................................... 22
Table 4.3: Age of respondents ......................................................................................... 23
Table 4.4: Marital status of respondents .......................................................................... 24
Table 4.5: Efficiency of using e-filling tax system to taxpayers...................................... 25
Table 4.6: Knowledge and facilities to use e-filling tax system ...................................... 28
Table 4.7: Problem of using e-filling tax system ............................................................. 31

xi
 LIST OF FIGURES
Figure 2.1 Dependent and independent variables ............................................................ 16

xii
 CHAPTER ONE
INTRODUCTION
This chapter has explained the background of the study, background of the organization,
statement of the problem, objectives of research, significance of this research, the
research questions as well as the scope and limitations of this study.

1.1 Background of the study

Tax authorities around the world are using electronic tax administration systems to
interact with taxpaying public in tax collection, administration and compliance settings
(Dowe, 2018). Technology has influenced the way we work and interact with others.
The use of technology to improve the effectiveness of tax administration, expand
taxpayer services, and enhance tax compliance has come to attract increasing attention in
developed and developing countries (Dowe, 2018). In the present world, day by day new
technologies are introduced and improved very fast in all fields. Now there has been the
introduction of the new technology gifted to tax payers for filing their income tax return
through online, E-filing. The online E-filing is the new effective method adapted of
filing income tax return which were previously filled manually by physically visiting the
tax authorities’ offices but is now done through online. It saves taxpayers time, energy,
cost and also reduces tension. E-filing program was first introduced by the US-IRS as a
pilot project for the 1986 filing period with the primary objective of improving its
efficiency in processing tax returns. Prior to the launching of the project, the IRS worked
closely with tax-preparation software providers and tax professionals to ensure a
successful launch of the program. (Dowe, 2018)

Electronic government (e-government) services as a tool to improve democracy,

transparency, and accountability as well as government performance (Denise and
Edwards, 2008). These systems are said to have enhanced relationships between clients
and suppliers, logistics partners etc. As a result, organizations including governments
around the world have increasingly realized the importance of leveraging information
technology and the internet to streamline government services and provide better

1
customer services to its people. Adopting e-filing will require fundamental changes in
organization, operation, management, and resource utilization by courts, lawyers,
clients, citizens, and government entities (Dowe, 2018).
In developing countries, electronic taxation is based on the rate of adoption of
information technology (IT). So, electronic taxation refers to complete and desirable
usage of information technology (IT) in the field of taxation. Compared to other online
services provided by the government, filling out the tax returns electronically is one of
the most advanced and widespread services being used. Given the tendency to online
services in the public sector, tax authorities tend to be a lead in using information
technology (Anna and Yusniza, 2019). The electronic tax filing system is a subdivision
of electronic taxation which refers to collection of taxes electronically resulting in a
good deal of time-savings and cost-savings of the public and the government, provided
that it is used in the right manner (Dr. Meena, 2015)
Electronic tax-filing is important to the Tanzania government because the system
improves the efficiency of evaluating and collecting tax information, increase tax
collection and reduce the error in computations (Ng. L et al., 2010). Furthermore,
electronic tax-filing has also benefited taxpayers in many ways. It avoids the hassle of
going to the tax office to submit the forms, saves time to do the calculation, and most
importantly electronic tax-filing system will speed up tax refunds. Apart from such
benefits still taxpayers experience a lot of challenges to adopt e-filling tax system in
Tanzania, so this study has assessed the challenges facing tax-payers in tax e-filling.

1.1.1 Background of the organization

The LAKI ASSOCIATES Certified Public Accountants was established by Mr.
CosmasLamosai in 2011 at Dar es Salaam. Before moving to Moshi, Mr. Lamosai
established a good foundation of the firm and recruited other qualified public
accountants to help him run the firm. He later on moved to Moshi and established a
branch of LAKI ASSOCIATES which is located at KNCU building, second floor, room
no: 18. LAKI ASSOCIATES was formed to assist and guide business individuals,

2
companies, associations, cooperatives and other interested parties on the matters of
auditing, accounting and taxation.
The firm has four departments (4): auditing department dealing with auditing the
financial statements of the clients, accounting department dealing with the preparation of
the financial statements of the clients who can’t prepare their financial statements, tax
consultancy department dealing with aiding and guiding the clients on tax related issues
and EFDMS department which deals with providing maintenance and training to the
clients on the use of EFD machines

LAKI ASSOCIATES Mission

For delivering its quality products and services, LAKI ASSOCIATES has its mission
statement. The mission statement states ‘’ to be an effective and efficient tax
administration, which promote tax in TRA Compliance by providing high quality
customer services with fairness and Integrity through competent and motivated staff and
to emphasize on collection of taxes in a cost effective way through promoting voluntary
tax compliance among tax payers.”

LAKI ASSOCIATES Vision

The Laki Associates Certified Public Accountants vision is ‘’ to be the public choice for
individuals, Micro, small and medium Enterprises’’. It must have strong enforcement
capacity delivered by high qualified, motivated and committed staff, it involves the use
of computerized system, modern practical and processes.

LAKI ASSOCIATES Organization Structure

There are several divisions of labor and specialization within the organization in which
there is direct coordination and relationship within the organization. This makes the
organization to achieve its objectives. The structure consists of rules, procedures,
authorities and good communication network that define and regulate actions and
interactions of organization customers.

3
Products (Services and Goods) Offered

Produce offered by LAKI ASSOCIATES are;

 Accountancy
 Auditing
 Taxpayer Identification Number (TIN)
 License
 Sales of EFD Machine
 VAT, SDL and PAYEE

1.2 Statement of the problem

Taxation in developing countries is a challenging topic and has attracted increasing
attention in the last two decades. During this period, many problems are observed like
poor administration, failing to collect sufficient tax revenues, lack of government and
economic stability (Vadde & Gundarapu, 2012). Ideally, taxpayers can put information
about their income and possessions into the taxation website electronically without any
need of their presence in taxation units / banks and pay off their taxes (Denise and
Edwards, 2008). Although many governments in both developed and developing nations
have made good progress in delivering digital services to their citizens, most of them are
still overwhelmed by the complexity of the technology and their own bureaucracy. One
purpose of providing government e-services is to promote the accessibility and ease of
providing essential government services to its citizens (Carter & Belanger, 2005).

In recent years, there have been efforts to change policy on domestic revenue
mobilization in many developing countries including Tanzania (Dr. Meena, 2014).
Currently, governments in developing countries collect much lower proportions of their
GDPs in tax revenue. A report from the African Development Bank Group (2017)
indicates that despite the adoption of e-filling tax system the domestic revenue collection
through taxation is still below its potential in many Sub-Saharan African Countries, it
means the e-tax system strategies are not successful in many countries.

