RELATIONSHIP BETWEEN TAX REGISTRATION AND TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN BWAISE SLUM KAMPALA UGANDA. A CROSS–SECTIONAL STUDY.

Abstract

Objective

To examine the relationship between tax registration (Identification of legal taxpayers/businesses, issuing TIN numbers, location & addresses of business/ taxpayers, Registration procedures.) and tax compliance (Tax filing, Tax reporting, and Tax payment) among Small and Medium Enterprises (SMEs) in Bwaise slum Kampala Uganda.

 Methods

The study used a cross-sectional design and was conducted in registered SMEs in Bwaise slum Kampala Uganda. The study used a sample size of 173 SMEs in Bwaise slum Kampala Uganda

 Results

Identification of legal taxpayers is significantly associated with tax compliance (tax filing, tax reporting, and tax payment), with p-values 0.000, 0.001, and 0.002 at significant levels of 0.01 (1%) respectively. Issuing a Tax Identification Number (TIN) is statistically significantly associated with tax compliance (tax filing and tax reporting), with p-values 0.000 and 0.003 at P<0.01 respectively. However, TIN is not statistically significantly associated with tax payment, with a p-value of 0.240. Tax registration procedures are significantly associated with tax filing and tax reporting, with p-values of 0.020 and 0.047 at P<0.05. Thus weak correlation though significant. Tax registration procedures are not significantly associated with tax payment, p-value of 0.270.

 Conclusion

It was evidenced that, the identification of legal taxpayers is statistically significant and positively correlated to tax compliance (tax filing, tax reporting, and tax payment).

 Recommendation

The tax authority should adopt early enforcement strategies like following up on the 1^st return in the 1^st month of registration to encourage compliance. Therefore, new registrations should be issued tax clearances that are valid for less than or equal to 3 months only so that they are pursued to keep a relationship with the tax authority.