PROPOSAL NEW

TAX ADMINISTRATION AND TAX REVENUE PERFORMANCE IN RWANDA REVENUE AUTHORITY A Research proposal submitted in partial fulfillment towards the awards of a Master’s Degree in Finance and Accounting BY: IRASUBIZA HOLLY LOUISE 13/MBA/KA/G/023 April 6th, 2016 DECLARATION I, Irasubiza Holly Louise, declare that this is my own work and it has never been presented to any other Institution for academic purpose. Signature Date Table of contents DECLARATION ii Table of contents iii List of Tables v List of figures vi List of acronyms/Abbreviations vii INTRODUCTION 1 Background of the Study 1 Statement of problem 3 Research Questions 4 General Objective 4 Specific Objectives 4 Significance of the study 5 Hypothesis 5 Scope of the study 5 Limitations of the study 5 Theoretical framework 6 Conceptual Framework 8 Operational Definitions of Terms 8 CHAPTER TWO 11 LITERATURE REVIEW 11 Tax Administration 12 Tax registration 14 Tax audit 15 Modernization- Tax Automation 17 Tax Revenue Performance 18 Tax compliance 20 Cost of collection 21 Identified gaps 25 CHAPTER THREE 26 RESEARCH METHODOLOGY 26 Research Design 26 Locale of the study 26 Population of the Study 27 Sample size 27 Sampling procedure 28 Research Instrument 28 Validity and reliability 29 Data Collection procedures 30 Data processing and analysis 30 List of Tables Table 1: showing the financial years/Tax to GDP ratios 2 Table 2: Sampling Procedure 28 Table 3: Mean Range of Likert Scale 28 List of figures Figure 1: Conceptual framework 8  List of acronyms/Abbreviations EAC : East African Countries IMF : International Monetary Fund IRB : Inland Revenue Board GDP : Gross Domestic Product HMRC : Her Majesty’s Revenue and Customs (UK) MDGs : Millennium Development Goals OECD : Organization for Economic Co-operation and Development RRA : Rwanda Revenue Authority SSA : Sub Saharan Africa URA : Uganda Revenue Authority WEO : World Economic Outlook  CHAPTER ONE INTRODUCTION Background of the Study Developing countries across the world typically suffer from insufficient supply of internal resources. Despite much effort, many countries fail to raise sufficient revenues to finance the government budgets and to support the development needs of the country. This incapability is a major hindrance for the government’s regular operations and for the capacity to accelerate economic growth initiatives (Haque, 2012; Hadler, 2000). For most developing countries, taxation goes hand-in-hand with economic growth and taxes are lifeblood for governments to deliver essential services and to make long-term investments in public goods (OECD, 2010; Paepe & Dickinson, 2014). Some of the countries in Latin America region that are on a fiscally sustainable path, revenues appear inadequate to fund a socially sustainable level of provision of public services (Ter-Minassian, 2012). The United Nations considers that achieving the Millennium Development Goals (MDGs) requires developing countries to raise at least 20% of their gross domestic product (GDP) in taxes. Several Asian and Latin American countries and some of sub-Saharan African countries still mobilize less than 17% of their GDP in tax revenues hence making it difficult to finance public projects (Paepe & Dickinson, 2014). Very low tax to gross domestic product (GDP) ratio is a common characteristic of most of the developing countries (Ter-Minassian, 2012). For example, over the past few years, lower than projected tax revenue has forced the government of Tanzania to cut its ambitious plans which reduced its capacity to finance public projects. Similarly, Despite the fast economic growth of Uganda, its tax to GDP ratio is still low (11% in 1997 to 13% now) (Mwenda M., 2015); and even Kenya the leading country in East-Africa, the tax to GDP ratio is still lower than the East African region ratio target of about 25% (African Economic Outlook, 2015). In the same region, according to African Economic Outlook (2015), Tax to GDP ratio for Rwanda was 13.9% (2013) and 14.8% (2014) which was lower than the 14.9% and 15.4% target respectively. This is still lower than Sub Saharan Africa (SSA) average of about 20% (The Government of Uganda, 2012) and the East African region target of about 25% (2014). In comparison with other East African Countries like Kenya which has a Tax to GDP ratio of about 20.1% (2014) and Tanzania 18.6% (2014), the Tax to GDP ratio for Rwanda is still low. Table SEQ Table \* ARABIC 1: showing the financial years/Tax to GDP ratios Countries Financial years/Tax to GDP ratios 2011/2012 2012/2013 2013/2014 2014/2015 Kenya 20.1 20.1 20.5 20.1(e) Tanzania 17.1 16.8 17.4 18.6 Rwanda 12.5 13.5 13.9 14.8(e) Uganda 10.33 11.19 11.76 13.1 Burundi 15.2 14.1 12.9 12.3 Average for EA region 16 18.1 18 18 Average for African Region 20 22.3 18 20 Source: (Kiringai, 2014) (African Economic Outlook, 2010) (Gaalya, 2015) (IMF, 2014) (Odero, Reeves, & Kipyego, 2015) The low tax to GDP ratio for Rwanda shows that a lot of tax remains uncollected, despite the fact that the government has put in place a number of interventions to increase the ratio and reduce the aid dependency. These measures include Taxpayer education in form of dialogues with stakeholders, seminars, and others to mobilize tax, to reduce tax evasion and to increase tax compliance; and also online facilities like e-filing and e-payment, e-clearance, e-billing machine and online registration were farther introduced to simplify the process of paying taxes, reduce costs, reduce time taken by taxpayers for declaration and payment of tax, and to increase domestic revenue (Kagarama Bahizi, 2013). According to Rwanda Auditor general’s report (2015), the failure to collect all potential revenue, could be linked to Tax Administration system characterized by lack of proper tracking of registered taxpayers for domestic taxes and gaps in existing databases of taxpayers; failure to register some taxpayers and yet RRA was aware of their existence; failure to verify majority of declarations and to follow up taxpayers who had not filed their returns or remained inactive since the time of their tax registration; capacity challenges in tax audits leading to low tax audit coverage and many contested audit results which resulted in reduction in amounts of tax assessed in 145 cases by RRA appeals committee (43% of all contested cases); and weak revenue protection system which is highly dependent on informers instead of generating and reviewing exceptional reports from existing systems to provide more preventive revenue protection strategies. Low tax to GDP has been linked to poorly administered tax system characterized by low tax audits, complicated tax system and thereby discouraging compliance and contributes to difficulties in raising tax revenues in Latin American region (Aggrey, 2011;Ter-Minassian, 2012). In Nigeria and Zimbabwe, the research findings show that those working in informal sector do not find the need of paying tax whereas it is the largest and growing component in economy and this leads to the revenue loss (Dube, 2014; Abiola & Asiweh, 2012). Could the tax revenue performance in Rwanda be due to the above stated inadequacy in other countries? This research will be relevant since it will seek to establish the relationship between Tax Administration and Tax Revenue Performance in Rwanda Revenue Authority. Statement of problem The Government of Rwanda continued to carry out tax reforms over the years with an aim of improving taxation efficiency and increasing the amount of revenue raised to finance the government expenditure. In year 2000, The Rwanda Revenue Authority (RRA) embarked on the decentralization process and further strategies were implemented such as Taxpayers education and electronic tax system to mobilize and increase tax revenue collections. However, despite the RRA employed strategies, the failure to collect all the potential tax revenue is persisting, and the tax-to-GDP ratio is lower than their target, EAC and SSA average ratio. The low tax to GDP ratio implies