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Transcript of Final Tax System
A MOBILE BASED INCOME-TAX RETURN SYSTEM
FORSMALL ENTERPRISES
By
MOSES MUGUMYA2006/HD18/6891U
BA (SS) (Mak), PGDCSDepartment of Information Systems
Faculty of Computing and Information Technology, Makerere UniversityE-mail:[email protected], Ph: +256772516236
A Project Report Submitted to School of Graduate Studies in PartialFulfillment for the Award of Master of Science in Information Systems
Degree of Makerere University.
Option: Management Information Systems
Supervisor: Dr Ddembe Williams
Department of Information SystemsFaculty of Computing and Information Technology, Makerere [email protected]: +256-41-540628/534560, Fax: +25641-
540620.
December, 2010
DECLARATION
I Moses Mugumya do hereby declare that this Project is original and has not been
published and or submitted for any other degree award to any other University before.
Signature ………………………………
Moses MugumyaBA (SS) (Mak)
Date: ………………………………………
1
APPROVAL
This report has been submitted for examination with the approval of the following
supervisor
Dr Ddembe Williams
BSc, Msc, PHD, PGDHE, ILTM, MBCS
Department of Information Systems
Faculty of Computing and Information Technology
Signature:……………………………………………….
Date: ………………………………………………………
2
DEDICATION
This report is dedicated to my parents late Mr David Mugumya, and Mrs Ruth Mugumya
who have been a source of inspiration.
3
ACKNOWLEDGMENT
I would like to acknowledge the invaluable assistance of Dr Ddembe Williams whose
supervision and guidance has enabled me to successfully complete this project.
Gratitude too is extended to all the lecturers who imparted the academic knowledge that I
acquired during the course period.
To my employer Uganda Revenue Authority ; friends- Martin Muhangi, Kenneth
Amanya, Martha Twagira, Marion Lubowa, Frank, James etc who gave me financial,
material and moral support am truly thankful
Finally I wish to thank the Almighty God who has seen me through this project and give glory and honour to him.
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LIST OF ACRYNOMS
5
CONTENTS
DECLARATION.................................................................................................................1APPROVAL........................................................................................................................2DEDICATION.....................................................................................................................3ACKNOWLEDGMENT.....................................................................................................4List of Figures.......................................................................................................................7INTRODUCTION...............................................................................................................8
1.1. Background to the Study.......................................................................................81.2. Definition of Key Words:...................................................................................101.3. Sources of problems in harmonizing the Informal Sector:.................................111.4. Problem Statement..............................................................................................131.5. Objectives of the Study.......................................................................................14
1.5.1. General Objective........................................................................................141.5.2. Specific Objectives......................................................................................14
1.6. Scope of the Study..............................................................................................142. LITERATURE REVIEW..................................................................................................15
2.1. Small and Medium Enterprises...........................................................................152.2. Taxing Small and Medium Enterprises in Africa:..............................................152.3. Role of Government in Promoting of E-Business..............................................162.4. Income Tax.........................................................................................................172.5. Modernizing Tax Administration in Singapore..................................................182.6. Home Workers....................................................................................................182.7. Requirements of an E-business Framework........................................................192.8. E-Business Frameworks......................................................................................20
3. METHODOLGY............................................................................................................223.1. Current Approaches to Modeling Business Processes........................................22
3.1.1. Activity Flow Oriented Approach...............................................................223.1.2. Data Flow Diagramming Approach.............................................................223.1.3. Object Oriented Approach...........................................................................233.1.4. Communication Flow Oriented Approach...................................................23
3.2. Evaluation of the current approaches to modeling business processes:..........243.3. Proposed System Development Life Cycle........................................................25
3.3.1. Feasibility....................................................................................................263.3.2. System Analysis:.........................................................................................263.3.3. System Design:............................................................................................273.3.4. Implementation............................................................................................273.3.5. Testing.........................................................................................................283.3.6. Maintenance.................................................................................................28
4. SYSTEM ANALYSIS AND DESIGN................................................................................29
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4.1. Overview.............................................................................................................294.2. Problems of the Existing System........................................................................294.3. User Requirements..............................................................................................29
