Factors Affecting Timely Remittance of Tax Returns in Lusaka, Zambia: A Case of Chachacha and Freedom Way Block

Abstract

The objective of this study was to explore the factors behind the timely remittance of tax returns by businesses in Lusaka. The purpose was to conduct a mixed-methods case study of the factors affecting timely remittance of tax returns amongst small businesses in Lusaka’s Chachacha-Freedom Way Tax Block. Data was collected from a purposive sample of 159 small business owners and managers in the Chachacha and Freedom Way Blocks in Lusaka, Zambia. A self-administered questionnaire was the tool used for data collection. Categorical data was analyzed by simple frequencies using SPSS Version 26. Qualitative textual data was analyzed manually using hierarchical coding frames. Quantitative Likert scale data was used to estimate PROBIT empirical models to investigate how factors such as perceptions of administrative simplicity, economic efficiency, equity, flexibility, certainty, and political responsibility around the fiscus affect the probability of timely remittance of returns. Results show that experiential issues were some of the reasons affecting taxpayers that could be analyzed in terms of the conduct of their businesses, interaction with tax authorities, and information flows between them. Factors contributing to delayed remittance of tax returns included non-adoption of e-filing methods and perceptions of political responsibility or being otherwise behind the tax system and fiscus. The study therefore finds some evidence for the political legitimacy theory of tax compliance. Both the quantitative and qualitative analyses conducted generally supported the idea that perceptions of economic efficiency, administrative simplicity, equity, flexibility, certainty, and political responsibility generally contribute to the timely remittance of tax returns. Recommendations of the study include promotion and easing of user friendliness of e-filing methods, as well as raising the ethical profile of the authority and strengthening taxpayer belief in the value of paying taxes through strategic partnerships with tax-funded government operations to improve political legitimacy.