that a lot of tax remains uncollected and so tax revenues collected are inadequate to finance government budget. For example, from 2012 to 2014 the tax to GDP ratio is averaged to14.06% compared to EAC average of about 18% (Table 2). This problem could be linked to inadequate tax registrations, tax audits, tax automation and Revenue protection system (Auditor General of Rwanda, 2015). Research Questions What is the effectiveness of Tax Administration in RRA? What is the level of revenue performance in RRA? What is the relationship between Tax Administration and Tax Revenue Performance in RRA? General Objective The purpose of this study will be to establish the relationship between the Tax Administration and Tax Revenue Performance at Rwanda Revenue Authority. Specific Objectives To measure the effectiveness of Tax Administration in RRA To determine the level of Tax Revenue Performance of RRA. To establish the relationship between Tax Administration and Tax Revenue Performance of RRA. Significance of the study This study will be very significant to Rwanda Revenue Authority since it aims to establish the relationship between Tax Administration and Tax Revenue Performance of RRA. It will identify areas of amendment in Tax Administration where necessary to enable RRA collect all potential tax revenue. After this study, the findings will benefit Rwanda as a state to strengthen the existing system or employ the best tax system to meet its target in terms of revenue. The study findings and recommendations will be used, in the future, by researchers who will carry out researches on a related topic. And finally, it will benefit the researcher in creating knowledge on Tax Administration and how it is related to revenue performance; and also be part of the fulfillment of Master’s degree requirements. Hypothesis There is no relationship between Tax Administration and Tax Revenue Performance in RRA. Scope of the study The study will be conducted from Rwanda Revenue Authority (RRA). It will be conducted for the period of one year and capture the data of 3 years from 2013-2015 in Rwanda Revenue Authority. The study will be limited to Tax Administration and Tax Revenue Performance in Rwanda Revenue Authority. Limitations of the study The study will be limited by the cross-sectional study due to capacity and time limitation which is designed to investigate one or two variables over a short period of time for a specific population. The longitudinal study would explore more. It will be limited by the descriptive statistics and correlational research design. The study population will be limited to RRA staffs who are involved in Tax Administration functions whereas taxpayer information would be also relevant for the study. The study will also be limited by the use of Questionnaire in data collection which doesn’t allow the respondent to explain his observation on the required. The open ended questions also provide a limited space since the respondent can give much information that can take longtime to process and analyze. The study will be limited with a four Likert scale Questionnaire which scale which will consist of strongly disagree, disagree, agree and strongly agree to measure revenue performance which was in actual sense to be measured quantitatively. Theoretical framework This study is underpinned with Governance theory established by Lynn, Heinrich, and Hill (2001) and Adam Smith’s model of principles of Taxation (1976). The concept of Governance implies a set of responsibilities and practices, policies and procedures, exercised by an institution to provide strategic direction, to ensure objectives are achieved, to manage risk and to use resources responsibly and with accountability (Frederickson, Kevin, Christopher, & Michael, 2012). Theory of governance states that institutions should have clearly defined functions which enable them to deliver outcomes effectively and achieve high levels of performance. This theory helps to identify the dimensions of the Tax Administration functions being the clearly defined which include tax registration, tax audit, revenue protection and tax automation. A classical economist Adam Smith (1776) also cited by (Abiola & Asiweh, 2012), put forward the canons or general principles of taxation which he said should be observed by the Government when building a good tax system to promote growth and development. These are equity, certainty, convenience, productivity, simplicity, elasticity and economy. These canons will improve on the revenue collection, compliance and lower cost of collection if followed in tax assessment, collection and administration (Egyin, 2011). Equity, certainty and simplicity principles are related to the performance indicators of Compliance. According to the equity principle, every taxpayer should pay depending on his ability to pay; means they should pay taxes proportional to income. Besides, the certainty principle says that the taxpayer should know in advance how much tax to pay, at what time to pay and in what form tax is to be paid. And the tax system should be simple for the taxpayers to understand. All these together will enhance taxpayers’ compliance since it will encourage taxpayers to pay and comply with the tax obligations. Economy principle is related to the revenue performance indicator of cost of collections. It states that the cost of tax collection should be lower than the amount of tax collected. It may not serve any purpose, if the taxes imposed are widespread but are difficult to administer. Productivity and elasticity principles are related to the revenue performance indicator of revenue collections. The tax system should be able to yield enough revenue for the treasury and the government should have no need for resort to deficit financing. In other words, it should be able to collect all projected revenues and also be able to increase or decrease revenue according to the requirement of the country (Elasticity). Convenience principle can do for both compliance and revenue collections. The mode and timing of tax payment should be as far as possible, convenient to the tax payers. For example, land revenue is collected at time of harvest income tax is deducted at source. Convenient tax system will encourage people to pay tax (compliance) and will increase tax revenue. Conceptual Framework Independent variable Dependent variable REVENUE PERFORMANCE Revenue collections Compliance Cost of collection TAX ADMINISTRATION Taxpayer’s registration Tax audit Revenue protection system Tax automation Figure SEQ Figure \* ARABIC 1: Conceptual framework Source: (Crandall, 2010), (Baingana, 2011), (Kariuki, 2012) Operational Definitions of Terms Tax Administration This is the implementation and enforcement of tax legislation and regulations in RRA. It will be examined based on Taxpayer registration, Tax audit, Verification of declarations and Revenue protection system. Taxpayer registration This is one way of administering tax in RRA by keeping information concerning of all taxpayers in order to identify where they are and whether they are active or inactive. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Tax audit A tax audit is an examination carried out by RRA to determine whether a taxpayer has correctly reported and assessed their tax obligations. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Tax revenue protection system Tax protection controls are a type of internal controls that provide assurance that all transactions are completely and correctly taxed. This is achieved by triggering tax events based upon the relevant criteria and by incorporating tax regulations on the correct tax base and rates into the software. This will be assessed from the ability of the RRA system in detection of frauds and errors, tracking non-compliant taxpayers, keeping all taxpayers information and generation of reliable information in decision making. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Tax automation This will be assessed by checking on the percentage uptake in electronic filing (e-filing), the percentage of RRA transactions processed using Electronic system. