Online Platforms and Tax Compliance in Tanzania's E-Commerce Sector

Abstract

Developing economies continue to underexplore the role of online platforms in tax administration, despite the growing importance of e-commerce. This study investigates the impact of online platforms on tax compliance among e-commerce entrepreneurs in Tanzania. Data were collected from 385 respondents using self-administered questionnaires and analyzed using a binary logistic regression model. The study examined how data sharing and cooperation between online platforms and the Tanzania Revenue Authority (TRA) influence tax compliance. The results demonstrated that data sharing has a coefficient of 0.425 and a p-value of 0.437, indicating that it has no statistically significant influence on tax compliance. It may facilitate the transparency conceptually, but in practice, it has not yet translated into measurable improvements in tax compliance among e-commerce actors. While cooperation between online platforms and the tax authority showed a coefficient of -2.073 and a p-value of 0.000, indicating that their cooperation actually had a significant negative effect on tax compliance; this surprising result might suggest that these efforts are impractical or considered intrusive by e-commerce businesses, leading to less voluntary compliance. These findings highlight the complex dynamics between regulatory collaboration and digital information sharing. Additionally, government and tax professionals should not view online platforms as avenues for evasion; instead, they should serve to improve tax compliance and revenue generation.

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Keywords

Tax Compliance
,
e-Commerce
,
Online Platforms
,
Data Sharing
,
Cooperation