Influence of electronic tax management system on effectiveness of tax collection in Rwanda: a case study of Rwanda revenue authority (RRA)

Abstract

The research purpose is to examine the effects of e filing and e payment on revenue collection by Rwanda Revenue Authority. With introduction of e-filing in 2012 it is believed that it will improve tax revenue and bridge the gap in the budget but still there are challenges associated with electronic tax management system in realizing the targets of planned budget. The researcher re-viewed both theoretical and empirical literature electronic tax management on revenue collection. The researcher used descriptive method of study based on qualitative and quantitative approach in order to get better analysis of the study. The population size is 120 and 75% of respondents were interviewed. Both primary and secondary sources with their relevant tools like questionnaire and documentary analysis in order to come up with required data. The data was processed by use SPPSS software and analyzed using percentages, mean and standard deviation. The relationship between variables was established by use of Pearson correlation model. In the finding it was established that electronic tax management system was introduced especially from 2003 to 2010 tax collection low ranging from 119.1 to 385.2 respectively which was below the national budget. This implies that tax collection was not meeting the budget target hence the country was operating below the budget. In 2012 E-filing and e-taxation payment was introduced by RRA in 2012 with functioning e-filing system in place such as Mobile declaration, Electronic Single for domestic taxpayers Window (ESW) and Authorized Economic Operator (AEO) for importers and exporters (Gupta, 2012) in order to improve on tax collection and meet the targeted budget accordingly. And this was done to enable the taxpayers to deal with RRA electronically anywhere and anytime as well as to enhance tax administration to collect tax revenue in short term and as a measure to improve on tax compliance and efficiency. It offers an option to the clients to file taxes like VAT, PAYE, Excise duty and Withholding taxes electronically on RRA‟s website without having to visit a RRA premise especially if there is tax education, com-pliancy aspect is guaranteed. The system managed to raise tax collection drastically in 2012 and 2013 by 48.1% and 42.9% respectively though still they were unable to meet the target. This was believed to be due to lack of awareness among the tax payers about electronic tax management system in place and lack of skills especially among the tax payers on how to use the system. In 2014 tax collection was increased to 888.2 against the budget which was 773.9. This implies that the RRA managed to collect revenue above the budget line by 12.6%. Consequently in 2015 revenue collection was about the budget by 98.1%. This implies that like stated in the hypothesis especially EBM and mobile payment system has relationship with revenue collection although internet system small relationship. Therefore it can be summarized that electronic tax management system has improved tax collection in Rwanda.