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This study aimed to assess the effectiveness of Electronic Fiscal Device (EFD) in the collection of Value Added Tax. Since many researchers had concentrated much of their works on tax systems, tax evasion, taxes and interest rates, a lot was desired especially in this area to assess the effectiveness of Electronic Fiscal Device which had been recently introduced by the Tanzania Revenue Authority much more on VAT collections. The study aimed to establish if the Electronic Fiscal Device had increased the collection of VAT and if there are any associated costs in using them. However the general purpose of this study was to determine by how much EFD has increased or decreased the collections of VAT since its introduction in 2010. The population under study comprised of 248 VAT registered taxpayers with EFD in Morogoro according to the regional TRA office’s records which were stratified into; service providers, wholesalers & large scale retailers and supermarkets. The main instrument of collecting primary data was questionnaires while secondary data were obtained from the TRA regional office. Analysis of data was mainly done using descriptive statistics. The findings of this research project will assist the Tanzania Revenue Authority on looking ways of improving the collections of VAT and ways of administering and using of EFD by VAT traders. Due to limited sources of literature, this research was not considered as exhaustive but could form the basis for further investigation. Data were collected from 80 registered VAT traders in Morogoro town. The respondents were senior, middle level and low managers and owners of business. Out of the 80 registered VAT traders to whom the questionnaires were administered, 80 of them responded to the questionnaires except to some questions which seemed to be difficult. This gave a response rate of 100 percent. Data analysis tools used in the research was an Excel and data were presented in form of tables. Based on the results from data analysis and findings of the research, one will safely conclude the following; First, Tanzania has witnessed significant changes in many aspects of its economy over the last five years, but like most developing countries, it has had to contend with the common problems that plague tax systems of developing countries (Karingi, Wanjala, and Dec, 2005).
Second, there is net increase of 38% in VAT collections since the introduction of EFD as per Morogoro tax region based Morogoro town. Third, EFDs are not cost effective to VAT traders on using them. Fourth, EFD is cost effective for the revenue authority in terms of
acquisition and administration. Firth, EFDs have so many challenges and problems to traders, and the revenue authority. Sixth, traders are not aware of their legal obligation over the usage of EFDs. Seventh, EFD regulations are not properly complied by taxpayers. Eighth, involuntary tax compliance and other EFD challenges were the major reasons to why traders are not complying with the EFD provisions.
Lastly the study have left a gap for other researchers to find out on the awareness of the general public who are the taxpayers on the use of EFD and compliance of EFD provisions by the supplier of the devices.
Also this research has left a gap to quantify the extent at which other factors like increase of population, increase of middle class earners, increase of businesses with high output taxes than input taxes such as hotels and other economic factors have increased VAT collections |
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