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Tax Revenue Performance This will be assessed based on revenue collections, tax compliance, and cost of collections Tax compliance This will be measured by checking if the taxpayers find it easy to file their return , pay tax and hence comply to legal obligations imposed by the tax system in RRA. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Revenue collections This is the amount of revenue collected to finance the government budget against what was projected. It will be assessed by comparing total revenue collected and revenue projections (Teera, 2003), looking at increase of revenue in terms of volume, reduction of foreign aid, and implementation of government plans. A 4 point likert scale will be used from 1 – 4 respectively of adjectives (1= Strongly disagree, 2 = disagree, 3 = agree, and 4 = Strongly agree. Legend: 1.00 – 1.75 (inadequate), 1.76 – 2.51 (poor), 2.52 - 3.27 (fair), 3.28 – 4.00(adequate). Cost of collections This is defined as the money spent in tax collection process. It will be assessed by comparing the annual costs of administration incurred by RRA with the total revenue collected throughout the fiscal year. A downward trend is a proof of improved efficiency. Therefore, secondary data will be referred to by looking at the trend of cost ratios for three consecutive years. Cost of collection ratio = Expenditure/Total revenue collections CHAPTER TWO LITERATURE REVIEW The literature review of variables will be conducted. This will include the Tax Administration and its determinants, Taxpayers registration, Tax audit, Revenue protection system and Tax automation; and the revenue performance determined by revenue collections, improved compliance, and cost of collections. The research will also review the Rwanda tax policy and tax revenue administration procedure. Akrani, Katyani, & Patil (2010) describe the tax revenue as the most important source of public revenue; (Uganda Revenue Authority, 2011; Abiola & Asiweh, 2012) also considers tax to be a compulsory payment levied by the government on individuals or companies to meet the expenditure which is required for public welfare. It is said to be a compulsory contribution imposed by a public authority, irrespective of the exact amount of service rendered to the taxpayer in return, and not imposed as penalty for any legal offence. When tax is collected is used by the government for public goods but not just for those who make payments. According to (Alley & Bentley, 2008) “Tax Administration is used as a vehicle to deliver and monitor welfare payments and it is the most pervasive and intrusive areas of interaction between the citizen and the state”. If Tax Administration is inefficient, it directly affects the country’s economy. Thus, for the government, raising sufficient revenue to finance its expenditure requires effective Tax Administration in the sense of ensuring high taxpayer compliance and efficient in the sense that administrative costs are low relative to revenue collected. Tax Administration The primary responsibility of a Tax Administration is to collect the proper amount of tax due to the government at the least possible cost to the public. In addition, it is essential that a Tax Administration carries out its responsibilities in a manner which warrants the highest degree of public confidence in the organization’s efficiency, integrity and fairness. URA (2011) mentions the core functions of Tax Administration as registration of taxpayers, including detection of non-registration and false registration; processing of tax returns, withholdings and third-party information; verification or examination of the correctness and completeness of received information that includes audit activities. Tax Administration may be referred to as dealing with taxpayers in order to collect tax and sanctioning non-compliance (Baingana, 2011). However, a good Tax Administration deals with gathering, processing and utilizing information in such a way as to collect revenues set out in the law in the fairest and most efficient way (Baingana, 2011;Bird R. M., 2015). According to Gebre (2010) Tax Administration pertains to how tax authorities discharge the responsibilities entrusted to them. These responsibilities include a range of related activities such as taxpayer identification and registration, invoicing, filing and payment requirements, control of filing and payments, refunds, audits and penalties. Perhaps peripherally, Tax Administration is also concerned with issues of who should administer the tax, what organizational setup to use and what resources are available (Baingana, 2011). Recent research by (Nkote N. & Luwugge, 2010) supports the view that the administration of any adopted taxation system should be acceptable and easy for taxpayers and efficient. A good tax should be one which is easy to understand that is to say, the tax payer must be able to know the exact amount to pay and when and how much to pay without any difficulty. Revenue collection procedures highly determine the number of taxpayers who do comply (Katairo, 2011). Bird R. M.(2010) argues that how a tax system is administered affects its yield, its incidence, and its efficiency. Increasing tax revenues requires an effective Tax Administration: new taxpayers must be identified and brought into the tax net, and new collection techniques developed. Some transitional countries failed to improve on Tax Administration when new tax structure was introduced and this resulted into tax imposition, tax evasion and lower than anticipated revenue. In some developing countries bribing tax officials is common and this kind of corruption undermines confidence in Tax Administration, affects willingness to pay tax and therefore reduces the capacity to finance government expenditure. Therefore how revenue is raised may some ways be more important as how much revenue is raised. Improving Tax Administration has long been a matter of concern to those concerned with developing countries. Since all countries need revenues, all countries have revenue administrations. For developing countries to benefit from the opportunities afforded by globalization they must be able to mobilize adequate fiscal revenues. Money alone is not enough; but it is necessary for any state to function, and the most reliable way to get it is with an effective Tax Administration. How countries tax affects the allocation and distribution of resources and the rate of economic growth. In addition, however, the tax system constitutes one of the major interfaces between citizens and state in any country; so how taxes are administered may affect not only the political future of the government of the day but also, more fundamentally, public trust in government. Tax Administration may thus play a critical role not only in shaping economic development but in developing an effective state (Bird R. M., 2015). Government of Serbia (2015) reports the continuous improvement of the administrative capacity of the Tax Administration as a result of intensive training efforts. After opening an integrated and centralized information point for taxpayers, some organizational units were created, new management tools were developed and other business strategies were adopted to enhance Tax Administration. Implementing legislation on tax identification number of legal entities aimed at simplifying procedure and cutting unnecessary paperwork in line with the comprehensive regulatory reform was also adopted. The enforcement capacity of the Tax Administration and tax collection has improved. Serbia is well on the way to meeting the EU standards, in the area of Taxation. Tax registration The registration and recording of taxpayer information is one of the fundamental functions of the Tax Administration and, to a great extent, drives how other core administrative functions operate. An inaccurate