Assessment of Tax Compliance in Selected Small and Medium Enterprises (SMEs) in Kigali City, Rwanda

Abstract

The objective of the study was to assess the level of tax compliance among SMEs in Kigali city in terms of Taxpayers ’registration, keeping books and records, Fulfilling tax obligation on time and attitude to tax evasion. Taxpayers ’registration is at a moderate level (Mean=2.31). Keeping books and records is done at a moderate level (Mean= 2.91). In general, the level of fulfilling tax obligations on time is moderate (Mean= 3.04). In general, negative attitude to tax evasion is at a high level (Mean= 3.42). These findings were in line with the study conducted by Isbell (2017) where he showed that on average across 36 countries, 63% of Africans say taxes are necessary for development. Large majorities say paying taxes is a civic duty (72%) and not paying taxes is wrong (87%) though many describe non-compliance as wrong but understandable. About recommendations, RRA must increase the effort in the enforcement, like organizing more training and mobilization to SMEs taxpayers because many of them do not comply because of ignorance. Taxpayers should participate in training organized by RRA. They should inform themselves from different sources about the tax law as applicable in Rwanda. This will help them to comply and hence avoid penalties. They should understand that the purpose and benefits of paying taxes.