OKUMU RONALD2024-12-102024-12-102024-08-30https://hdl.handle.net/20.500.12311/2476The study conducted on the effect of Tax Compliance on Domestic Revenue performance in Industrial City Division, Mbale City, revealed significant insights into the relationship between tax compliance and revenue collection. Utilizing self-administered questionnaires and employing stratified and purposive sampling techniques, the study engaged 40 respondents, primarily from small and medium-sized enterprises (SMEs) within the Industrial City Division. Findings indicated a strong positive correlation between tax compliance and domestic revenue performance, shedding light on various factors influencing compliance levels. Despite the positive correlation, the study uncovered challenges hindering tax compliance, including high tax rates, negative taxpayer attitudes toward the Uganda Revenue Authority (URA), and the pervasive informal sector, fostering tax evasion. Additionally, a prevailing low compliance culture and issues such as tax arrears registered by URA were identified as deterrents to optimal compliance. To address these challenges, the study recommends enhancements in tax administration through the provision of guidance on bookkeeping standards and tax returns, establishment of tax counseling offices nationwide, and streamlining procedures for filing returns and applications. Moreover, it underscores the importance of tax education initiatives to raise awareness among taxpayers and proposes incentivizing compliant behavior through the awarding of prizes. Ultimately, the study concludes that tax competencies significantly influence SMEs' tax payment behavior, with compliance costs, both in terms of time and money, impacting the level of compliance. SMEs with individuals possessing high tax competencies are more likely to fulfill their tax obligations, suggesting the importance of targeted capacity-building efforts in improving compliance rates.enThesis