taxpayer database will inevitably lead to ineffective compliance programs. The timely and accurate collection and recording of basic identifying information of the taxpayer will permit the Tax Administration to understand its taxpayer base, staff itself accordingly, and to effectively plan other core Tax Administration functions. In short, the administration cannot manage its taxpayers if it does not know who they are, where they are located, and whether they are active or inactive (Arturo, Crawford, Murdoch, Yassiemine, & Lethbridge, 2013). Taxpayer enumeration and registration: A good Tax Administration system should identify all those required to pay taxes and issue unique identification numbers that are fed into a master file upon which updates are made and from which retrievals can be made (Moyi & Ronge, 2006). (Baingana, 2011) in his research finds that taxpayer identification is one of the most important aspects of Tax Administration. This is because, as more taxpayers are located and registered, the taxpayers that would otherwise evade are reduced. Hence, (Bird R. M., 2010) noted that if taxpayers are identified and registered, it would enhance efficiency and significantly ease revenue collection. Tax audit Taxpayers are always not willing to pay their tax liability. They therefore need to be motivated or forced to pay what are expected from them. Tax audit is therefore used as a financial tool to help the government in revenue generation by determining the level of compliance of an organization with tax law of the country (Onoja & Iwarere, 2015; Bibe & Cottarelli, 2010). (OECD, 2006) adds on saying that failures to comply with the law are inevitable whether due to taxpayers’ ignorance, carelessness, recklessness and deliberate evasion, or weaknesses in administration. To the extent that such failures occur, governments, and in turn the communities they represent, are denied the tax revenues they need to provide services to citizens. However, the role of an audit program in a modern Tax Administration must extend beyond merely verifying a taxpayer’s reported obligations and detection of discrepancies between a taxpayer’s declaration and supporting documentation (Bibe & Cottarelli, 2010).One of the most important tasks of the Tax Administration authorities is to set up internal control and accountability systems to detect errors in tax assessments. To ensure that taxpayers are not taxed incorrectly, the tax authorities must review appropriately tax laws to avoid deficiencies in laws, procedures, or practices that lead to errors (Moyi & Ronge, 2006). However there are instances when it is not possible to verify the information got, and in such cases assessments are raised bearing in mind that the taxpayer or their representatives can easily challenge them (Annah, 2006). Bibe & Cottarelli (2010) assert that there is a significant positive relationship between tax audit and revenue generation. That is an increase in tax audits increases revenue generation from taxes; tax audits also increase tax bases for the government and reduces tax fraud in the tax system. (Ndungu, 2013) also concluded in his study showing that internal control systems which include audits contribute 88.3% of the generated revenue. Can it be the same case in Rwanda? This question will be answered by the findings of this research. Tax Revenue Protection system According to OECD (2010), Tax Revenue protection system also called Tax protection controls are described as a type of internal controls that provide assurance that all transactions are completely and correctly taxed. This is achieved by triggering tax events based upon the relevant criteria and by incorporating tax regulations on the correct tax base and rates into the software. The function of Revenue protection system is to minimize revenue losses by detecting and preventing external tax evasion, i.e. smuggling, and as well all other forms of evasion (Land, 2004). Several causes to revenue losses are encountered such as understatement of sales, omission of some transaction in recording, tax evasion and others to minimize the tax liability. Generally, organizations perform a fraud risk assessment and evaluate related internal control in revenue loss detection and control for better revenue generation (Ndungu, 2013). When the Revenue protection system is unable to detect and prevent such practices a lot of taxes remain uncollected and it can cause huge losses in tax revenues of the government ( United Kingdom Revenue Protection Association, 2015). Internal control involves different methods and measures that are established to ensure the smooth running of organizations. As a result of effective and efficient internal control system, an organization attains good corporate governance and provides proper motivation to management to pursue and achieve organizational objectives (Ndungu, 2013). Detection of frauds and errors being the main task of tax protection system, Okello (2014) emphasizes that prompt detection of taxpayers failing to file their returns and/or pay the tax due is very critical to increase tax compliance. In this case, collection enforcement should be prompt and expeditious, since international experience has shown that the older the debt the more difficult it is to collect it. To achieve this, cleansed and updated taxpayer register is needed. Therefore this research will be relevant to measure the effectiveness of Tax protection system in RRA. Modernization- Tax Automation Automation is the process of using machines to accomplish tasks performed wholly or partly by humans (Gutierrez, 2008). (Laffer, Winegarden, & Childs, 2011) emphasize on the appropriate application of automation. Automation of Tax Administration allows tax data entry, automated processing, computation and analysis as well as automatic production of tax reports and feedback required for control and risk management purposes (Holniker, 2005). However much tax auditors face challenges as a result of modern computerized business and accounting system which were once paper-based but now wholly electronic, the aim of tax audit remains the same: an auditor needs to obtain sufficient and appropriate evidences to enable him to draw reasonable conclusions on which to base the audit opinion to whether or not tax returns were prepared according to domestic legislation. Automation is very helpful to tax auditors; it helps in obtaining a quicker understanding of system processes through the availability of documentation describing internal controls and their application. Reliable audit data will be more easily obtained in a standard format. A major outcome is expected to be a more efficient use of audit time, thus reducing costs for the revenue body and businesses, indicators of revenue performance (OECD, 2010). However, (Ling & Fatt, 2008) assert that Automation helps establish a good system for tracking case files, which is essential for effective auditing and increases the speed and quality of data provided to auditors. E-filing system was used as one of the strategies to facilitate tax compliance and to achieve tax administrative and compliance efficiency (Ling & Fatt, 2008). In 2004 Malaysia’s Inland Revenue Board (IRB) spearheaded an initiative to implement electronic system for filing and paying taxes that would promote electronic, paperless transactions to establish a system of Tax Administration that allows for collection of required taxes at a minimum cost. They encountered several challenges in e-tax system implementation among them was public’s readiness to use it. The reports shows that the implementation of e-system increase in individual and companies’ electronic filing from 5% to 34% and also increased tax to GDP from 14.5% to 15.3% between 2006-2011 (Nasr, 2012). HRMC (department in charge of the collection of taxes in United Kingdom) is considered the highest performing government department in a way it manages risks to its core functions while harnessing new technology and data to enhance its