4
The TRA has introduced an electronic filing (e-filing) system to improve tax compliance
and increase efficiency in tax administration.Prior to deploying the e-filing system, only
the monthly value-added tax returns were filed electronically and withholding tax
certificates were generated electronically, all other tax returns are to be filed physically
(paper copy) with the TRA.

Tanzania is one of the developing countries that has greatly benefited from electronic tax
service deployment. The government of Tanzania recognized the necessity of ICT in the
development process and decided to deploy ICT in the revenue sector (seelmann, 2011).
Adoption of electronic service in TRA can be traced back in 1997. Since then, a number
of ICT aided tax services have been deployed.However, the citizens are less satisfied
with e-services for a number of reasons such as skepticism, lack of digital skills, lack of
trust in the systems, confusion resulting from poor instructions (Merima, 2020).

It has become obvious that the future is trending more towards online delivery of
government services such as education, housing and taxation The intense research
interest in this area is a reflection of its importance and of how little is known about
electronic filling (e-filling) service delivery and the users ‘success factors. To enhance
effectiveness in government online service delivery, the barriers to increase online user
satisfaction must be identified and addressed to TRA. From website design and quality
of online service to assurance of privacy, barriers must be sufficiently addressed in order
to increase tax payer desire to continue using e-filling provided by TRA (Merima, 2020).

E-Filing system in Tanzania is convenient to taxpayers but many of them don’t know
how to use online filing (Land Transportation Office annual report, 2012). TRA has to
consider those who don ‘t knows how to use online internet filing. To be more specific
to those taxpayers living in the rural areas, Tanzania ‘s internet coverage is not widely
spread all over the country, thus, some citizens have poor perception towards e-Filing
systems.

5
Moreover, it is important to notice that Tanzania’s environment is different from the
developed countries environment where the E-tax filing system is more enhanced.
Hence, the main aim of this research was to investigate what challenges tax payers face
in adoption of e-filling system in Tanzania, whereby Laki Associates was used as a case
to accomplish this study.

1.3 Research Questions

In the line of research objectives, the following were the research questions:

(i) Is e-filing system efficient to be used by taxpayers in the study area?

(ii) Do tax payers have the knowledge and facilities to use the e-filing system in the
study area?
(iii)What are the problems faced by the tax payers in using the e-filing system in the
study area?

1.4 Objectives of the Study

This was guided by objectives that are divided into two categories:

1.4.1 General objective

The overall objective of this study was to examine the challenges facing taxpayers in e-
filling tax system in Tanzania.

1.4.2 Specific objectives

Specifically, the study intended:

i. To identify whether e-filing system is efficient to be used by taxpayers in the

study area.
ii. To know whether the tax payers have the knowledge and facilities to use the e-
filing system in the study area.
iii. To investigate whether the tax payers have problems in using the e-filing system
in the study area.

6
1.5 Significance of Study
The study was expected to be helpful to TRA management as it helped them review the
e-filling system and obtain reliable information as a result of formulation of new
policies, strategies and improvement of the settings of electronic–tax system in
Tanzania. Also the findings of this study were useful to researchers and scholars as it
contributed to the body of knowledge in the area of electronic-tax filling. It also assisted
other researchers to further their studies on areas of interest not yet exploited.

1.6 Scope of the Study

This study was conducted in Moshi Municipality, specifically on assessing the
challenges facing the tax payers in e-filling tax return in Tanzania. In accordance with
the environment of this study, researcher considered tax payers served by Laki
Associates in tax issues as respondents. Also, this study covered four months from
November, 2020 up to February, 2021.

1.7 Limitations of the study

In undertaking this study two main limitations were encountered, and that are:

a) Less availability of computers

This made it difficult for the researcher not to be able to undertake certain
activities at a required period of time.
b) Power outage
This also made the researcher fail to perform tasks at a required time.

7
 CHAPTER TWO
LITERATURE REVIEW

2.0 Introduction
This section covered three main parts: theoretical literature review, empirical literature
review and the conceptual framework.

2.1Theoretical literature review

2.1.1 Definition of key terms and concepts

2.1.1.1 Tax
Tax can be defined as a contribution from individuals out of their private property for
the maintenance and defense of the government, so that the government may perform its
functions and the ends of the state be realized, (Misrak, 2018). In similar, Tax is defined
as ‘a compulsory levy, imposed by government or other tax raising body, on income,
expenditure, or capital assets, for which the taxpayer receives nothing specific in return’
(Lymer, et al.2009).

2.1.1.2 E-taxation
Electronic tax system is a system that has been developed to replace manual system. It is
a secure application system that provides a fully-integrated and automated solution for
administration of domestic taxes. It enables taxpayers to register tax, returns filing,
payment registration to allow for tax payments and status inquiries with real-time
monitoring of accounts (Waweru 2013).

E-tax filing is a system for submitting tax documents to the tax department through the
internet or direct connection, usually without the need to submit any paper documents.
Various tax return preparation software with e-tax filing capabilities are available as
standalone programs or through websites or tax professionals or from major software
vendors for commercial use. “E-File is the term for electronic filing, or sending your tax
from tax software via the internet to the tax authority” (Chang and Hung, 2005).

8
On the study about the satisfaction level and awareness of tax-payers towards e-filing of
income tax return in Moradabad city defined E-filing as the process of filing tax
electronically. Taxpayers no longer stand in long queues and no waiting for filing.
Customized forms have been devised by the Tax Authority which is available on the site
(Chanchal, et al, 2013).

2.1.1.3 Tax system

According to Misrak (2018), tax system is a type of official unity government system
connected to unit government policy created to control, integrate, improve, change,
review and manage methodically tax law and tax legislation using accurate, defined,
effective, transparent, just data, information, proof, research and statistics.

Tax system can also be defined as an interconnected community of all existing public
relations (economic, political, organizational, and legal) in the field of taxation.
According to the author, the main elements of any state’s tax system are the economic
characteristics of the tax system, current and future courses of the tax policy, the system
of tax legislation principles, the system of tax and other fiscal bodies, the conditions of
interaction between budgetary and tax systems, the procedures of tax distribution among
budgets, the forms and methods of tax control, the order and conditions of tax
proceedings, the responsibility of tax legal relations’ participants, the means of
protecting the rights and interests of taxpayers (A.V.Bryzgalin, 2019)

2.1.1.4 Government revenue

According to TRA Annual Report (2014), government revenue is the income generated
or received by Government from different taxable sources and non-taxable sources.
Taxable sources such as taxes levied on the income and wealth accumulation of
individuals, businesses and on the goods and servicesproduced exports and imports.
Non-taxable sources such as income generated from Government-owned Corporation,
Central Bank revenue and capital receipts in forms of grants, external loans and debits
from international financial organizations/ institutions.

