Analysis of operational aspects of the value added tax in the Tanzania manufacturing industry

There has been improvement in revenue collections since operationalization of Tanzania Revenue Authority (TRA). The authority instituted many changes and reforms in the past nine years geared at enhancing revenue collections. It is argued, however, that the TRA is not collecting to its capacity level and the authority is, as a result currently initiating even more major reforms in tax administration and organization structure. This study analyzed the one specific area of focus in reforms which is the review as to whether Sales Tax was still effective and efficient in contemporary tax administration. Sales Tax which was collected on locally manufactured and imported items was embodied with a lot of weaknesses, both administratively and operationally. The study utilized a survey method of research using structured and unstructured questionnaires as well as interviewing customers and TRA officials. Both primary and secondary data were collected covering imports and operational results of the target compares. The study analysed data using the Statistical Package of Social Sciences (SPSS). The study findings show that consumer behaviour, taxpayers' compliance, level of the economy, the tax rate, and tax administration efficiency have a significant impact on the level of tax compliance. It is recommended measures should be taken to improve the efficiency of the tax regime and educate the public on tax compliance.