business. Its introduction and development of connect technology to detect tax risks is a good illustration of this capability. The connect technology helped HRMC to collect around £500 billion each year with insignificant service failures. The automation of all its process enabled it to reduce its operating costs by 30% and also increased its tax revenue from its compliance work (Laffer, Winegarden, & Childs, 2011). Electronic tax systems for filing and paying taxes, if implemented well and used by most taxpayers, benefit both Revenue bodies and taxpayers (Nasr, 2012). Whereas the above literature states cost reduction due to tax automation, (Nkote N. & Luwugge, 2010) in their study show that the adoption of tax automation by Uganda Revenue Authority increased the cost of Tax Administration, effectiveness in revenue collection and reduced the time taken by taxpayers to clear tax declarations. Therefore, a study is needed to establish the effectiveness of Automation in RRA. Tax Revenue Performance Globally, government has a responsibility to provide some basic infrastructures for her citizen. Among these are the provision of schools, hospitals, construction of roads and bridges, Airports and others. So Taxation is one tool that government uses for raising revenue to carry out its role of financing government expenditure on public good and services (Abiola & Asiweh, 2012). Some of the SSA countries are still relying on donor financing which is by its nature volatile due to their being slow in rebuilding fiscal positions.IMF World Economic Outlook (WEO) reports that their tax revenue is very low comparing to international standards. In these countries, Botswana, Ghana, Malawi, Kenya, Rwanda, Liberia, Nigeria, Tanzania and Zambia, tax revenue averaged about 16.9 percent of GDP during the period 2008-2010.This sis relatively weak compared to international standards. During the same period the comparator figure in advanced countries was 25.4 percent; the OECD country members collect on average additional 10 percentage points of GDP, which raised their Tax-to-GDP ratio to about 35 percent (Okello, 2014). McClellan (2013) asserts that without adequate tax revenues, governments cannot provide the necessary public services to foster growth. Shortfalls in tax revenue push governments to levy ever more distortionary taxes in attempts to raise funds. These additional taxes place an undue burden on economies, and likely hinder growth. A good tax Revenue Collection system ought to be capable of efficiently collecting all potential revenue; this being the main task of Tax Administration (Abiola & Asiweh, 2012), revenue collections methods are effective if they can collect all the taxes as projected/planned and efficient if the collections are done with minimum resources (Annah, 2006). Developing countries across the world typically suffer from insufficient supply of internal resources. Very low tax to gross domestic product (GDP) ratio is a common characteristic of most of the developing countries. Despite much effort many countries fail to raise sufficient revenues to finance the government budgets and to support the development needs of the country (Haque, 2012). This may be due to poor Tax Administration that if improved can increase revenue collection (Annah, 2006;Baingana, 2011;Bird R. M., 2015; McClellan, 2013). According to (Baingana, 2011) the main task of Tax Administration is revenue collection. If a tax is well administered, then inevitably revenue collections have to increase. It is the only way one can be able to know whether a tax is well administered or not. Thus, improvement in administration would lead to increased revenue performance. (Kariuki, 2012;Atawodi & Ojeka, 2012;Crandall, 2010) show the following: increased revenue collections, improved compliance, and minimized costs of collection as the indicators of Tax Revenue Performance. Tax compliance According to (OECD, 2008), the extent to which compliance (e.g. filing, reporting and payment) has been improved as a result of revenue body activities would clearly be an indication of a revenue body’s effectiveness. There are four basic tax compliance obligations of citizens and businesses that generally speaking must be administered by all revenue bodies in accordance with their respective tax laws: to register for tax purposes; to file tax returns on time (i.e. by the date stipulated in the law); to correctly report tax liabilities and to pay taxes on time. According to (McCoon, 2013; Atawodi & Ojeka, 2012) most of the major types of taxes imposed by governments around the world rely upon voluntary compliance of those who must pay the tax. If taxpayers do not comply with the tax laws and do not remit their taxes, then the taxing authority collects insufficient tax revenue and the system breaks down. The research findings show that in Nigeria, this is due to high tax rates, complicated filing systems and lack of proper enlightenment in taxation. Additionally, Latin American governments almost without exception collect insufficient amounts of tax revenue. They are chronically underfunded and suffer from a phenomenon known as low tax effort. As a region, Latin America collects as a percentage of GDP the lowest percentage of corporate income tax, the lowest percentage of personal income tax and the lowest percentage of total tax of any region in the world. Latin American low tax effort has persisted for decades. And reports revealed that its inability to collect income taxes is due to poor Tax Administration as inability to properly assess and collect taxes which promotes noncompliance (OECD, 2010). How about in Rwanda? Can it be the same case as the above? This research will find out the factors that encourage non-compliance in Rwanda. Cost of collection According to (OECD, 2011)Tax administration efficiency depends on the design of internal organizational design, how budgeted funds are allocated to meet the priorities; the utilization of ICT and e-government initiatives to reduce the costs. The cost of collection ratios compare the annual costs of administration incurred by the revenue body with the total revenue collected over the course of a fiscal year. The downward trend proves improved efficiency and improved compliance. Modern Tax Administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Unlike the costs incurred by tax payers, administration costs are also incurred and financed from tax revenue; they are socially most costly. Thus the Tax Administrations will have a sense of how their costs are, comparing to the tax revenue raise (Keen, et al., 2015). Hence administrations will achieve the goal of tax policy by minimizing the administration costs. According to (Okello, 2014) The cost effective systems in tax collections are those that encourage the majority of taxpayers to voluntarily meet their tax obligations and leave the tax officials to put more efforts in dealing with those who do not comply. These needs a Tax Administration which adopts service-oriented attitude towards taxpayers and help them understand the tax law requirements, take tough actions concerning non-compliance through auditing programs and consistent penalties, and also to be transparent and seen to be honest by the public. Whereas (Okello, 2014) affirms that experiences in different countries show that voluntary compliance achieved through self assessment will minimize administration costs and thus increases tax collections ; however (OECD, 2013) shows that administrative assessment is still commonly used in many countries including some of the advanced countries such as Austria, France, Singapore and others. The report shows that it costs the Tax Administration of Austria to assess business and most company returns than the gained revenue. It is not clear why advanced countries still operate system that is costly and has many challenges, but this is not the focus of this study. Looking on the side of taxpayers, according to Laffer, Winegarden, & Childs (2011) costs incurred by