9
2.1.1.5 Tax administration in Tanzania
In order to strengthen the fiscal policy, TRA was introduced and started to operate in
July 1996. TRA is responsible with the assessment, collection and accounting of Central
Government Revenues. The Constitution of the United Republic of Tanzania recognizes
the two parties of the union, namely Zanzibar and Tanzania. The Constitution has
differentiated tax charged under the union and tax charged independently of each side
(non-union taxes). From the side of Mainland Tanzania, TRA collects the Union taxes,
while the Zanzibar Revenue Board collects all non-union taxes in Zanzibar. UNION
Taxes are taxes on income imposed under the Income Tax Act 2004 Cap. 332revised
edition 2008 and Custom duties under the East Africa Customs Management Act 2004
revised edition 2011. NON-UNION taxes are taxes on domestic consumption, including
the Value Added Tax under the Value Added Tax Act 2014, Excise Duties, Hotel
Levies, Stamp Duties, Motor Vehicles Taxes, and other charges (Tanzania Revenue
Authority Annual Report, 2014).

2.1.2The Theory of Innovation Diffusion

The Shorter Oxford English Dictionary defines innovation as “the alteration of what is
established; something newly introduced” (Oxford 1973) and Roget’s Thesaurus offers
the synonyms ‘newness’ and ‘change’. Diffusion of innovations is a theory that seeks to
explain how, why, and at what rate new ideas and technology spread. Rogers (2003)
argues that diffusion is the process by which an innovation is communicated over time
among the participants in a social system, while diffusion is the process by which an
innovation is communicated through certain channels over time among the members of a
social system. Given that decisions are not authoritative or collective, each member of
the social system faces his/her own innovation-decisions that follow a 5-step process:

1) Knowledge – person becomes aware of an innovation and has some idea of how it
functions,

2) Persuasion – person forms a favorable or unfavorable attitude toward the innovation,

10
3) Decision – person engages in activities that lead to a choice to adopt or reject the
innovation,

4) Implementation – person puts an innovation into use,

5) Confirmation – person evaluates the results of an innovation-decision already made.

Rogers proposes that four main elements influence the spread of a new idea: the
innovation itself, communication channels, time, and a social system. This process relies
heavily on human capital. The innovation must be widely adopted in order to self-
sustain. Within the rate of adoption, there is a point at which an innovation reaches
critical mass. According to Rogers (2003), the categories of adopters are innovators,
early adopters, early majority, late majority, and laggards. In regards to e-taxation,
Tanzania can be categorized as laggards because since introduction of electronic
taxation in 2019, Tanzania being the giant of Africa failed to key into the innovation
before other African countries. This theory is relevant to this study as the various
elements that influence the spread of a new idea is been considered by the TRA, more
especially by involving the Tanzania commission for science and technology
(COSTECH) as a channel through which taxpayers can be traced and some problems
solved so as to make them conveniently pay their taxes.

2.1.3 Theory of Innovation Translation

An alternative view of innovation is that of innovation translation proposed in actor-
network theory (ANT). Theory of Innovation Translation is a theory of innovation in
which, instead of using an innovation in the form it is proposed, potential adopters
translate it into a form that suits their needs. According to Latour (1996) [21], ANT
considers both social and technical determinism to be flawed and proposes instead a
socio-technical account in which neither social nor technical positions are privileged. In
this socio-technical order nothing is purely social and nothing is purely technical. ANT
deals with the social-technical divide by denying that purely technical or purely social

11
relations are possible. What seems, on the surface, to be social is partly technical, and
what may appear to be only technical is partly social.

Translation involves all the strategies through which an actor identifies other actors and
arranges them in relation to each other (Callon, M, 1983). The mere ‘possession’ of
power by an actor does not automatically confer the ability to cause change unless other
actors can be persuaded to perform the appropriate actions for this to occur (Latour,
1996). In the context of this study, the actor is the TRA charged with the sole
responsibility of administering and collecting taxes from tax payers. This theory
suggests that it is the responsibility of the body to translate existing e-taxation
innovations in other countries to suit the need of the Tanzania taxpayers and
government, and also insure its implementation by persuading tax payers to comply.

2.2 Empirical Literature Review

2.2.1 Efficiency of e-filling system to taxpayers

A study by Jones (2014) observed that, tax systems efficiency is important, especially
because the term of efficiency is used in two different perspectives under the context of
taxation. The first one by classical economist Adam Smith describes electronic filling
tax system as efficient when it does not interfere with or influence taxpayers' economic
behavior. The second perspective by new conservative economist John Keynes considers
a tax system as efficient when individuals or institutions react to this system by
deliberately changing their economic behavior. Two perspectives are available
nowadays concerning tax efficiency. The classical perspective considers a tax system as
efficient when it does not affect the different patterns of taxpayers’ behavior. Based on
this perspective, tax is not purposive, so it is imposed and collected just to generate
revenue for governments. According to this perspective, a tax that is designed to modify
taxpayers’ behavior is considered inefficient because it distorts the market. The classical
economist, Adam Smith, believed that a tax system should have as little as possible
influence on taxpayers (Jones, 2014).

12
According to Monica et al. (2017) in their study “Effects of Electronic Tax System on
Tax Collection Efficiency in Domestic Taxes Department of Kenya Revenue Authority
(KRA). They had to find out the effect of electronic tax filing on revenue collection
efficiency, examine the effect of staff competency on revenue collection efficiency and
to find out the level of taxpayers’ knowledge in operating electronic tax system. The
main data collection tools were questionnaires that were administered to 130
respondents who included employees of KRA and tax payers. Descriptive & inferential
statistics were employed as data analysis technique. Findings from the study revealed
that most tax payers strongly agreed that they were able to fully access and operate tax
system.

On the other hand, the British economist, John Maynard Keynes, considered a tax
system as efficient when it has the ability to influence the different patterns of taxpayers’
behavior. It is worth noting that many unreasonable patterns of behavior can be modified
and improved. It is worth noting that there is a difference between tax efficiency in fact
and in appearance. Most income systems are, in fact, efficient, but the way that this
efficiency perceived by taxpayers is sometimes more important issue. Efficiency in
appearance means that a tax system consists of efficient rules, items, and regulations,
when these are applied. It is inadequate to be actually efficient, but it is more important
to be efficient in the minds of taxpayers, or to be perceived by taxpayers as efficient.
The way taxpayers perceive a tax system is an important issue, because it determines the
level of taxpayers’ compliance, and their level of cooperation. Moreover, a tax system
determines peoples’ loyalty to their government (Ibrahim et al., 2009).

2.2.2 Knowledge level of taxpayers and facilities to use the e-filling system
E-filing does not significantly affect taxpayers to report taxes, but it is the knowledge of
tax payers that can affect significantly. Similar to the findings of this study those
facilities such as knowledge and guidebooks and electronic devices for using e-filing can
increase the taxpayer's intention to use e-filing in reporting taxes. In addition, the

13
attitude of the taxpayer is also a consideration of taxpayers in using the system (Tarmidi
et al, 2017).

