Managing VAT non-compliance: a case study of the Mozambique Tax Authority

De Figueiredo-Sabino, Yolanda
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In spite of tax policy and administration reforms, the way governments levy taxes, and the compliance approaches adopted by Tax Authorities(TAs) to maximize Value Added Tax (VAT) revenue collection, have influenced governance quality. While there is an ongoing debate on the effects of taxation on the quality of governance, there is a lack of empirical evidence on how compliance approaches have prompted strong and less arbitrary governance policies. This study examines how current reactive compliance approachesinformed by“hard facts”havehad a limited influence on VAT non-compliance management. The purpose is to develop an understanding of the reasons for and to promote a more proactive, VAT factor-focused and key actor-based compliance approach, within the framework of institutional theory. The study used a qualitative approach. It adopted a case study research design with personal interviews, focus group discussions and document analysis as research techniques, with the participation of different stakeholders. Recognising the merits of reactive approaches in influencing tax compliance, the study revealed the dynamics of VAT non-compliance, within its multiplicity, complexity and social reality, to transcend the traditional approach, which focuses on offenders as units of analysis in VAT non-compliance practicability. This has enhanced mistargetting strategies and prevailing challenges to the dilemma. The findings have revealed that cause-driven enforcement strategies, which account for the VAT nature and structure, and the dynamics of social group interaction, were more effective in discouraging VAT non-compliance. Factors from the socio-psychological theory on tax compliance, were revealed to strengthen and complement the efficacy of economic factors, when acting as deterrent factors in VAT compliance. Although institutions have been revealed to shape the frame of taxpayer compliance, it could not fully account for the dynamics of distinctive interests amongst different VAT key actors, reflected in collusion effects at different levels. However, a systemic perspective could enable institutions to improve the effectiveness of VAT compliance
A thesis submitted to the Faculty of Commerce, Law and Management at the University of the Witwatersrand, Johannesburg in fulfilment of the requirements for the degree of Doctor of Philosophy, 2020