Abstract
This study was carried out to explore and analyse the effect of tax dispute resolution mechanism in Rwanda in relation to on taxpayer’s compliance. From a population of 297, a sample of 170 were selected. The findings from data collected using structured questionnaires and documentation was presented using frequencies and percentages. It was established that there is significant positive relationship between fairness of tax disputes resolutions and tax compliance. The results from primary data revealed that the appeal committee of the Rwanda Revenue Authority (RRA) does not include external tax experts, rather, it is solely composed of only its own staffs which is suspiciously viewed by taxpayers. Respondents also revealed that resolving tax disputes through administrative procedures other than judicial ones positively impacts tax compliance. This was affirmed by more than 80% of respondents. It was concluded that that Rwanda Revenue Authority have to work and put strategies to resolve tax disputes which arise in an independent a manner as early as possible, to positively influence taxpayer’s compliance. The study further recommends to the Authority that tax audits cases have to be reviewed by the independent panel review within the department who has no previous involvement with the audit or case work to review the technical merits of an audit position, before the matter is finalised.
Highlights
Tax has been defined as a financial charge or other levy imposed upon its payer by the state or its functional equivalent, usually considered as a source of funding for various public expenditures [1] It has been referred to as the price we pay for living in a civilized society and in a fair society we expect to pay our fair share. [2] A tax dispute has been defined as a situation where a tax authority needs more information to enable it to form a considered opinion on the correct tax treatment of a transaction and the customer, or their agent, has differing views on what is the tax legally due.[3]
Disagreements regarding the amount of tax liability may be with respect to the amount of taxable income calculated by the taxpayer, the taxpayer’s choice of transfer pricing method used to value transactions between the taxpayer and its associated enterprises or with regard to the
Disagreements regarding the amount of tax liability may be with respect to the amount of taxable income calculated by the taxpayer, the taxpayer’s choice of transfer pricing method used to value transactions between the taxpayer and its associated enterprises or with regard to the availability or computation of foreign tax credits
Summary
Tax has been defined as a financial charge or other levy imposed upon its payer by the state or its functional equivalent, usually considered as a source of funding for various public expenditures [1] It has been referred to as the price we pay for living in a civilized society and in a fair society we expect to pay our fair share. [2] A tax dispute has been defined as a situation where a tax authority needs more information to enable it to form a considered opinion on the correct tax treatment of a transaction and the customer, or their agent, has differing views on what is the tax legally due.[3]. [2] A tax dispute has been defined as a situation where a tax authority needs more information to enable it to form a considered opinion on the correct tax treatment of a transaction and the customer, or their agent, has differing views on what is the tax legally due.[3]. Tax dispute resolution is a central component of the operation of any modern tax system around the world [4] Disputes relating to tax may be resolved either through agreement or litigation. In litigation the dispute is resolved through a statutory appeal to an independent body, for example a tribunal or a court. It includes tax related common law claims to the courts or applications for judicial review.[5]
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