4.3.1. Functional Requirements.............................................................................304.3.2. Non Functional Requirements.....................................................................31
4.4. System Design.....................................................................................................314.4.1. The Proposed System has a Three Tier Architectural Design.....................324.4.2. System (Hardware and Software) Requirements.........................................334.4.3. Data Flow Diagram of Proposed System.....................................................34
4.5. Conceptual Design..............................................................................................364.5.1. Relations......................................................................................................364.5.2. Relationship.................................................................................................37
4.6. Logical design.....................................................................................................404.6.1. Mappings.....................................................................................................40
5. SYSTEM DEVELOPMENT IMPLEMENTATION.............................................................425.1. Development.......................................................................................................425.2. Tax Payer Registration Page...............................................................................435.3. Tax Officer Registration Page.............................................................................435.3.1. Tax Payer Login Page.....................................................................................445.3.2. Tax Officer Login Page...................................................................................445.4. Return Submission Page.....................................................................................455.5. Taxpayer Profile Page.........................................................................................475.6. Taxpayer Payment Report...................................................................................475.7. Submitted Returns waiting for tax officer’s verification....................................485.8. Report of Taxpayers submitted returns...............................................................48
6. DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS........................496.1. Challenges Met During the Project.....................................................................496.2. Conclusion..........................................................................................................496.3. Recommendations...............................................................................................50
7
LIST OF FIGURES
Figure 1: Taxpayer Registration Page...............................................................................43Figure 2: Tax Officer Registration Page............................................................................44Figure 3: Tax payer login page..........................................................................................44Figure 4: Tax officer login page........................................................................................45Figure 5: Return submission page.....................................................................................45Figure 6: Taxpayer return filling validation page..............................................................46Figure 7: Taxpayer profile page........................................................................................47Figure 8: Taxpayer Payment Report..................................................................................47Figure 9: Submitted returns waiting for approval..............................................................48Figure 10: Report showing submitted returns...................................................................48
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ABSTRACT
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CHAPTER 1
1.4 Problem Statement
In some countries the concept of filing on-line has been an integral part of the economy.
In USA, counties such as Missouri , one may be required to obtain a Federal Employer
Identification Number (FEIN). The FEIN is issued by the Internal Revenue Service
(IRS). It is used to identify taxpayers who are required to file various business tax
returns. Employers, Corporations, Partnerships, limited liability companies, trusts and
estates, and other business entities are required to have a “Federal Employer
Identification Number (Missouri Online Business Registration.htm).
In Uganda taxpayers are required to have Tax Identification Number TIN) for carrying
out transactions with the revenue body .however the e-tax system caters for the medium
and big taxpayers who have access to internet facilities. The small and microenterprises
are un enable to use the new e-tax system because it is a complicated process. A gap
therefore exists in the sense that mobile phone usage that would have been easier to use
for filling returns has not been incorporated into the e-tax system hence the need to
provide a platform for the small traders to exploit this.
1.5 Objectives of the Study
1.5.1 General Objective
To develop a mobile based income-tax return management system that will enable the
informal sector file their returns.
1.5.2 Specific Objectives
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1. To identify requirements for mobile based income-tax return management system
2. To design a mobile based income-tax return management system that will enable
traders file their returns.
3. To implement the mobile based income-tax return management system
4. To test and validate the system.
1.6 Scope of the Study
This covered the Informal sector which consists of private trading enterprises based in
Kikuubo area of Kampala District owned by individuals that are not constituted as
separate legal entities and for which no complete accounts are available that would
permit a financial separation of the production activities of the enterprise from other
activities of its owners. The study will also cover the activities of the URA officers based
at the domestic tax department offices at Crested Towers who will be interfacing with the
small traders.
1.7 Significance of the Study
1. The study will aid future scholars and researchers who may be interested in
developing similar prototypes for academic reference.
2. The proposed system will also highlight the importance of automating
information systems in organizations in general.
3. Further, the research will contribute to the general pool of knowledge in the area
of E-tax Systems and help other scholars to identify missing gaps in future
developments.
