SCHOOL OF LAW MASTER OF ARTS IN REVENUE LAW AND ADMINISTRATION (MARLA – EVENING PROGRAM – 2ND YEAR) GRADUATE ESSAY TITLE ASSESSMENT OF TAX COMPLIANCE AMONG SMALL BUSINESS OWNERS IN TANZANIA THE CASE OF ILALA DISTRICT Name of Student Bahati Fredrick Ogolla Reg. No 2016 06 01278 Mobile Phone No 255 684 305 618 Name of Supervisor Mr. Masalu A Graduate Essay Submitted in Partial Fulfilment of the Requirements for the Degree of Master of Arts in Revenue Law and Administration of the University of Dar es Salaam July, 2018 Dar es SalaamTABLE OF CONTENTS TOC o 1-3 h z u HYPERLINK l _Toc520469875 CERTIFICATION PAGEREF _Toc520469875 h i HYPERLINK l _Toc520469876 DECLARATION AND COPYRIGHT PAGEREF _Toc520469876 h i HYPERLINK l _Toc520469877 ACKNOWLEDGEMENTS PAGEREF _Toc520469877 h i HYPERLINK l _Toc520469878 DEDICATION PAGEREF _Toc520469878 h ii HYPERLINK l _Toc520469879 ABSTRACT PAGEREF _Toc520469879 h 1 HYPERLINK l _Toc520469880 LIST OF ABBREVIATIONS AND ACRONYMS PAGEREF _Toc520469880 h 1 HYPERLINK l _Toc520469881 LIST OF STATUTES PAGEREF _Toc520469881 h 2 HYPERLINK l _Toc520469882 CHAPTER ONE PAGEREF _Toc520469882 h 3 HYPERLINK l _Toc520469883 1.1 BACKGROUND TO THE PROBLEM PAGEREF _Toc520469883 h 3 HYPERLINK l _Toc520469884 1.2 STATEMENT OF THE PROBLEM PAGEREF _Toc520469884 h 5 HYPERLINK l _Toc520469885 1.3 OBJECTIVES OF THE STUDY PAGEREF _Toc520469885 h 7 HYPERLINK l _Toc520469886 1.3.1 MAIN OBJECTIVE PAGEREF _Toc520469886 h 7 HYPERLINK l _Toc520469887 1.3.2 SPECIFIC OBJECTIVES PAGEREF _Toc520469887 h 7 HYPERLINK l _Toc520469888 1.3.3 HYPOTHESES PAGEREF _Toc520469888 h 7 HYPERLINK l _Toc520469889 1.4 SIGNIFICANCE OF THE STUDY PAGEREF _Toc520469889 h 8 HYPERLINK l _Toc520469890 CHAPTER TWO PAGEREF _Toc520469890 h 8 HYPERLINK l _Toc520469891 LITERATURE REVIEW PAGEREF _Toc520469891 h 8 HYPERLINK l _Toc520469892 2.1 THEORETICAL GROUNDING PAGEREF _Toc520469892 h 9 HYPERLINK l _Toc520469893 CHAPTER THREE PAGEREF _Toc520469893 h 13 HYPERLINK l _Toc520469894 RESEARCH METHODOLOGY PAGEREF _Toc520469894 h 13 HYPERLINK l _Toc520469895 3.1 RESEARCH DESIGN PAGEREF _Toc520469895 h 13 HYPERLINK l _Toc520469896 3.2 STUDY AREA PAGEREF _Toc520469896 h 14 HYPERLINK l _Toc520469897 3.3 SAMPLE AND SAMPLE SIZE PAGEREF _Toc520469897 h 14 HYPERLINK l _Toc520469898 3.4 SAMPLING PROCEDURES PAGEREF _Toc520469898 h 14 HYPERLINK l _Toc520469899 3.5 DATA COLLECTION METHODS PAGEREF _Toc520469899 h 14 HYPERLINK l _Toc520469900 3.6 VALIDITY AND RELIABILITY PAGEREF _Toc520469900 h 15 HYPERLINK l _Toc520469901 3.7 DATA ANALYSIS PLAN PAGEREF _Toc520469901 h 15 HYPERLINK l _Toc520469902 BIBLIOGRAPHY AND REFERENCES PAGEREF _Toc520469902 h 16 HYPERLINK l _Toc520469903 APPENDIX I INTERVIEW QUESTIONS PAGEREF _Toc520469903 h 18 HYPERLINK l _Toc520469904 APPENDIX II QUESTIONNAIRE PAGEREF _Toc520469904 h 20 HYPERLINK l _Toc520469905 APPENDIX III OBSERVATION GUIDE PAGEREF _Toc520469905 h 24 HYPERLINK l _Toc520469906 APPENDIX IV CURRICULUM VITAE FOR THE RESEARCHER PAGEREF _Toc520469906 h 25 CERTIFICATION The undersigned certifies that he has read and hereby recommends for acceptance by the University of Dar es Salaam a Graduate Essay paper titled Assessment of Tax Compliance among Small Business Owners in Tanzania with Special Reference to Ilala District in Dar es Salaam, in fulfillment of the requirements for the Degree of Master of Arts in Revenue Law and Administration of the University of Dar es Salaam. . Mr. Masalu (Supervisor) Date DECLARATION AND COPYRIGHT I, Bahati Fredrick Ogolla declare that this Graduate Essay is my own original work and that it has not been presented and will not be presented to any other University for similar or any other degree award. Signature.. This Graduate essay is a copyright material protected under the Berne Convention, the Copyright and Neighbouring Rights Act, Cap.218 R.E 2002 and other international and national pieces of legislation, in that behalf, on intellectual property. No part of this work may be reproduced by any means in full or in part or otherwise stored in any retrieval system or transmitted in any form by means of electronic, mechanical, photocopying or recording except with the prior written permission of the author or the University of Dar es Salaam. ACKNOWLEDGEMENT Prima facea, I am thankful to God for the good health and wellbeing that were essential to complete this essay. I place on record, my sincere thanks to