Tax Digitalisation Perceptions and Voluntary Tax Compliance Among SMEs in Kampala, Uganda.

Omwima Husein Mausa (PhD Candidate)1, & Prof. Rafiu Oyesola Salawu2
1,2 Department of Business Studies, Faculty of Management Studies (FMS)
Islamic University In Uganda, Main Campus, Mbale, Uganda
DOI – http://doi.org/10.37502/IJSMR.2026.9201

Abstract

Digitalization of taxation has become a vital approach for modernizing tax administration and enhancing voluntary tax compliance, especially in developing nations like Uganda. In recent years, the Uganda Revenue Authority (URA) has instituted various digital tax systems, such as e-filing, e-payments, Digital Tax Stamps (DTS), and the Electronic Fiscal Receipting and Invoicing System (EFRIS), to enhance efficiency, transparency, and taxpayer participation. Notwithstanding these measures, voluntary tax compliance among Small and Medium Enterprises (SMEs) in Kampala continues to be markedly low. Previous research indicates that taxpayers’ opinions of digital tax systems particularly trust, perceived equity, usability, and digital literacy significantly influence compliance behavior. Nevertheless, empirical information regarding these links in the Ugandan context is still scarce.

This study examined the correlation between tax digitalization and voluntary tax compliance among SMEs in Kampala. A cross-sectional research approach was utilized, and quantitative data were gathered from a sample of 400 SMEs selected via Slovin’s algorithm. Data were examined via SPSS, employing descriptive statistics, correlation analysis, and multiple regression methods. The correlation results revealed strong positive associations among trust, perceived justice, digital literacy, business characteristics, business environment, and voluntary tax compliance. Regression research indicated that trust in digital tax systems (β = 0.237, p < 0.001) and perceived fairness (β = 0.200, p = 0.003) were the most significant predictors of voluntary tax compliance. While digital literacy, business size, and business age exhibited favorable correlations, they were not statistically significant predictors that could accounted for 25.4% of the variance in voluntary tax compliance (Adjusted R² = 0.242). The research suggests that bolstering trust and equity in digital tax systems is essential for improving voluntary tax compliance among SMEs in Kampala, Uganda.

Keywords: Digitalization of taxation; Voluntary tax compliance; Small and Medium Enterprises; Trust and equity; Uganda

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