CHALLENGES ASSOCIATED WITH VALUE ADDED TAX (VAT) COLLECTION WITH RETAILERS AT ADUM SMALL TAXPAYERS OFFICE (STO) -GHANA REVENUE

Abstract

Tax leakage in developing countries is often worsened by poor functioning tax authorities due to variety of reasons; under–resourced or under–trained administrators, poor tax collection systems, failure of legal enforcement mechanism for tax collection among others. These factors create opportunities for entities to abuse the system since tax official frequently lack the required resources to carry out their work. The main objective of this study is to assess challenges associated with the collections of VAT and how they could be addressed. In this paper, questionnaire administration and interviews were used for the study. The questionnaire was administered to forty (40) retailers under the Adum STO and the Interview Conducted on twenty (20) tax collectors. The questionnaire covered awareness, compliance and challenges retailers encounter that affect their compliance level whereas the interview focused on the challenges the tax collector encounter both in the office and with retailers. It was found out that majority of taxpayers have not heard of VAT hence a high level of non-compliance on their part. Also, data gathered from respondents revealed that the compliance level of retailers is very low and that majority associated that to among other problems as; long queues they have to join to pay their VAT and low knowledge on how to compute VAT correctly. Tax collectors on the other hand complained of late filing of returns by retailers within the Adum STO, some of the retailers they said are located in inaccessible areas. The research also revealed that tax collectors were barely motivated to perform their duties and logistics were inadequate for their purposes.This study recommends that more education of the public using the media like radio and televisions among other mediums should be carried out regularly.