Mr. Masalu, my supervisor, for the continuous encouragement. I am extremely thankful and indebted to him for sharing expertise and valuable guidance and encouragement to me. I take also this opportunity to express gratitude to all members of the University of Dar es Salaam School of Law for their help and support. I am further grateful to my family members and my parents for unending support and encouragement throughout this venture. Lastly, I place on record, my sense of gratitude to all, who directly or indirectly, extended their support towards completion of this write-up. May God bless you DEDICATION I dedicate this essay to my mother and father. I am grateful to them since without them I would not be born. Also, I dedicate this work to my beloved wife, Mary Ogutu for encouraging me to pursue Degree of Master of Revenue Law and Administration. Lastly, this paper is dedicated to my daughter Davina Ogolla and my son, Rouvin Ogolla who inspired me in the course of preparation of this document. ABSTRACT This study was conducted to examine factors that affect owners of small businesses to comply with tax statutes. It aimed at spotlighting the particular tax situations of small business owners and consequences on the compliance with the tax laws. Similar studies carried out on the matter suggest that there is a link between subjective experience of the tax situation of small business owners and compliance matters and that calls for a focus on approaches that aim to affect taxpayers perceptions of their own chances of evasion and avoidance, their level of knowledge on tax laws and their logic of possession of tax money. A descriptive research approach was applied in conducting the study. Data were gathered through a questionnaire, an interview and observation and 50 respondents were visited for the purpose of executing the study. Results indicate that unawareness of the requirements of tax laws, higher tax rates and numerous taxes are among the factors that affect level of compliance among small business owners. The study therefore recommends that tax laws tailored to small businesses be formulated and administrative aspects thereof be handled exclusively. The study also recommends that taxpayers education be improved to impart awareness to small business owners. LIST OF ABBREVIATIONS AND ACRONYMS BRELA Business Registration and Licensing Agency SME – Small and Medium Scale Enterprise TRA – Tanzania Revenue Authority URT – United Republic of Tanzania LIST OF STATUTES Business Activities Registration Act, 2007 Income Tax Act, 2004 Tax Administration Act, 2015 CHAPTER ONE 1.1 BACKGROUND TO THE PROBLEM A small business is operated using a relative small number of employees and little amount of capital (URT SME Policy, 2003). It may be run in form of a corporation (company), sole proprietorship or partnership depending on the choice of the owner(s) (Zimmerer, T. and Scarborough, N., 2008, pp. 159-187 Stokes, D., 1998, pp. 162). It is the feature of business that will enable its categorization into a small business rather than the form of business ownership. Mostly, the small business is operated in such a manner that there is no separation of power between the owner and manager. It is usual to find an owner involving in day-to-day operations of the business (Stokes, D., 2000, pp. 27). Thus, small businesses are basically informal particularly those which are operated on sole proprietorship basis (Udechukwu, 2003). Small businesses are registered by approved bodies according to laws of a particular jurisdiction. In Tanzania, they are registered by the Business Registration and Licensing Agency (BRELA), Tanzania Revenue Authority (TRA) and licensed by municipality of the local government or relevant regulatory body depending on the type of activity that they carry out (The Business Activities Registration Act, 2007, Tax Administration Act, 2015). They pay fees and taxes to the respective registering bodies. Taxes from small businesses are assessed and collected by TRA (Income Tax Act, 2004). Therefore, they play a vital role in the tax system (Kamleitner et al., 2012, pp. 330). Compliance level with the tax statutes determines amount of revenue payable to TRA. Because of close relationship between small businesses and their owners, compliance with tax laws is directly dependent upon the owners willingness to pay tax. Thus, reactions