taxpayers to comply with tax law are actually higher than what the government collects. This is also affirmed by (Atawodi & Ojeka, 2012) that businesses, large and small, hire teams of accountants, lawyers, and tax professionals to track, measure, and pay their taxes. This tax infrastructure is also used to optimize the tax liability of the business. And consequently Individuals and businesses change their behavior in response to tax policies, hiring tax experts to discover ways to minimize their tax liabilities. The efficiency costs from both legal tax avoidance and illegal tax evasion are difficult to quantify, but could be the highest costs of all. (Laffer, Winegarden, & Childs, 2011; Atawodi & Ojeka, 2012) conclude saying that the minimization of cost of collection and reduction of inefficiencies attached to high costs attached to tax collection would increase considerably the growth in revenue and wealth in the country. This study will measure the level of Tax Revenue Performance in Rwanda basing on cost of collection. Tax Administration and revenue performance Increase in tax revenue to finance government expenditures is a function of effective enforcement strategy which is the pure responsibility of tax administrators (Abiola & Asiweh, 2012). This was the same view of several other researchers like Baingana (2011); Annah (2006), and Aggrey (2011). If Tax Administration issues are well managed by the Revenue Agency, it will bring about an improvement in the Revenue Performance of the institution in terms of reduced Tax Administration costs (Aggrey, 2011, Gaalya, 2015; Teera, 2003; Baingana, 2011). Researchers demonstrated this using an approach proposed by Bahl(1971) and Chelliah(1971) to regress tax- to-GDP ratio on a set of variables that serve as proxies for a country’s Tax Administration. T/Y= f (V) Where, T= Tax revenue , Y=GDP , T/Y= Tax ratio , V= Vector Tax Administration McClellan (2013) in his study found that poor or corrupt Tax Administrations can reduce government revenues, negatively affect growth, and enable tax evasion. Under the rational crime framework of tax evasion, increasing enforcement effort in Tax Administration results in lower evasion and higher collections. The case of Malaysia proves the view of the above researchers. Malaysia’s Inland Revenue Board launched electronic tax system in 2004 aiming to increase revenue collection by improving tax payer services. The goal was to cut time and cost and to allow taxpayers to comply with tax obligations more easily. Although they encountered several challenges in e-tax system implementation, the improvement in Tax Administration led to positive outcomes. Between 2006 and 2011 the share of individuals and companies filing electronically increased from 5% to 34% and over the same period, tax collections increased from 14.5% of GDP to 15.3% (Nasr, 2012). However, Bird R. M.(2015) argues other factors that are mostly ignored yet they contribute to revenue performance. If Tax Administration is to increase revenue, it must be adequately staffed with trained officials and should be properly organized. Computerization and appropriate use of modern information technology can help a lot, but technology alone cannot do the job. Also (Bird & Zolt, 2008) mentioned that many countries have found it difficult to work out the right mix and sequencing for upgrading both IT and human resources in Tax Administration. Therefore, modern technology and well-trained people, with adequate political support, are needed to administer taxes effectively. Provision must be made for training and retraining staff as needed. According to (Annah, 2006) A well-implemented taxpayer administration will result in an informed taxpayer who is able to register voluntarily, fill his returns in time and honor his tax obligations. However, as important as tax revenue to the nation, people still find it difficult to comply with their tax obligation. No one likes paying taxes yet they are for welfare purpose (Abiola & Asiweh, 2012). On the other hand, According to (Gebre, 2010), even though many literatures focuses on weak Tax Administration as the reasonable cause of the poor performance in developing countries, It may also be due to other factors as resource constraint and designing the tax separately from the administration. In addition to that, (Saunders Mark, 2003) points out that standard economic approach to taxation usually ignores some key administrative issues as evasion and avoidance, administrative and compliance costs, and their effects on Tax Revenue Performance. Therefore, this study seeks to establish a relationship between Tax Administration and Tax Revenue Performance in RRA to find out if the indicators of Tax Administration in the study are the causes to the problem or if it is caused other factors outside this study. Identified gaps Generally in literature review, authors discussed the various determinants of Tax Revenue Performance from different corners. Not all authors find the same determinants of Tax Revenue Performance. (Baingana, 2011; Abiola & Asiweh, 2012) assert that poor Tax Revenue Performance may be due to inadequate tax identificatation, assessment, collection procedures and sensitization. On the other side, Gebre (2015) and Annah (2005) have the view that it may be due to the quality of service delivery, Attitude of taxpayers toward tax, and inadequate tax registration . Besides that (Aggrey,2011;Gaalya,2015) also present a different view of Tax Revenue Performance determinants. In their studies their discussed Government expenditure, Foreign aid,Trade openess, Exchange rates and Informal sector share to GDP to be the main determinants of the Tax Revenue Performance. However, in this study, the researcher with a skeptical mind about the literature in place wants to find out the relationship between other indicators such as tax audit, revenue protection system and tax automation (core functions of Tax Administration) with Tax Revenue Performance. In addition, The researchers stated above used purposive sampling (Baingana,2011; Abiola & Asiweh, 2012), Stratified and Systematic random sampling (Gebre,2015;Annah,2005) in their study to select respondents;whereas this study will use Simple Random Sampling. Whereas various studies were conducted in different developing countries like Nigeria, Ghana, Ethiopia,Uganda, few in Kenya and in OECD countries to improve Tax performance; however, no similar study has been so far conducted in Rwanda. Therefore, this study is aiming to establish the relationship between Tax Administration and Tax Revenue Performance in RRA. CHAPTER THREE RESEARCH METHODOLOGY This chapter describes the methodology that will be used in the study such as research design, area of the study, population of the study, sample size, sampling procedure, research instrument, reliability and validity, data collection procedure and data analysis method. Research Design A research design includes the plan for data collection and data analysis. The study will employ both quantitative and qualitative approaches. Quantitative method will be used to generate numerical data to ensure high levels of reliability of gathered data, and qualitative method to generate non numerical data in order to get in-depth information about the variables. The study will engage a descriptive, cross sectional and correlational research designs. It will be descriptive because it will use descriptive statistics to describe the two variables of the study; and it will be cross sectional since it will be carried out over a short period of time and data will be collected as a one stop event. It will engage correlational design to establish the relationship between Tax Administration and Tax Revenue Performance in RRA. Locale of the study The study will be conducted in Rwanda Revenue Authority Headquaters. It is located in Gasabo District in Kigali City, Kimihurura Avenue du Lac Muhazi . It has so far 30 branches in the whole country. Population of the Study The population