Ilias et al. (2019) assessed the role of education on e-filing adoption. Their study
suggested that education background has an important role in influencing the taxpayers’
attitude to use e-filing. However, the study found no significant difference between
genders in terms of attitude in using e-filing. A study by Lu, Huang & Lo (2014)
reported tax equity as one of the factors that affect attitude towards online filing of tax.
The influence of behavioral aspects (perceived usefulness, social norm, perceived risk,
and perceived ease of use) on intention to use electronic tax systems have been widely
studied (Gupta, Zaidi, Udo&Bagchi, 2015).

Small taxpayers who cannot afford computers and internet connectivity in their business
premises the internet-based is preferred because it allow them to them to file returns
elsewhere, they have access to internet. Thus, access to computing and internet facilities
can be a major hindrance for adoption of e-filing in developing countries like Tanzania
where the economy is dominated by small taxpayers who either cannot afford to have
these facilities or have limited skills in information technology.

2.2.3 Problems faced by tax payers in using the e-filing system

A problem supposed by Anna &Yusniza (2019) on their study on the adoption of tax e-
tax filing in Malaysia, is to ensure that the system runs smoothly and efficiently during
tax filing period each year. This refers to the technical aspects of e-tax filing, i.e.
computer and information systems utilized for the e-tax filing system need to be stable
and reliable enough to handle amount of information processed, especially during the
peak period of e-tax filing and particularly as the deadline approaches. The service
provider has to ensure that the e-tax filing system can handle the heavy processing of
data during the month of tax submission without any glitches. Another critical issue on
e-tax filing is that the tax authorities have to ensure that the confidentiality and privacy
of the information submitted through the internet is preserved.

14
Another challenge with e - tax filing is its inability to provide automated online
assistance to a taxpayer with a complex income structure. Therefore, for such taxpayers
trying to get help on a complicated tax question from a website help-desk may not be
nearly as useful as getting help from an in-person tax professional. (Dwilson, 2014).

Apart from the many reported benefits of tax e-filing there are as well offsetting costs.
Studies by Yilmaz& Coolidge (2014) reported some of these costs. For small taxpayers,
additional capital may be needed to invest for e-filing in order to put the system in place.
This may entail purchasing of hardware and connectivity to internet. If the costs are
high, it is likely that they affect e-filing adoption in the short-run; in the long run the
accumulated benefits outweigh these costs. Also, additional time may be required to
learn the system for practical implementation of the policy in the country.

Studies conducted in Tanzania by Yonazi (2010) and Rumanyika&Mashenene (2014)

reported constraints related to low level of ICT development in the country. Tax
authorities in many countries received a lot of taxpayer’s complaints regarding the
introduction of electronic tax system, tax authorities face some major challenges towards
the implementation of the e-tax filing system. One such challenge is the public
perception of the e-tax filing system. After using an e-service over the Internet, the
public may find the e-service system easy and useful or otherwise. Since the public
cannot directly communicate with tax personnel, see or touch the tax forms as the
service is provided online, the e-tax filing service system delivered to them may not
perform as expected.

2.3Conceptual framework
The conceptual structure of this study was linked to independent variables that are
challenges faced by taxpayers in e-filling, taxpayer’s knowledge concerning e-filling and
facilities used in e-filling. The dependent variable was tax voluntary compliance. This
relationship is shown in the following Figure2.1

15
Figure 2.1 Dependent and independent variables

Independent variables Dependent variables

●e-filling system efficiency

●voluntary tax
● Knowledge and tax payers’ compliance
facilities

●e-filling problem

Source; researcher raw data (2021)

2.4 Researchgap
Most of the studies discussed above show that there exist challenges of electronic tax
system. However, most of these studies were conducted outside of Tanzania. As per
knowledge of the researcher, In Tanzania, different studies on electronic tax filing
system has been addressed by few studies such as Practice, Challenges, and Prospects of
e-Government. Most of the studies carried out discussed tax authority challenges instead
of the taxpayer’s perception and challenges. Therefore, this study was motivated because
of the absence of studies in the area of the challenges of e-tax filing system in Tanzania
and sought to fill the gap.

16
 CHAPTER THREE
RESEARCH METHODOLOGY

3.0 Introduction
This chapter covers; research design, study area, study population, sample size and
sampling techniques, type and sources of data, data collection methods, validity and
reliability of data, and data analysis methods.

3.1 Research Design

Research design is the conceptual structure within which research is conducted. It
constitutes the collection, measurement and analysis of data. A case study seeks to
describe unit in detail. This study employed a case study research design. A case study
research was more than simply conducting research on a single individual or situation. A
case study was used because it provided level of precision (e) is 5% with 95%
confidence level.

3.2 Study Area

The study was carried out in Kilimanjaro-Tanzania. Researcher was interested on
extending knowledge on the challenges faced by taxpayers in e-filling tax system in
Tanzania with focus to Laki Associates organization. The reason of carrying out a study
in this organization was because of simplicity in getting data, the fast-growing firm as
well as accessibility from researcher’s residence hence cost effective and familiarity of
the researcher in that area.

3.3 Sampling
Sampling was preferred in this study because respondents were quite many, thus
couldn’t be accessed all.

3.3.1 Target Population

The study used case study-based approach and targeted population in this study
includedthe staff and clients who get tax consultation services atLaki Associates

17
especially VAT payers, where the sample was selected from 55 customers and 7 staff
members.

3.3.2 Sample size

A representative sample size of46customers (VAT payers) and 7 staff members of Laki
Associates were drawn. Each group of respondents participated effectively in displaying
all material facts that enhanced the researcher being able to draw an objectively and
significant conclusion. The researcher used Taro Yamane (1967) formula in determining
the sample size.

According to Yamane, (1964) n = N/ [1 + (Ne²)]

Where n = is the sample size

N = is the population

e = is the error limit (0.05 on the basis of 95% confidence level) Therefore,

n = 62/1 + 62(0.05)2

n = 62/1.155

n=53

Sample size is 53 respondents inclusive of Laki Associates customers

3.3.3 Sampling techniques

Non probability sampling technique used was the purposive and simple random
sampling from the probability sampling technique, both wereused. Researcher
usedsimple random sampling technique in the selection of each Laki Associates-client.
Each member had an equal opportunity of being included in the sample size of the study.
The researcher hadopt the technique since it was free from biasness therefore it gave
reliable and accurate data.

18
The purposive sampling technique was used in the selection of key persons from the
office staff based on their job position at the Laki Associates. In addition, the study
opted the technique since it reflected a true representation of the employees and gave
relevant data for the study.