of owners of small businesses to tax matters affects the level of compliance. Though the evidence is not clear, most research suggests that small business owners are more likely to cheat compared to other groups of taxpayers (Kamletner et al., 2012, pp. 330). Tax authority is concerned with the tax compliance matters. It ensures that maximum revenue is collected from the tax system (Oats, L. et al., 2017, pp. 13). The government ensures that there is improvement in the legal and regulatory framework through formulation of strategies and implementation thereof in order to enhance tax compliance (URT, SME Policy, 2003, pp. 22). Despite government efforts to improve legal and regulatory environment, tax regime in Tanzania is still considered to be challenging to the development of small businesses. Taxes are many and are collected by various authorities including TRA and local government authorities. Also, owners of small businesses are ignorant of tax issues whereas cost of complying with tax laws is deemed to be high. Small businesses are affected under such an environment in comparison to larger businesses due to the disproportionately heavy costs of compliance arising from their size (URT, SME Policy, 2003, pp. 21-22). This document provides definition of concepts used herein, a brief overview of literature on tax compliance and examination of small business owners particular tax paying position. Finally, recommendations are provided to improve the level of compliance among small business owners. 1.2 STATEMENT OF THE PROBLEM Small business lends to objective definitions. Criteria such as level of turnover or number of staff members engaged in the business may be used to distinguish small businesses from other enterprises (Deakins, D., 1999, pp. 34). It is noted that the definition of a small business depends on the criteria for determining what small is (Hatten, T. S., 2006 pp 4). It may be defined as a venture that is independently owned and operated, that is dominant in its area of operation and qualifies certain standards of size in terms of employees or annual turnover (Luthans, F. Hodgetts, R., 1989, pp. 88). As such, defining a small firm based only on one parameter is inappropriate. In Tanzania, a firm is considered small if it hires 5 up to 49 employees and maintains a capital investment in machinery of above TShs. 5 million but not exceeding Tshs. 200 million (URT, SME Policy, 2003, pp. 11). All small businesses are centred around an individual or in case of team founders around closely related persons. Such individuals usually make or are accountable for all managerial and operative decisions. Their behaviour is crucial to the ventures success, which eventually tends to relate directly to their personal income. Thus, one way to view small business owners is to describe them as people whose behaviour is largely dependent on their emotional and rational perception of taxation (Kamleitner et al., 2012, pp. 331-332). Small business owners often need to self-assess and self-report their income and pay taxes out of their pocket. They pay individual income taxes, corporate taxes, property taxes, payroll taxes and withholding taxes on rent, dividends and interest income in respect of businesses that they operate. They also pay local government taxes such as municipal levies and fees (Sections 4, 5 and 94 of the Income Tax Act, 2004 Kamleitner et al., 2012, pp. 333). It is presumed that various types of taxes and taxation requirements may significantly shape the perceived tax situation of small business owners (Kamleitner et al., 2012, pp. 333). Government of the United Republic of Tanzania (URT) has adopted various initiatives including designing and implementing policies and programs to support small businesses. Despite such efforts, the sector is still facing challenges relating to compliance matters. The legal and regulatory framework is bureaucratic, costly and centralized (URT, SME Policy, 2003, pp. 21). Such an environment causes a number of small business owners to become non-compliant with various aspects of the law (Atawodi, O. and Ojeka, S., 2012, pp. 88). In view of the above, it is of importance to assess tax compliance by owners of small businesses. This study contributes to a quest of furthering understanding of small business owners tax compliance by pointing out that tax decisions tend to be made by and are personally relevant to small business owners, who can be characterized as individual decision makers. 