Audit rates, penalties, Fairness and tax compliance in Uganda Revenue Authority.

Abstract

The purpose of this study was to establishing the influence of fairness, penalties, and audit rate on tax compliance. The study was guided by three objectives. That is, to establish the relationship between the audit rate and tax compliance; the relationship between the penalties and tax compliance; and the relationship between the fairness and tax compliance.

The study used a cross-sectional design. A disproportionate stratified sampling design was used to select a sample of 278 taxpayers and 152 URA employee respondents. The data was collected using a self-administered questionnaire. Correlation tests (coupled with regression analysis) were run to establish the impact of the independent variables on the dependent variable.

The findings reveal a significant negative relationship between audit rate and tax compliance. Furthermore, findings also reveal that there is a significant positive relationship between penalties and tax compliance. Finally, the findings also reveal a significant negative relationship between fairness and tax compliance.

Therefore tax fairness is one of the most important variables that can influence tax compliance behaviour. The study recommends that it is important to treat tax payers in a procedurally fair and respectful manner, especially when being committed to pay their share of taxes.