3.4 Data Collection Techniques and Instruments

3.4.1 Primary data collection techniques

The researcher collected the raw data from the respondents through questionnaires.

3.4.1.1 Questionnaires
During the study the researcher used the questionnaires that included open and closed
ended questions. Closed ended questionnaire enabled the respondents to obtain relevant
answers to the objectives. A questionnaire was used to assist the researcher to get the
detailed answers from the respondents to get reliable information.

The advantage of the self-administered questionnaire compared to other data collection

tools is that, it ensured top secrecy, it was relatively inexpensive and it allowed a large
number of respondents to be surveyed in a short period of time even if the respondents
were widely distributed geographically. The notable disadvantage of the self-
administered questionnaire was low rate of return of the dully filled questionnaire;
control over questionnaires once distributed is uncertain, ambiguous replies or omission
of replies and slowness of the method.

Moreover, the questionnaires were distributed to53respondents and they were given time
to fill them and return to the researcher the next day. Furthermore, it was elaborated
earlier to respondents that their answers were treated as confidential. In that case
respondents were not required to write their names on the questionnaire. The
respondents werefree to ask any question from the questionnaire which neededmore
elaboration. On return of the questionnaire paper, each was checked for completeness
and consistency.

19
3.5 Data Analysis Techniques
Data analysis is obtaining answers to questions through explanation and investigations.
Descriptive statistics methodwas used where data processing including entry process and
coding was clearly done as preliminary data analysis techniques before embarking to the
actual data analysis. Before performing the analysis, all data were sorted out to ensure
that only the accurate and relevant elements were left to go into the analysis process.
Data was presented using frequencies and percentages for the purpose of drawing
conclusion basing on specific objective.

Tables were used to present data in a consistent way as the researcher‘s research
questions and objectives. All recommendations from the respondents had been
documented and formed the basis of research recommendations.

20
 CHAPTER FOUR
PRESENTATION AND DISCUSSION OF FINDINGS

4.1 Introduction
In this chapter, presentation of findings is provided based on specific objectives
concerning thechallenges facing taxpayers in e-filling tax system in Tanzania. This
presentation and discussion is arranged in line with the research objectives that guided
the study. First the chapter starts with socio-demographic profile of the respondents.

4.2 Socio-demographic Profile of Respondents

It was necessary to know the background of the respondents in terms of sex, education
level, age and marital status as discussed in the following sub-sections.

4.2.1 Sex of the respondents

Table 1 show that distribution of respondents by sex where 67.9% of the respondents
were male while 32.1% was female.

Table 4.1: Sex of the respondents

Sex Frequency Percentage

Male 36 67.9

Female 17 32.1

Total 53 100.0

The findings showed that 67.9% of the respondents were male while 32.1% were
female. This indicated that women usually do not engage in production that needs to tax
returns using e-filling as much as men do. Women in production activities are thought to
be particularly vulnerable to discrimination and neglected due to the fact that many men
tend to control such activities which can be partly explained that men tend to face
challenges in e-filling tax system compared to women. On the other hand, women do

21
much of daily work but they do not have the authority to take key decisions on e-filling
tax system.

4.2.2Education level of respondents

Table 2 show that 52.8% had secondary education, 26.4% had certificate education,
9.4% had diploma education, and 7.5% had degree education while 3.8% had master’s
education.

Table 4.2: Education level of respondents

Education level Frequency Percent

Secondary education 28 52.8
Certificate education 14 26.4
Diploma education 5 9.4
Degree education 4 7.5
Masters education 2 3.8
Total 53 100.0

Concerning education level of the respondents the results indicated that 52.8% had
secondary education, 26.4% had certificate education, 9.4% had diploma education, and
7.5% had degree education while 3.8% had master’s education. This means that most tax
payers have secondary level of education. The findings indicate that to some extent the
level of education can help tax payers reduce challenges in e-filling tax system.
Furthermore, the findings imply that, tax payers with master’s level of education their
level of understanding is high compared to the 52.8% who had secondary level of
education so they can help other tax payers to analyze challenges facing them in e-filling
tax system.

22
4.2.3 Age of respondents
Table 3 indicate that 5.7% of the respondents aged between 20-34 years old, 28.3% aged
between 35-44 years old and 52.8% aged between 45-54 years old while 13.2% aged 56
years old and above.

Table 4.3: Age of respondents

Age Frequency Percent

20-34 years old 3 5.7
35-44 years old 15 28.3
45-54 years old 28 52.8
56 years old and above 7 13.2
Total 53 100.0

Regarding age of respondents, the findings indicated that 5.7% of the respondents aged
between 20-34 years old, 28.3% aged between 35-44 years old and 52.8% aged between
45-54 years old while 13.2% aged 56 years old and above. This can be interpreted that,
respondents who were older matured enough to adhere strictly with e-filling tax system
that could ensure their tax returns as required, that could enable them face challenges
facing them in e-filling tax system compared to the young. These findings showed that
most of the respondents are in the category of economically active age which is regarded
to be more aware to e-filling tax system that could reduce challenges facing them during
tax returns using e-filling tax system.

4.2.4 Marital status of respondents

Table 4 demonstrates that, 18.9% of the respondents were single, 66.1% were married
while 7.5% were divorced and widows/widowers respectively.

23
Table 4.4: Marital status of respondents

Marital status Frequency Percent

Single 10 18.9
Married 35 66.1
Divorced 4 7.5
Widow/widower 4 7.5
Total 53 100.0

Concerning marital status of respondents, the results demonstrated that, 18.9% of the
respondents were single, 66.1% were married while 7.5% were divorced and
widows/widowers respectively. The findings indicated that, marital status has positive
influence on e-filling tax system. This is because married people are able to jointly
engage in formal business and generate income that meets their household needs and
eventually return tax that requires them to pay using e-filling tax system. Some married
couples may want to stay together and, therefore, may prefer undertaking formal
business together by provision of responsibilities which leads to the increase of their
income and return tax using e-filling tax system compared to those who are single or
divorced.

4.3 Efficiency of Using E-filling Tax System to Taxpayers

Table 5 show that 9.4% of the respondents strongly agreed, 69.8% agreed, 7.5%
remained neutral, and 9.4% disagreed while 3.9% strongly disagreed on the advantages
of e-filing outweigh the disadvantages.

Moreover, 7.5% of the respondents strongly agreed, 49.1% agreed, 9.4% remained
neutral and 24.6% disagreed while 9.4% strongly disagreed on confidentiality
guaranteed.

In that order, 1.9% of the respondents strongly agreed, 35.8% agreed and 58.5%
disagreed while 3.8% strongly disagreed on being psychologically comfortable to use it.
24
Also, 22% of the respondents strongly agreed while 77.4% agreed onthe statement that it
saves the cost of complying with TRA tax legislation (e.g. penalty, interest).