1.3 OBJECTIVES OF THE STUDY 1.3.1 MAIN OBJECTIVE To assess factors that affect tax compliance among small business owners in Tanzania 1.3.2 SPECIFIC OBJECTIVES To assess the mechanism involved in tax collection among small businesses To assess challenges faced in collection of taxes from small businesses and To suggest ways that may improve tax compliance among small businesses. 1.3.3 HYPOTHESES The following are the major hypotheses to be tested Null hypothesis, H0 There are other factors more important than high tax rate that influence small business owners to comply with tax laws in Tanzania. Alternative hypothesis, H1 High tax rate is the most crucial factor influencing small business owners to comply with tax laws in Tanzania. 1.4 SIGNIFICANCE OF THE STUDY Although relevant literature is full of reference to tax compliance among small business owners, the problem of non-compliance with tax laws and regulations among small business owners raises the question whether the role and dynamics of small business owners in achieving tax compliance are fully understood by entrepreneurs and policy makers. Several studies such as Evans Lignier (2013) and Joulfaian and Casal Mittone (2016) have tended to focus on general issues, such as compliance costs and evasion without examining link between small business owners and tax compliance aspects. The current study undertakes to establish the link between small business owners and tax compliance. It enables policy makers to focus on the best strategy to enhance tax compliance among small business owners. CHAPTER TWO LITERATURE REVIEW Several studies have been carried out to assess tax compliance among small businesses in different jurisdictions. They have described what a small business is in accordance with their country or regional specific criteria. They have addressed how small businesses comply with tax laws within relevant jurisdictions. Some factors for non-compliance appear to be universal such as attitude of taxpayers while others relate country-specific issues such as policy formulation and enforcement of laws. This section outlines studies that have been conducted to assess tax compliance among small business owners. It provides theoretical grounding on the study, empirical studies and synthesis gap arising from the studies. 2.1 THEORETICAL GROUNDING According to Atawodi and Ojeka (2012) there are two theories of tax compliance, namely economic based and psychological based theories. Economic based theory suggests that taxpayers are influenced by economic motives such as profit maximization and probability of detection. As such they analyse alternative compliance paths for example whether or not to evade tax, chance of being detected and resulting consequences and then select the alternative that maximises their expected after tax returns after adjusting for risk. Therefore, according to this theory, in order to improve compliance, audits and penalties for non-compliance need to be increased. Psychology-based theory suggests that taxpayers are influenced to comply with their tax obligations by psychological factors. It focuses on the taxpayers morals and ethics. The theory suggests that a taxpayer may comply even when the probability of detection is low. As opposed to the economic theory that emphasizes increased audits and penalties as solutions to compliance issues, psychology theories lay emphasis on changing individual attitudes towards tax systems. Kamleitner, et al., (2012) developed three characteristics that influence small business owners tax compliance, namely perceived opportunity, knowledge requirements and decision frames. Perceived opportunity factor suggests that business owners are often mentioned as a high-risk group in terms of tax compliance because their opportunities to evade are high. This is because of the level of control they have over their businesses. Knowledge requirements characteristic portrays that lack of knowledge about compliance measures and requirements among small business owners make them to become defaulters of requirements of the law. Decision frames factor suggests that small business owners typically pay their taxes out of their pocket. Small business owners dispose of their gross revenue, which is mentally perceived as their