Contribution of Tax Reform on Reduction of Tax Evasion in Rwanda

Abstract

The study aimed to explore the contribution of tax reform on reduction of tax evasion in Rwanda, guided by objectives to examine contribution of personal income tax reform, identify contribution of corporate income tax reform and assess contribution of value added tax reform. The research design was qualitative, targeting 2700 taxpayers were from Rubengera sector. The systematic sampling method are taxpayer, resulting in a sample size of 348 respondents drawn using purposive sampling. Close ended/structured questionnaires were used to primary data, which was then analyzed using the Statistical Package for Social Science (SPSS). The data was analyzed the findings of using both descriptive and inferential statistics show a strong and positive association between tax reform and tax evasion at personal income tax reform (PIT) will help with reduction of tax evasion with the mean score is notably higher at 2.74, indicating a more positive perception of the reform's effectiveness. Still, the wider standard deviation of 1.404 suggests greater variability, corporate income tax reform (CIT) combined with value added tax(VAT) will help with reduction of tax evasion with no significant correlation between VAT reforms and corporate income tax reforms or their effectiveness and the corporate income tax reform (CIT) respondents gave an average score of 2.73 on the effectiveness of these reforms in reducing tax evasion, with a standard deviation of 1.422, indicating variability in opinions. The results show that the study stated that tax reforms reduced tax evasion significantly and made the following recommendations: The Rwanda Revenue Authority (RRA) should offer comprehensive training to all taxpayers, focusing particularly on educating them about the substantial changes resulting from the tax reforms, especially the new requirements and their perceptions of the impact and effectiveness of these reforms in curbing tax evasion. The consistent nature of these results emphasizes the importance of considering a variety of viewpoints when assessing the outcomes of tax reform efforts. To ensure the continuous effectiveness of Rwanda's tax system, it's imperative to regularly review and adjust it in accordance with the current economic landscape. The study's findings underscore the substantial impact of tax reforms on reducing tax evasion. The research concludes by suggesting further investigations to evaluate the influence of tax reform on tax revenue contribution in Rwanda.