FACTORS INFLUENCING IMPLEMENTATION AND ADMINISTRATION OF WITHHOLDING TAXES IN RWANDA. A CASE STUDY OF RWANDA REVENUE AUTHORITY (2018-2020)
Abstract
The objective of the study was to assess the factors influencing implementation and administration of withholding taxes by the Rwanda Revenue Authority. RRA has faced numerous problems and challenges with its withholding tax system. It was in the backdrop of these challenges that facilitated the researcher to establish effective withholding taxes as a tool of enhancing revenue collection in Rwanda. a case study of Rwanda Revenue Authority (2018-2020). To provide the basis of the study, the researcher relied on the following theories and model: human capital theory, equal sacrifice theory and theory of planned behavior. A descriptive research design was adopted for the study and the target population was all 73 RRA employees in Kigali province domestic tax division. Census approach was adopted. Data was collected from both primary and secondary data using questionnaires and documentation. Data collected was analyzed using SPSS version 21. Data analysis involved statistical computations for averages, percentages, and correlation and regression analysis. Ordinary least squares (OLS) regression method of analysis was adopted to determine the inferential statistics. Regression analysis was used to evaluate the degree of the contribution of indirect taxes on revenue collection in Rwanda and the findings presented in tables and graphs. Starting with the significant factors, the variable "Tax Policy and Regulations" demonstrated a positive and statistically significant influence on withholding tax collection (Beta = 0.374, p < 0.001). Similarly, "Tax Administration and Enforcement" also showed a positive and significant relationship with withholding tax collection (Beta = 0.230, p < 0.001). On the other hand, "Taxpayer Compliance rate" exhibited a positive relationship with withholding tax collection, albeit with a smaller standardized coefficient (Beta = 0.444, p = 0.009). Interestingly, "Taxpayer Education and Awareness" did not show a significant relationship with withholding tax collection (Beta = 0.009, p = 0.893). The regression analysis revealed that tax policy and regulations, tax administration and enforcement, and taxpayer compliance rate are significant factors influencing withholding tax collection, in line with the literature. However, the role of taxpayer education and awareness, while theoretically important, did not emerge as a significant factor in this particular study. This suggested that policymakers and tax authorities should focus on strengthening legal provisions, improving administrative efficiency, and enhancing taxpayer compliance to boost withholding tax collection in the given context. The study also recommended that Rwanda Revenue Authority develop strategies to increase the number of taxpayers who embrace the eTax system through training and marketing. They need to embark on public sensitization to improve tax knowledge and efficient awareness on withholding tax.
Keywords: Witholding Tax, Tax Revenue collection, Rwanda Revenue Authority
CITATION: Murwanashyaka, G. C., & Twesigye, D. (2023). Factors influencing implementation and administration of withholding taxes in Rwanda. A case study of Rwanda Revenue Authority (2018-2020). The Strategic Journal of Business & Change Management, 10 (4), 1447 – 1462. http://dx.doi.org/10.61426/sjbcm.v10i4.2830
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DOI: http://dx.doi.org/10.61426/sjbcm.v10i4.2830
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