own money, and actively determined taxes represent a loss. Paying the tax share out of persons own pocket represents a loss frame. Allingham, M. and Sandmo, A. (1972) presented a model of tax behaviour proposing that tax honesty increases with higher chance of audit and severe penalties. A taxpayer may declare his/her actual income or declare less than the actual income. If he/she chooses the latter strategy his/her payoff will depend on whether or not he/she is investigated by the tax authorities. If he/she is not investigated he/she is clearly better off than under the former strategy. If he/she is investigated, he/she is worse off as there will be imposition of fines due to under-declaration of taxable income. The taxpayer chooses the strategy that is optimum. Allingham, M. and Sandmo, A. (1972) formed a foundation for the study of taxpayers behaviour towards tax compliance. Kirchler (2007) provides a thorough description of the determinants of tax compliance. He categorizes them into three groups, namely social psychological determinants which comprise subjective knowledge and mental concepts of taxation, attitudes, norms, perceived opportunities of non-compliance, fairness and motivation to comply with tax requirements political determinants like complexity of tax law and tax system and economic determinants such as the decision-making process and the effect of audits, fines, tax rate and income. 2.2 EMPIRICAL STUDIES Compliance cost is mentioned in the study conducted by Evans, C. et al., (2013) as one of the factors that result in non-compliance in Australia. They categorize compliance cost into two categories, namely external and internal factors. External factors are out of control of small business owners. They include tax laws and payment process. On the other hand internal factors emanate from the small business operations. They include factors such as knowledge of business owners and competence thereof. A high tax rate is considered to be the most driving factor causing small business owners to become non-compliant as pointed out in the study conducted in Nigeria by Atawodi, O. Ojeka, S., (2012). The same finding is presented by Joulfaian, D. Rider, M. (1998). Complicated procedures for tax filings are also considered to be a hindrance to small business owners in achieving tax compliance (Atawodi, O. Ojeka, S., 2012). Incidence of multiplicity of taxes which results in high cost of doing business is mentioned by Udechukwu, F. N. (2003) to be among the problems that face small businesses in Nigeria. The study conducted by Casal, S. Mittone (2016) suggests that the tendency of taxpayers to evade taxes results from their unwillingness to pay tax dues. This is considered to result from their behaviour. Cumbersome administrative procedures and high tax rates are cited by Mnenwa, R. Maliti, E. (2008) to be among the factors that affect small business owners in Tanzania. Empirical results unequivocally fall within the three main categories of determinants of tax compliance, namely social psychological factors, political determinants and economic determinants of tax compliance. 2.3 SYNTHESIS GAP There has been a significant increase in the volume of research into tax compliance in recent years. Such research recognizes that the traditional deterrence model does not explain taxpayer behaviour. The deterrence model undertakes that taxpayers pay their taxes lest they are detected. So they are motivated by the threat of penalties and fines and the likelihood of being detected by tax authorities. Studies of taxpayer attitudes towards compliance now show that levels of compliance are generally higher than would be forecast under the deterrence model. Acknowledgement that there are other factors at work is being explored (Oats, L. et al., 2017). The taxpayers attitude on compliance may be influenced by many factors, which eventually influence taxpayers behaviour. Those factors differ from one country to another (Kirchler, 2007) and from time to time (Kasipillai, J. and Jabbar, H. A., 2006). Because of such evolution a fresh study is undertaken to reflect contemporary circumstances existing on the scene. CHAPTER THREE RESEARCH METHODOLOGY 3.0 INTRODUCTION According to Kothari, C. R. (2004), research methodology is defined as a way to systematically solve the research problem. This section explains the methods and techniques that were applied to collect data and the way such data were summarized, analyzed and interpreted in order to come up with reliable conclusion of the study. 