of the study will consist of 1,093 RRA staff reported by the Human Resource department (2015).This population will consist of RRA staff involved in day-to-day Tax Administration in Rwanda. It includes Commissioners and Deputy Commissioners, Senior Officers, Officers. The purpose of choosing them as the respondent will be that they are usually the personnel who interface with taxpayers and enforce the legal framework promoted by legislators to administer and safeguard government revenue. Sample size The sample size will comprise staff from all RRA departments. The sample size will be 284 respondents determined using the table of determining sample size by Krejcie, Robert V., Morgan, Darley W. (1970) and it will comprise of 4 commissioners and deputy commissioners, 47 Senior Officers, and 233 Officers. Sampling size computation applied to RRA staff Category Number % Sample size(n) Commissioners and Deputy Commissioners 16 1.4 4 Senior Officers 182 16.7 47 Officers 895 81.9 233 Total 1,093 100 284 Source: (Katamba & Nsubuga, 2014, p. 91) Sampling procedure The study will use Simple Random sampling methods in selecting the respondents in the study. Random sampling will be used because of its simplicity and it gives equal chance to each person to be selected. There is no bias in selecting respondents. Table SEQ Table \* ARABIC 2: Sampling Procedure Categories Target population Sample size Sampling procedure Commissioners and Deputy Commissioners 16 4 Simple Random sampling Senior officers 182 47 Simple Random Sampling Officers 895 233 simple Random Sampling Total 1,093 284 Source: Human resource management report (2015) Research Instrument In this study, data will be collected using semi-structured questionnaire that will be administered to RRA staff and a face to face interview will be conducted to the key people to get depth information on the matter. Questionnaires will be designed according to Likert Scale: “Strongly disagree (1), Disagree (2), Agree (3) and Strongly agree (4)” to explore the key variables of Tax Administration and revenue performance. The questionnaire will comprise of closed questions, Attitude questions and open questions. It comprises of three sections. Section A entails the Biodata; Section B entails Tax Administration and Section C Revenue performance. Table SEQ Table \* ARABIC 3: Mean Range of Likert Scale Scale Response Rating Mean Range Interpretation 4 Strongly agree 3.28-4.00 Adequate 3 Agree 2.52-3.27 Fair 2 Disagree 1.76-2.51 Poor 1 Strongly disagree 1.00-1.75 Inadequate Source: (Abiola & Asiweh, 2012) Data sources Primary data will be collected from the responses of the questionnaires to measure the effectiveness of Tax Administration and the level of Revenue performance in RRA. Secondary data will be collected from RRA reports, journals, World Bank reports, African Development Bank reports and internet library to provide data on Revenue collections and to assess the costs of collection for the years that will be covered by the study. Validity and reliability For quality Control, a pre-test of the research instrument to test its validity and reliability will be conducted. The Cronbach’S alpha coefficient will be used to assess the Reliability while the Validity will be determined using the Content Validity Index (CVI). Validity The term “validity” refers to the judgments on the adequacy of an instrument as it is to be used in a particular study (Katamba & Nsubuga, 2014). To ensure the validity of the questionnaire, the researcher will use two URA staff and the research supervisor as experts to confirm the ability of items in the questionnaires to measure what they are intended for so as to minimize the errors in measurement. To ensure Validity of an instrument, the researcher will use the Content Validity Index (CVI).The questionnaire will be considered valid if CVI exceeds 0.7 (Heiner, 2007). CVI = Total number of valid questions in the questionnaires Total number of questions in the questionnaires Reliability The term “reliability” refers to the consistency of the answers provided by an instrument. The index that indicates the degree of internal consistency is called Cronbach’s alpha coefficient (Katamba & Nsubuga, 2014). To ensure the reliability of an instrument, a pilot study will be conducted from Uganda Revenue Authority (URA) since it has the same characteristics as the target population of the study (Heiner, 2007). Thirty-two questionnaires (32) will be administered to URA staff. Collected data will be analyzed using SPSS and Cronbach’s alpha coefficient will be determined. The questionnaire will be reliable if Cronbach’s alpha coefficient is above 0.70 as recommended by (Katamba & Nsubuga, 2014). Data Collection procedures An introductory letter will be obtained from Bugema University and it will be presented to the Commissioner General of Rwanda Revenue Authority, where this study will be based. With the Authorization of the Commissioner General, the research questionnaires will be administered to the intended respondents. Sequential data collection will be conducted, after analyzing data collected using a questionnaire. An interview guide will be designed with research supervisors’ guidance to capture some information that is not covered by questionnaires. Data processing and analysis Data that will be collected from the primary source will be compiled, sorted, edited for accuracy and clarity, classified, coded into a coding sheet and will be analyzed using a Statistical Package for Social Science (SPSS 16.0) since it is simple and friendly to use. During data analysis frequency tabulations, Pearson’s correlation analysis and coefficient of determination will be used to present the results of the study. The frequency tabulations will be used to present the results for the level of behaviors in the variables, the Pearson’s correlation analysis will be used to present the relationships between the study variables. Both objectives 1 and 2 will use descriptive statistics to determine the mean values of the variables indicators. Objective 3, the researcher will use Pearson’s correlation matrix to seek relationship between Tax Administration and Revenue performance. The Null Hypothesis (H0) will be rejected if the p-value (statistical test) is less than the significance level and will be accepted if the p-value is greater than the significance level (Baingana, 2011). REFERENCES Abiola, J., & Asiweh, M. (2012). Impact of Tax administration on Government Revenue. International Journal of Business and Social Science , 3 (8), 99-113. African Economic Outlook. (2015). Rwanda Economy. AFDB, OECD, UNDP. African Economic Outlook. (2010). Uganda Economy. © AfDB, OECD, UNDP, UNECA. Aggrey, J. (2011). Determinants of Tax Revenue: Evidence from Ghana. Accra: Cape Cost University. Akrani, G., Katyani, M., & Patil, M. (2010). Adam Smith's Canons of Taxation. Kalyan City Life . Alley, C., & Bentley, D. (2008). The Increasing Imperative of Cross-Displinary Research in Tax administration. eJournal of Tax research , 122-144. 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Mekelle, Ethiopia: Mekelle Press. Government of Serbia. (2015). Modernisation of Tax Administration. Belgrade: Serbia Government. Government of Tanzania. (2015). Why should Tanzanians pay Tax? Samora, Tanzania: World Bank Group. Gutierrez, N. (2008). Information Technology in Support of the Tax. Hadler, S. (2000). Improving Tax Administration in Sub-Saharan Africa. Montreal: Harvard University. Haque, A. A. (2012). Determinants of low tax efforts of developing countries. Sydney: University of sydney. Heiner, J. (2007). Measurement: Reliability and Validity measure. United States: Johns Hopkins University publisher. Holniker, D. (2005). Computerization of commercial tax system. IMF. (2011). Revenue mobilization in developing countries. Policy Paper prepared by the Fiscal. Washington D.C.: International Monetary Fund: IMF. IMF. (2014). Rwanda-IMF Country Report No. 14/185. Washington, D.C: IMF. Kagarama Bahizi, B. (2013). National Taxation Policy and Government Revenue Collection. 