An empirical correlational study on Zambia Revenue Authority (ZRA) electronic-tax system and adoption levels among small scale enterprises in Kalingalinga township of Lusaka district, Zambia.

Abstract

Taxation is essential for sustainable economic development, and tax administration is a basic function of a successful state. Taxation also helps make a government accountable to its citizens. The Zambia Revenue Authority and the banking sector launched the e-payment system for domestic taxes through web portals and ATM’s in order to improve efficiency and increase revenue collection. The electronic tax system was introduced by ZRA to increase tax collection, administration, avail services to the tax payers all the time from anywhere, reduce costs of transaction and improve tax compliance. However, tax compliance levels in Zambia remain low and tax collections are below the targets set by ZRA. The main aim of this study was to assess the impact of ZRA e- payment tax system on adoption levels among Small to Medium Enterprises in the informal sector in Lusaka with a main focus on Kalinga-Linga Township based SMEs. The target population for the study comprised of Small and Medium Scale Enterprises in the in the informal sector in Lusaka’s Kalinga-Linga Township. A simple random sampling technique was used to select a total of 50 SMEs in the informal sector which constituted the sample size for this study. The study employed the use of self-administered questionnaires and data was collected from the questionnaires and analysed, summarized, and interpreted accordingly with the aid of descriptive statistical techniques such as total score and simple percentage. A review of the results showed that the majority of the metal fabricator entrepreneurs (80%) in Kalinga-Linga Township did not have the knowledge (Know-How) of how to incorporate internet into their business activities. The technical skills of the filing tax returns can also be identified as a challenge facing taxpayers as many of them fear the notion and consequences of errors from online filing such as keying-in incorrect information. The study further brought to light that the technical skill of filing tax returns is still a factor that influences the tax compliance. Based on the research findings, the inquiry recommended that more awareness campaigns and marketing of the tax online system should be done by ZRA in order to secure an increase in the informal sector taxpayers on the system.