Furthermore, 37.7% of the respondents agreed, 5.7% remained neutral and 50.9%
disagreed while 5.7% strongly disagreed onTRAextension of filing deadline for e-fillers.

Table 4.5: Efficiency of using e-filling tax system to taxpayers

Efficiency of e-filling tax system Strongly Agree Neutral Disagree Strongly

agree disagree
The advantages of e-filing 9.4% 69.8% 7.5% 9.4% 3.9%
outweigh the disadvantages
Confidentiality guaranteed 7.5% 9.4% 24.6% 9.4%
49.1%
Psychologically comfortable to use 1.9% 35.8% 0.0% 58.5% 3.8 %
it
It saves the cost of complying with 22.6% 77.4% 0.0% 0.0% 0.0%
TRA tax legislation (e.g. penalty,
interest) 0.0% 37.7% 5.7% 50.9% 5.7%
TRA extension of filing deadline
for e-fillers

The findings showed that 9.4% of the respondents strongly agreed, 69.8% agreed, 7.5%
remained neutral, and 9.4% disagreed while 3.9% strongly disagreed on the advantages
of e-filing outweigh the disadvantages. This implied that the e-filing of tax returns is
possible and using the electronic services is part of the government's commitment which
requires any business owner whose business is registered to make tax returns using e-
filling tax system. This ensures individual self-assessment returns and enables tax payer
to return on time that ensure efficiency at all level of production in the country.

25
Moreover, 7.5% of the respondents strongly agreed, 49.1% agreed, 9.4% remained
neutral and 24.6% disagreed while 9.4% strongly disagreed on confidentiality
guaranteed. This finding implies that the adoption of electronic tax returns by citizens is
significantly influenced by the confidentiality guaranteed by e-filling tax system which
ensures the electronic tax returns which they use for completing and submitting their
taxes without anybody seeing their financial information while filling. This reduces the
challenges facing tax payers in use of e-filing tax system and increases the possibility of
tax payers to use electronic filing tax system.

In that order, the findings indicated that, 1.9% of the respondents strongly agreed, 35.8%
agreed and 58.5% disagreed while 3.8% strongly disagreed on psychologically
comfortable to use it. This implied that citizens are psychologically aware of the existing
security provided by e-filing tax system which ensures that providers of the electronic
tax return systems are reliable and have a suitable control on the security of the private
reports about their income. In fact, psychological awareness among taxpayers about their
security of their income reduces challenges facing term in use of e-filing tax system.

Also, the findings indicated that, 22% of the respondents strongly agreed while 77.4%
agreed on the statement that e-filing saves the cost of complying with TRA tax
legislation (e.g. penalty, interest). This indicates that the use of e-filing among tax payers
facilitates wealth accumulation of the country where the major attention of the
government is to generate revenue locally in such a way to ensure the increase of
productivity due to the adoption of electronic tax systems technologies to drive tax
administration which plays an important role in the increase of internally generated
revenue in the country by ensuring compliance thereby boosting productivity and
economic activities in the country.

Sheikh (2015) explains that as with any new system, there have been numerous teething
problems with the electronic system. Taxpayers are receiving demand emails from the
Integrated Tax Management System. This is bound to create discrepancies in taxpayers

26
‘records, especially with regards to payment of tax obligations as well as submitting
returns. For instance, in the current setup, if a taxpayer pays taxes manually, the iTax
system will not recognize the payment. Instead, the system automatically calculates
penalties and interest on the perceived missed tax payments thereby leading to potential
disputes between the tax office and the taxpayer. Second, the iTax system lacks
historical records of taxpayers. Its record keeping is a going forward type in that it only
stores tax records of taxpayers from the time of registering for iTax onwards (Sheikh,
2015).

4.4 Knowledge and Facilities to Use E-filling Tax System

Table 6 shows that, 41.5% of the respondents strongly agreed, 32.1% agreed, 1.9%
remained neutral and 15.1% disagreed while 9.4% strongly disagreed onhavinggood
knowledge on e-filling taxation.

Furthermore, 3.8% of the respondents strongly agreed, 49.1% agreed, 9.4% remained
neutral and 24.5% disagreed while 13.2% strongly disagreed ontraining on how to use
the e-filling.

Moreover, 7.5% of the respondents strongly agreed, 32.2% agreed, 13.2% remained
neutral, and 35.8% disagreed while 11.3% strongly disagreed onusing tax consultant to
file tax returns.

In that order, 1.8% of the respondents strongly agreed, 49.1% agreed, 20.8% remained
neutral and disagreed respectively while 7.5% strongly disagreed on having basic
computer skills and knowledge.

Also, 5.7% of the respondents strongly agreed and strongly disagreed respectively,
49.0% agreed and 11.3% remained neutral while 28.3% disagreed on having facilities
which enable filling return online.

27
Table 4.6: Knowledge and facilities to use e-filling tax system

Knowledge and facilities to use Strongly Agree Neutral Disagree Strongly

e-filling tax system agree disagree
Having a good knowledge on e- 41.5% 32.1% 1.9% 15.1% 9.4%
filling taxation
Training on how to use the e- 3.8% 9.4% 24.5% 13.2%
filling 49.1%
Using tax consultant to file tax 7.5% 32.2% 13.2% 35.8% 11.3 %
returns
Having basic computer skills and 1.8% 49.1% 20.8% 20.8% 7.5%
knowledge 11.3% 28.3%
Having facilities which enable 5.7% 49.0% 5.7%
filling return online

Concerning knowledge and facilities to use e-filing tax system the findings showed that,
41.5% of the respondents strongly agreed, 32.1% agreed, 1.9% remained neutral and
15.1% disagreed while 9.4% strongly disagreed on having a good knowledge on e-filling
taxation. Considering the importance of the availability of information the respondents
were asked about their knowledge of e-filing tax system. The finding showed that the
respondents were easily understanding about e-filing tax system due to knowledge they
have. Therefore, the implication to these findings indicates that the majority of tax
payers were knowledgeable of e-filing tax system.

Furthermore, the findings indicated that, 3.8% of the respondents strongly agreed, 49.1%
agreed, 9.4% remained neutral and 24.5% disagreed while 13.2% strongly disagreed on
training on how to use the e-filling. The findings imply that training on using e-filing
makes submission of tax returns easy which encouraged tax payers to take personal
responsibility for tax affairs. This means the introduction of e-filing is the best way to
improve efficiency of TRA systems and encourage taxpayers to comply.
28
Moreover, the study found that, 7.5% of the respondents strongly agreed, 32.2% agreed,
13.2% remained neutral, and 35.8% disagreed while 11.3% strongly disagreed
onusingtax consultant to file tax returns. This implies that tax consultants are able to
perform the online filing for any customer. This means for any taxpayer when the
documents related to taxes and laws make it difficult for them undertake tax affairs by
themselves. Therefore, taxpayers do require support from others such as tax consultants.
This indicates that although most taxpayers have tax knowledge but they sometimes
need tax consultant to file their tax issue to ensure efficiency and effectiveness.

