Abstract: Raising more domestic revenue is a priority for most sub-Saharan African countries (Drummond & al., 2012). Mobilizing revenue is a way for governments to create fiscal space, provide essential public services. However, the domestic tax bases in most African countries are undermined by widespread tax avoidance and evasion. This study determined to assess the effect of taxation on business formalisation in Rwanda. To achieve this, the study was guided by the following specific objectives; to determine the effect of business owners’ attitude towards government spending on business formalization in Rwanda; examine the level of trust in Tax Authority on business formalization in Rwanda; to analyse the effect of attitude towards tax information on business formalisation in Rwanda and to assess the effect of fiscal (tax) burden on business formalisation in Rwanda. This study adopted a descriptive research design. The target population was 137,699 informal enterprises. The sampling technique employed was simple random sampling and the sample size was 399 respondents. Primary quantitative data was collected by use of self-administered structured questionnaires. The researcher also used secondary data . The data collected was analysed, with respect to the study objectives, using both descriptive and inferential statistics. The data was analysed using descriptive statistics such as percentages. Multiple regression analysis was employed to determine relationship between taxes and business formalisation in Rwanda. Data was presented in tables, charts, figures and frequency tables. The findings that study that attitude towards government spending, level of trust in tax authority and tax burden had had had effect on business formalisation while attitude towards tax information does not influence business formalisation. This is due to the fact that informal business owners do not interact with educators from Rwanda Revenue or Private Sector Federation because these bodies always target formal business.
Keywords: Business formalisation, Tax burden, Tax compliance.
Title: EFFECT OF TAXATION ON BUSINESS FORMALIZATION IN RWANDA
Author: MUNYANGEYO Theogene, Dr. MULYUNGI Patrick, NGUSALE Vincent
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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