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Developing Capacity for tax administration. Kigali, Rwanda: European Centre for development policy management (ECDPM). Ling, L. M., & Fatt, C. K. (2008). Electronic Tax Filing System: Taxpayer's perspective. Seventh Wuhan International Conference on e-business: Unlocking the full potential of Global Technology, Vol.1 (pp. pp.338-343). Kuala Lumpur, Malasia: University Technology MARA. McClellan, C. B. (2013). The consequences of poor tax administration: Collections Growth. Georgia: Georgia State University. McCoon, M. (2013). Tax compliance in Latin America. Journal of Finance and Accountancy , 2-13. Moyi, E., & Ronge, E. (2006). Tax and Taxation: Modernization in Kenya. Nairobi, Kenya: Institute of Economic Affairs. Mwenda M., A. (2015). Uganda fastest growing economy. New Vision , 27. Nasr, J. (2012). Implementing electronic tax filing and payment in Malaysia. Kuala Lumpur, Malaysia: Doing Business. Ndungu, A. (2013). The effect of internal controls on revenue generation. Nairobi: University of Nairobi. Nkote N., I., & Luwugge, L. (2010). Automation and Tax Customs administration:Empirical evidence from Uganda. African Journal of Business Management Vol. 4(11) , pp. 2241-2246. Odero, W. O., Reeves, W. A., & Kipyego, N. (2015). Kenya Economy. African Economic Outlook. OECD. (2010). Forum on tax administration: Guidance and Specifications for Tax Compliance of Business and Accounting Software. Paris: Centre for tax policy and administration. OECD. (2009). Forum on Tax Administration. Monitoring Taxpayers’ Compliance: . OECD. (2013). Forum on Tax administration, Centre for Tax Policy and Administration. Comparative Information on OECD and Other advanced Emerging economies . OECD. (2006). Forum on Tax Administration’s Compliance: Strengthening Tax Audit Capabilities:. Paris, France: Organization for Economic Co-orporation and Development (OECD). OECD. (2008). Monitoring Taxpayers’ compliance: A practical guide based on leading revenue body experience. Paris: CENTRE FOR TAX POLICY AND ADMINISTRATION - ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. OECD. (2011). Government at a Glance. Paris: OECD Publishing. Okello, A. (2014). Managing Income tax compliance through Self-Assessment. IMF Working Paper , 4-32. Onoja, L. M., & Iwarere, H. (2015). Effects of Tax audit on revenue generation. Journal of Good Governance and Sustainable development in Africa , 67-80. Paepe, G. D., & Dickinson, B. (2014). Tax revenues as a motor for sustainable Development. Paris: Organization for Economic Development and Co-operation (OECD). Saunders Mark, L. P. (2003). Research Methods for Business. United Kingdom: Prentice Hall. Teera, J. M. (2003). Appraisal of Uganda's Tax performance Relative to Sub-Saharan Africa. Bath, United-Kingdom: University of Bath press. Ter-Minassian, T. (2012). More than Revenue. Washington, DC, United States: Inter-American Development Bank. The Government of Uganda. (2012). Uganda Vision 2040. Kampala, Uganda: The Government of Uganda. The Rwanda Revenue Authority. (2013). Annual Activity Report. Kigali: RRA. Uganda Revenue Authority. (2011). Taxation Handbook: A guide to Taxation in Uganda. Kampala: Fountain Publishers. United Kingdom Revenue Protection Association. (2015, October 7). Retrieved from http://www.ukrpa.co.uk/ APPENDICES QUESTIONNAIRE Dear respondent, My name is Irasubiza Holly Louise a student of Bugema University. You are selected to be among the respondents of the study which is intended to establish the relationship between Tax Administration and Tax Revenue Performance. This is for academic purposes and we believe you are the only person to help us get the right information to meet the purpose of this study. We are requesting you to respond to the statement honestly. The information communicated to us will be treated with utmost confidentiality (Don’t write your name on the questionnaire). Thank you for participating and making this research successful. SECTION A: BIODATA Tick (√) in the appropriate box where necessary. Gender : Male Female Age : Below 30 30-35 36-40 Above 40 Level of education Degree Professional Master Other (specify)………………….. Designation in institution …………………………………………………….. How long have you been in RRA? Less than two 2 years b. 2-5years c. 5-8years d. Above 8years SECTION B: TAX ADMINISTRATION Evaluate the following statements using these alternatives: Strongly disagree (1) Disagree (2) Agree (3) Strongly agree (4) TAX REGISTRATION 1 2 3 4 Every taxpayer identified is always registered. A quick check is done on taxpayers to establish if they are correctly registered. The ranking of eligible tax payable is based on taxpayer’s income. Tax offices are effective in identifying and registering all potential taxpayers. Identification methods are effective in registering all potential taxpayers. All registered tax payers are followed up to find out if they are active. All taxpayers’ basic information are collected and recorded on a timely basis. Taxpayers are able to register without intervention of tax officials. TAX AUDIT 1 2 3 4 There are sufficient financial resources to audit all taxpayers. The institution has sufficient staff to carry out audits. RRA organizes training programs for auditors. Financial statements and records of all potential taxpayers are examined annually. Audits are conducted on a timely basis to verify if the taxpayer has correctly reported and assessed their obligations. RRA has the capacity to identify tax evaders through audits. RRA gives audit notifications to the taxpayers on time. New registered taxpayers are frequently advised concerning filing of returns, payment of amount due, records to be maintained, etc REVENUE PROTECTION SYSTEM 1 2 3 4 RRA system is able to detect and track frauds. RRA system is able to track non-compliant taxpayers. RRA system is able to track non-registered taxpayers. RRA system is able to keep all taxpayers’ information. The system is able to generate appropriate reports. The system is able to ensure the accuracy and security of the information processed. The system is able to ensure that a transaction is processed once. Preventive revenue protection strategies are provided by the system in place. The revenue collected are protected from any leakage. TAX AUTOMATION 1 2 3 4 All transactions are processed using automated system. All registered taxpayers are able to file electronically. E-tax system reduces time taken by taxpayers in declaration and tax payment. Non-compliance cases decreased as a result of e- tax system. E- tax system increased revenue collection. All records are digitized with RRA. Electronic records are able to be retrieved after an extended period for audit purposes. SECTION C: TAX REVENUE PERFORMANCE REVENUE COLLECTIONS 1 2 3 4 RRA consistently surpasses its revenue targets. Tax collection in terms of volume has Increased tremendously. General contribution of tax towards government budget has been going up. There is a reduction in foreign aid as a result of increased revenue. TAX COMPLIANCE 1 2 3 4 All registered taxpayers file their returns on time. The system is able to track taxpayers who do not file their returns. Taxpayers are able to declare and pay actual taxes on time. Taxpayers who do not file their returns are followed up. Taxpayers are able to keep records, file returns and pay tax on time without intervention of tax officials. All taxpayers are aware of the consequences of delay or non remittance of tax. All taxpayers disclose income earned for tax purpose. What do you think are the causes of failure to collect all potential revenue by RRA? ……………………………………………………………………………………………………………………………………………………………………………………………………………. ……………………………………………………………………………………………………. In your opinion, what should be done to improve the Tax Revenue Performance? …………………………………………………………………………………………………………………………………………………………………………………………………………….. …………………………………………………………………………………………………….. Thank you! 6