In that order it was found that, 1.8% of the respondents strongly agreed, 49.1% agreed,
20.8% remained neutral and disagreed respectively while 7.5% strongly disagreed on
having basic computer skills and knowledge. This indicates that having basic computer
skills and knowledge ensure efficiency to the government where tax returns using
computer encourage taxpayers ‘adoption of services provided by the government
electronically.

This is supported by Seelmannet al. (2011) did a study benefits of a computerized

integrated system for taxation in Tanzania. They argued that taxation is often the most
important source of state revenue. However, many developing countries lack effective
tax administration structures and processes. Technological innovations have not filtered
through to the daily working reality of tax officials. They concluded that
computerization of tax and revenue authorities can contribute to reaching the goal of
good (financial) governance. It improves accountability and transparency of the revenue
authorities.

Also, the study findings indicated that, 5.7% of the respondents strongly agreed and
strongly disagreed respectively, 49.0% agreed and 11.3% remained neutral while 28.3%
disagreed onhaving facilities which enable filling return online. This indicated that
having facilities facilitates e-filing return of tax online. This was shown to be an
important construct to influence taxpayer to use electronic tax-filing system. Given the

29
fact that adoption of the electronic tax-filing system is voluntary, the findings suggest
that in order to attract more users to use the electronic tax-filing system, it is not enough
just to develop a useful and easy to use system to interact with. It is also important to
develop an electronic tax filing system that is boundless from perceived risk.

4.5 Problem of Using E-filling Tax System

Table 7 shows that, 17.0% of the respondents strongly agreed while 83.0% agreed on the
statement that e-filing is difficult to use without assistance; 71.7% of the respondents
strongly agreed while 28.3% agreed on using e-filing makes submission of tax returns
difficult; 56.6% of the respondents strongly agreed while 43.4% agreed on the statement
that e-filing system designed with the user’s best interest; 54.7% of the respondents
strongly agreed while 45.3% agreed on the statement that lack of access to personal
computer discourages the use of e-filing; 64.2% of the respondents strongly agreed
while 35.8% agreed on high cost of e-filling implementation; 32.1% of the respondents
strongly agreed while 67.9% agreed on unreliability of internet access.

30
Table 4.7: Problem of using e-filling tax system

Problem of using e-filling tax Strongly Agree Neutral Disagree Strongly

system agree disagree
E-filing is difficult to use without 17.0% 83.0% 0.0% 0.0% 0.0%
assistance
Using e-filing makes submission 71.7% 0.0% 0.0% 0.0%
of tax returns difficult 28.3%
E-filing system designed with the 56.6% 0.0% 0.0% 0.0 %
user’s best interest 43.4%
Lack of access to personal 54.7% 45.3% 0.0% 0.0% 0.0%
computer discourages the use of e-
filing 64.2% 0.0% 0.0% 0.0%
High cost of e-filling 32.1% 35.8% 0.0% 0.0% 0.0%
implementation
Unreliability of internet access 67.9%

The findings revealed that, 17.0% of the respondents strongly agreed while 83.0%
agreed on the statement that e-filing is difficult to use without assistance; 71.7% of the
respondents strongly agreed while 28.3% agreed on using e-filing makes submission of
tax returns difficult; 56.6% of the respondents strongly agreed while 43.4% agreed on
the statement that-filing system designed with the user’s best interest; 54.7% of the
respondents strongly agreed while 45.3% agreed on the statement that lack of access to
personal computer discourages the use of e-filing; 64.2% of the respondents strongly
agreed while 35.8% agreed on high cost of e-filling implementation; 32.1% of the
respondents strongly agreed while 67.9% agreed on unreliability of internet access.

Concerning the statement that e-filing is difficult to use without assistance, 83.0% of the
respondents agreed, implying that, it is very difficult for most taxpayers to use e-filing
31
tax system which may be because it is a new technology. This means that taxpayers need
to attain emergency assistance from the equipped personnel to quickly react to their
problem of using e-filing tax system for helping with filing their tax returns.
Regarding the statement that using e-filing makes submission of tax returns difficult,
71.7% of the respondents, implying that, it is very difficult for most taxpayers to pay tax
using e-filing However, to small number of populations in the study area e-filing tax
system is easier for them to use because it can help them to declare their tax in easier
way. The e-filing system enhanced the tax filing form system whereby the tax payers
can easily fill the form anywhere and anytime regardless the difficult they encounter in
using it.
Concerning the statement thate-filing system designed with the user’s best interest, most
respondents (56.6%) strongly agreed, implying that to some extent e-filing tax system
was designed to meet the best interest of the users, meaning that there was more
potential interest in using the electronic filing for the government from small and
medium enterprises. In order for the government to collect more revenue they introduce
the existing electronic filing in the early steps of implementation for more wealth
accumulation of the country.
Regarding the statement that lack of access to personal computer discourages the use of
e-filing, 54.7% of the respondents strongly agreed, implying that, by fully using e-filing
system will make difficulties to taxpayers work manually because they doesn ‘t have
computer. This is due to the fact that most taxpayers do not have computer that could
facilitate tax returns and reduce the challenges facing taxpayers in e-filing tax system.

High cost of e-filling implementation found to be problem in e-filing tax system by

64.2% of the respondents, implying that cost such as cost of ICT equipment and
network, software and reorganization require much money and time. Although e-filing is
costful in implementation but collection of taxes electronically resulting in a good deal
of time-savings and cost-savings of the taxpayers and the government, provided that it is
used in the right manner.

32
Concerning unreliability of internet access, 67.9% agreed that it was a problem that
facing the use of e-filing, implying that, there is not a reliable internet network to
support the use of e-filling among taxpayers. This means that e-filing is affected by
power or network problem when power or the internet is off in some parts of the
country. The electronic filing process still confuses a lot of people because the web
portal has many features and yet most people cannot understand some tax terms. It is
also easy because the tax payer can send the form through internet although there is also
network problem in accessing internet.

