Attitude towards Electronic Tax System and Value-Added Tax Compliance, the Mediating Effect of Adoption of the Electronic Tax System among Small and Medium Enterprises (SMEs) in Fort Portal City, Western Uganda

Purpose: This study aimed to examine the relationship between attitudes toward the electronic tax system and VAT compliance while assessing the mediating effect of the adoption of the electronic tax system among SMEs in Fort Portal City, Western Uganda. Materials and Methods: The study used a cross-sectional design, adopting a quantitative approach. The study used a survey method with a structured self-administered questionnaire to collect data from the managers. The study population comprised 297 SMEs, generating a sample of 165 SMEs in the Central and North Divisions of Fort Portal City. SMEs were selected by stratified simple random sampling while respondents were purposively selected. Pearson correlation and Hierarchical multiple regression analysis techniques were employed using SPSS version 22. Findings: The study established that the adoption of the electronic tax system partially mediates the relationship between attitudes towards the electronic tax system and tax compliance among SMEs in Fort Portal City. It was established that whereas attitudes towards e-tax system predict tax compliance, the effect is better felt through the adoption of the e-tax system. Implications to Practice and Policy: Premised on the technological acceptance model, the study has brought out the inevitable role the adoption of the e-tax system plays in explaining the relationship between attitude toward the e-tax system and tax compliance among small and medium enterprises. SMEs are urged to ensure tax compliance and maintain a good reputation through online registration, filing of tax returns, and prompt settlement of tax obligations to limit tax avoidance and incidental consequences.