Effects of Technological Tax Reforms on Tax Compliance among Small and Medium Enterprises in Tanzania

Abstract

This study investigates the effect of technological tax reforms on tax compliance among Small and Medium Enterprises (SMEs) in Kinondoni, Tanzania. The study used structured questionnaires to gather quantitative data from 171 owners of SMEs based in Kinondoni Dar es Salaam who were convenience selected. The paper was grounded on the economic deterrence theory. Informed by the positivism philosophy, a quantitative approach and descriptive research design, targeting a sample of 163 SMEs through questionnaires. Data was analyzed using descriptive statistics in SPSS V26. The findings reveal low awareness and limited adoption of technological tools such as e-registration, e-filing, and Electronic Fiscal Devices (EFDs) by SMEs. Most respondents expressed dissatisfaction with the reforms, reporting that the technology had not effectively reduced compliance costs or enhanced the efficiency of tax processes. Key challenges included inadequate training, insufficient technical support, and a lack of infrastructure. The study concludes that while the reforms were introduced to improve tax compliance, their impact remains minimal due to these challenges. It is recommended that there should be increased taxpayer education, simplifying tax processes, and enhancing technological integration to meet SME needs. Improving collaboration between the TRA and SMEs is also crucial for making the reforms more effective and accessible.