Vol. 1 No. 1 (2020): Vol 1, Iss 1, Year 2020
Articles

Impact of electronic billing machine (ebm) on vat compliance among small and medium sized -enterprises in rwanda

Jean Bosco Harelimana
Jean Bosco Harelimana, Institut d’Enseignement Superieur de Ruhengeri, Musanze, Rwanda,
Patrick Gayawira
Jean Bosco Harelimana, Institut d’Enseignement Superieur de Ruhengeri, Musanze, Rwanda,
Published February 20, 2020
Keywords
  • Electronic Billing Machine (EBM), VAT compliance, small and medium size enterprises
How to Cite
Harelimana, J. B., & Gayawira, P. (2020). Impact of electronic billing machine (ebm) on vat compliance among small and medium sized -enterprises in rwanda. Journal of Management and Science, 1(1), 87-109. https://doi.org/10.26524/jms.2020.9

Abstract

This study aimed at assessing the impact of Electronic billing machine on VAT compliance on Small and Medium -Size Enterprises in Rwanda. The main challenge in the administration of Value Added Tax (VAT) in many countries, has mainly been tax evasion by non-issuance of tax invoices especially by small to medium taxpayers. Electronic Billing Machines (EBMs) enable revenue authorities to monitor formal business transactions and thus offer the potential to improve VAT compliance, however , because firms can choose not to issue receipts or issue false receipts, EBMs have limited benefits to VAT collections. Descriptive method was used to collect data, data gathered was analyzed, interpreted and presented. A sample size of 159 people grouped into Medium taxpayers, Small taxpayers and staff of RRA Musanze station was randomly selected from a population of 709 VAT registered taxpayers located in Tax centre of Musanze. Primary and secondary data was used in this research. Given the findings of this study, there is positive relationship between the adoption of mandatory usage of EBMs and VAT compliance indicators with a correlation coefficient of 0.586 . It was established that after the adoption of EBMs, late filing and non-filing rate of VAT has reduced by 14% and 20% respectively, timely payment of VAT liabilities has increased by 20%, reporting of sales has increased by 737 %, VAT collections were increased by 732 % and voluntary VAT registration has increased by 346 %. To improve VAT compliance through EBMs. RRA is recommended to come up with plan integrating EBMs within broader tax compliance frameworks that create the environment which will best ensure taxpayers’ voluntarily compliance.

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