33
 CHAPTER FIVE
SUMMARY, CONCLUSION, AND RECOMMENDATIONS

5.1 Introduction
This chapter provides the summary, conclusion and the recommendations of this study.

5.2 Summary

5.2.1 Efficiency of using e-filling tax system to taxpayers

Concerning efficiency of using e-filling tax system to taxpayers, the findings indicated
that 9.4% of the respondents strongly agreed, 69.8% agreed, 7.5% remained neutral, and
9.4% disagreed while 3.9% strongly disagreed on the advantages of e-filing outweigh
the disadvantages. Moreover, 7.5% of the respondents strongly agreed, 49.1% agreed,
9.4% remained neutral and 24.6% disagreed while 9.4% strongly disagreed on
confidentiality guaranteed. In that order, 1.9% of the respondents strongly agreed, 35.8%
agreed and 58.5% disagreed while 3.8% strongly disagreed on psychologically
comfortable to use it. Also, 22% of the respondents strongly agreed while 77.4% agreed
on the statement that it saves the cost of complying with TRA tax legislation (e.g.
penalty, interest). Furthermore, 37.7% of the respondents agreed, 5.7% remained neutral
and 50.9% disagreed while 5.7% strongly disagreed on TRA extension of filing deadline
for e-fillers.

5.2.2Knowledge and facilities to use e-filling tax system

Regarding knowledge and facilities to use e-filling tax system the findings revealed that,
41.5% of the respondents strongly agreed, 32.1% agreed, 1.9% remained neutral and
15.1% disagreed while 9.4% strongly disagreed on having a good knowledge on e-filling
taxation. Furthermore, 3.8% of the respondents strongly agreed, 49.1% agreed, 9.4%
remained neutral and 24.5% disagreed while 13.2% strongly disagreed on training on
how to use the e-filling. Moreover, 7.5% of the respondents strongly agreed, 32.2%
agreed, 13.2% remained neutral, and 35.8% disagreed while 11.3% strongly disagreed
onusing tax consultant to file tax returns. In that order, 1.8% of the respondentstrongly

34
agreed, 49.1% agreed, 20.8% remained neutral and disagreed respectively while 7.5%
strongly disagreed on having basic computer skills and knowledge. Also, 5.7% of the
respondents strongly agreed and strongly disagreed respectively, 49.0% agreed and
11.3% remained neutral while 28.3% disagreed on having facilities which enable filling
return online.

5.2.3 Problem of using e-filling tax system

Concerning problem of using e-filling tax system the study found that, 17.0% of the
respondents strongly agreed while 83.0% agreed onthe statement that e-filing is difficult
to use without assistance; 71.7% of the respondents strongly agreed while 28.3% agreed
on using e-filing makes submission of tax returns difficult; 56.6% of the respondents
strongly agreed while 43.4% agreed on the statement thate-filing system designed with
the user’s best interest; 54.7% of the respondents strongly agreed while 45.3% agreed on
the statement thatlack of access to personal computer discourages the use of e-filing;
64.2% of the respondents strongly agreed while 35.8% agreed on high cost of e-filling
implementation; 32.1% of the respondents strongly agreed while 67.9% agreed on
unreliability of internet access.

5.3 Conclusion
In the line of research objectives this study concludes that, it is very difficult for most
taxpayers to use e-filing tax system which may be because it is a new technology. This
means that taxpayers need to attain emergency assistance from the equipped personnel
to quickly react to their problem of using e-filing tax system for helping with filing their
tax returns. However, to small number of populations in the study area e-filing tax
system is easier for them to use because it can help them to declare their tax in easier
way. The e-filing system enhanced the tax filing form system whereby the tax payers
can easily fill the form anywhere and anytime regardless the difficult they encounter in
using it.
Additionally, to some extent e-filing tax system was designed to meet the best interest of
the users, meaning that there was more potential interest in using the electronic filing for

35
the government from small and medium enterprises. Using e-filing systemmanually will
make difficulties to taxpayers work becausefindings revealed that most taxpayers do not
have computersthat could facilitate tax returns and reduce the challenges facing
taxpayers in e-filing tax system.

5.4 Recommendations
Based on the study findings, TRA must be transparent in e-filing to increase many tax
payers to use e-filing through internet that can be done by giving them more exposure on
how to use the system itself. The tax payers need to know in depth how to use the e-
filing tax system. Moreover, the government should give more time for the tax payers
that do not know how to use computer and internet because e-filing tax systems can be
more convenient to the taxpayers that know how to use computer and internet but not for
those who do not know. The government ofTanzania should build full trust of the tax
payers to use e-filing tax system to create positive perception towards it. The e-filing tax
system must be proven to be the best method for the tax payers to use it. By building
trust of the tax payers, it can lead to the higher confidence level of the tax payer to use e-
filing system through internet.

36
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39
 APPENDICES
Appendix1
QUESTIONNAIREFOR CLIENTS (TAX PAYERS)
I am a student at Mzumbe University pursuing bachelor of accounting and finance in
business sector (BAF-BS), doing a research study as a compulsory part of my study
programme. The purpose of the research is to assess the challenges facing the Tax
payers in electronic tax filing system in Moshi Municipality. I will be grateful if you
spend some few minutes to fill in this questionnaire. I promise, the information that you
provide will be treated as confidential and your identity will not be exposed.

 Please put tick (√) mark where appropriate

PART ONE: DEMOGRAPHIC PROFILE

1. Sex

a. Male ( )

b.Female ( )

2. Level of Education

a. Secondary ( )

b.certificate ( )

c. Diploma ( )

d. Degree ( )

e. Masters ( )

f. Other (specify)………………..

40
3. Age

a. 20-34 years ( )

b. 35-44 years ( )

c. 45-54 ( )

d. 56 years and above ( )

4. Marital status (tick the appropriate):

a.Single ( )

b. Married ( )

c. Widow/Widower ( )

d. Divorced ( )

e. Others (specify)…………………………………………………………..
PART TWO: CHALLENGES FACING TAX PAYERS IN E-FILLING

1. Efficiency of using e-filling tax system to taxpayers

FACTOR STRONG DISAGREE DON’T STRONG AGREE

DISAGREE KNOW AGREE
The advantages of
e-filing outweigh
the disadvantages

Confidentiality
guaranteed
Psychologically

41
comfortable to use
it
It saves the cost of
complying with
TRA tax legislation
(e.g. penalty,
interest,)
TRA extension of
filing deadline for
e-fillers

2. Knowledge and facilities to use e-filling tax system

FACTOR STRONG DISAGREE DON’T STRONG AGREE

DISAGREE KNOW AGREE
Having a good
knowledge on e-
filling taxation
Training on how to
use the E-filling
Using tax consultant
to file tax returns
Having basic
computer skills and
knowledge
Having facilities
which enable filing
return online

42
3. Problem of using e-filling tax system

FACTOR STRONG DISAGREE DON’T STRONG AGREE

DISAGREE KNOW AGREE
E-filing is difficult
to use without
assistance
Using e-filing
makes submission
of my tax returns
difficult
E-filing system
designed with the
user’s best interest
Lack of access to
personal computer
discourages the
use of e-filing
High cost of
implementation of
E-Tax. (such as
cost of ICT
equipment and
network, software
and reorganization
There is not a
reliable internet
network to support
the use of E-filling

43