3.1 RESEARCH DESIGN Research design involves selection of an appropriate survey method, sample and design of appropriate questions (Deakins, D., 1999, pp. 246). It is defined as the conceptual structure within which research is conducted and comprises the planning for the collection, measurement and analysis of data (Kothari, C.R., 2004, pp. 31). The study was conducted using quantitative research approach. Research questions were generated and incorporated in the questionnaire which was used to gather data from the respondents. Data were analysed using statistical parameters out of which conclusion was drawn. 3.2 STUDY AREA The study was conducted on small businesses operated in Ilala district, a place which occupies an area of approximately 273 km. Ilala district is located in Dar es Salaam region, Tanzania. 3.3 SAMPLE AND SAMPLE SIZE The sample contained all major characteristics of a population in order to allow making inferences about the entire population. In this study, a sample of 50 respondents operating/owning small businesses was selected from the entire population of small businesses. 3.4 SAMPLING PROCEDURES A simple random sampling technique was employed whereby every small business had equal chance of inclusion. 3.5 DATA COLLECTION METHODS Questionnaire A questionnaire consists of a number of questions printed or typed in a definite manner on a form or set of forms (Kothari, C. R. 2004, pp. 96-100). Questionnaire was used to collect information from the respondents within the planned time. Questionnaire consisted of both open and closed-ended questions. Questions were distributed to the respondents. Researcher provided assistance whenever required by the respondents. Interview Researcher had direct interaction with the respondents, and responses were captured accordingly. Observation Researcher physically visited small business premises and collected data accordingly. Visual information such as location and business disposition was captured by the researcher. 3.6 VALIDITY AND RELIABILITY In order to achieve validity and reliability of study tools, a pilot study was conducted with the aim of checking effectiveness of research instruments in collecting the required data for this study. 3.7 DATA ANALYSIS PLAN In this study the researcher employed both qualitative and quantitative data analysis techniques. Qualitative data involving responses from interviews were analyzed. Quantitative data were derived from questionnaire and other documents. They were extracted, classified, tallied and computed into percentages and ratios using Microsoft Excel program. They were systematically presented in tables, charts and the graphs. Prior to data analysis, the collected data were checked for correctness at the field. Only data that met variables for research questions were incorporated for analysis. The data were managed as soft copies on computer. Finally, interpretation and discussion of the results and findings were made. BIBLIOGRAPHY AND REFERENCES Allingham, M and Sandmo, A (1972). Journal of Public Economics 1 323 -338. Atawodi, O. Ojeka, S. (2012). Factors that affect tax compliance among small and medium enterprises (SMEs) in North Central Nigeria International Journal of Business and Management. Vol 7, No. 12, pp 87-96. Retrieved from http//dx.doi.org/ijbm.v7n12p87 Casal, S. Mittone, L., Social esteem versus social stigma The role of anonymity in an income reporting game, Journal of Economic Behaviour Organization (2016) 5566. Deakins, D. (1999). Entrepreneurship and small firms. McGraw-Hill, Publishing Company, the U.K. Evans, C., Lignier, P. Tran-Nam, B. (2013). Tax Compliance Costs for the Small and Medium Enterprise Business Sector Recent Evidence from Australia. University of Exeter Business School. Hatten, T. S. (2006). Small Business Management. Houghton Mifflin Company, Boston New York, the U.S.A. Joulfaian, M. Rider, M. (1998) Tax Evasion by small business. U.S. Department of the Treasury and Georgia State University. Kamleitner, B., Korunka, C. Kirchler, E. (2012). Tax Compliance of Small Business Owners A review. International Journal of Entrepreneurial Behaviour Research, Vol 18 Iss 3 pp 330-351. Kasipillai, J. and Jabbar, H. A. (2006). Gender And Ethnicity Differences In Tax Compliance. Asian Academy of Management Journal, Vol. 11, No. 2, 7388. Kirchler, E. (2007). The Economic Psychology of Tax Behaviour. Cambridge University Press, Cambridge, UK. Kothari, C.R. (2004). Research Methodology Methods and Techniques. New Age International (P) Limited, Publishers, India. Luthans, F Hodgetts (1989). Business. The Ryden Press, the U.S.A. Mnenwa, R., and Maliti, E. (2008). The Role of Small Businesses in Poverty Alleviation The case of Dar es Salaam, Tanzania. Research Report, Dar es Salaam, REPOA. Oats, L., Miller, A. and Muligan, E. (2017). Principles of International Taxation. Bloomsbury Publishing Plc, London, the UK. Stokes, D. (1998). Small Business Management. Ashford Colour Press, Gosport, Hants, Great Britain. Udechukwu, F.N. (2003) Survey of Small and Medium Scale Industries and Others Potential in Nigeria Central Bank of Nigeria Seminar on Small and Medium Industries Equity Scheme (SMIEIS). CBN Training Centre, Lagos, Nigeria. United Republic of Tanzania, Small and Medium Enterprise Development Policy, 2003. Zimmerer, T. and Scarborough, N. (2008). Essentials of Entrepreneurship and Small Business Management. Pearson Prentice Hall, New Jersey, the USA. APPENDIX I INTERVIEW QUESTIONS Below are interview questions which were addressed to the respondents. Please, briefly describe challenges that you face when complying with tax laws in your business …………………………………………………………………………………………………………………………………. Do you plan to proceed with operating this business in the future If no what are the reasons and what activity do you plan to involve yourself into. What was your motivation for starting a business . May you describe relationship that exists between your employees (if any) APPENDIX II QUESTIONNAIRE Below is questionnaire which was used to capture responses from the respondents. We are conducting a research on the challenges that you are facing in your day-to-day operations of your business in connection with compliance with tax laws. We request you to fill this questionnaire. It will take approximately ten (10) minutes to complete, and all information will be kept anonymous and confidential. We hope you enjoy the experience and thank you for your precious time. Please describe the nature of your operations. What were your sales during 2016 and 2017 Please state amounts in TZS.2016..2017. How many employees do you hire………………………………………………………….. Who is the manager of your business operations.. Are there clear job distinctions between your staff members…………………………………………………………………………………………………………………………………………… Please state your highest academic qualification of your staff members (including you) (a) (b) (c) (d) (e).. (f).. (g).. Who are the owners of this business Please provide also ownership percentage.. What types of returns do you file with tax authorities……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. How much taxes did you pay to TRA and local government authorities during 2016 and 2017 Tanzania Revenue Authority Type of Tax/Levy20162017 Local Government Authorities Type of Tax/Levy20162017 Please, rank below factors, in order, starting with 1 as the most influencing factor and 7 as the least influencing factor in small businesses High taxes …………………( ) Numerous taxes …( ) Poor methods of collecting revenue from small businesses ( ) Low awareness of tax compliance among small..( ) Bureaucratic procedures filing returns and payment of taxes ( ) Low level of awareness among small business owners ..( ) Other factors …( ) Have you ever defaulted in tax compliance matters If yes describe the default What were the reasons for non-compliance……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. Please indicate approaches which you believe when adopted will resolve non-compliance matters relating to tax. Do you prepare accounts for external auditors……………………………………………….. APPENDIX III OBSERVATION GUIDE Below is a description of the observation guide that facilitated execution of the research. Please describe physical location of the business premises. What are the nearest commercial activities going on in the visited area……………………………………………………………………………………………………………………………………………………………………………………………………………………………….. Please describe any matter of concern relating to this business PAGE MERGEFORMAT ii PAGE MERGEFORMAT 22 BxwKbRsHD
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