4. The project will be beneficial to URA management in that it will help in the re-
organization and easier storage, retrieval and standardized reports about income
tax returns.
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5. The project will be beneficial to tax players in that they will be enable to send
their income tax return via their phone.
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CHAPTER 2
LITERATURE REVIEW
13
CHAPTER 3
METHODOLOGY
3.1 Introduction
Finding appropriate research methodologies is critical in drawing up model solutions/
systems to identified problems (Finkelstein, 1994). This study followed the procedures
proposed in a pilot study approach by a researcher Yin (1988) with a system study and
experiment-based observations. The objective was to develop a mobile based income-tax
return system for small enterprises. A system study approach was used since it is an
exploratory (single-in-depth study) research strategy that involves empirical investigation
of a particular contemporary within its real life context using specific study techniques
3.2 Identifying requirements for mobile based income-tax return system for small enterprises
3.2.1 System Study
To achieve objective (i) of identify requirements for mobile based income-tax return
system, a system study and analysis for the existing manual system at the Uganda
Revenue Authority was carried out. The system study and analysis are discussed in detail
in Chapter Four.
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3.2.2 Questionnaire
A questionnaire was developed and issued to selected respondents whose responses
(quantitative data) were analyzed to determine requirements for the system. The
questionnaire was kept as brief as possible. Microsoft Excel software was used for
presentation and analysis of the quantitative data. A copy of the questionnaire is attached
in Appendix .
I chose the questionnaires because of the advantages they had over some other types of
surveys since they are cheap and do not require as much effort from the questioner as
verbal or telephone surveys, and often have standardized answers that make it simple to
compile data, though, such standardized answers may frustrate users.
3.2.3 Interview
We used interview guides with simple language and open ended questions to the shop
owners in Kikuubo dealing in general merchandise who are the majority and URA
officers who receive returns at the front desk area to identify the characteristics and type
of small businesses with an aim of knowing the current practices and views on how to
automate and simplify business and tax requirements. About 12 shop owners and 6 URA
officers were interviewed. The Information acquired from these interviews was
harmonized to come up with requirements specifications.
3.2.4 Observations
This involved physically seeing and evaluating how the small shop owners have been
handling their book keeping aspects as well as how the URA officers have been handling
their activities with regards to filing of returns. This created a firsthand impression of the
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inadequacies of lack of using e-governance facilities and incase some information is
omitted from information gathered in the interviews.
3.2.5 Document Reviews
This was done through reading of articles and journals relating to small business owners
and how their activities are taxed in other countries. It was also helpful in reviewing
literature to identify any gaps that require further attention and studies of researchers.
3.2.6 Data Analysis
The data collected on the concerns of the users and the management of the Organizations
under review about the information system (IS) in place was used as a basis of designing
a mobile based income-tax return management system.
The analysis was done using analytical software - SPSS. The results of the analysis were
used in designing this system.
3.3 Designing a mobile based income-tax return management system
To achieve objective (ii) of designing a mobile based income-tax return management
system, the database was designed using conceptual, logical (ERD), and physical
database design techniques as recommended by Connolly and Begg (2005). Microsoft
Office Visio was used to draw the ERD, the logical database design model of the
prototype. The ERD shows all the entities, attributes, cardinalities, and their inter-
relationships.
The income-tax return filling process was developed using the Unified Modeling
Language (UML) which is a tool for specifying, visualizing, constructing, and
documenting all the parts and pieces of the application (Larman, 2001). UML is useful in
designing USE CASE, Sequence, activity diagrams.
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3.4 Implementation of the system
The system was designed using WML, WMLScripts, WAP, PHP, CSS, and Mysql for the
database enabling data to be easily sorted based on the principles governing search
engines.
Interface pages for the system were achieved through WML, CSS and php for data
interchange over a secure WEB.
3.5 Testing and validating a mobile based income-tax return management system
In determining the accuracy of any system, three important aspects were considered:
verification, validation and credibility. Verification is the process of determining that a
prototype performs as expected, checking all assumptions and any diagrams like
flowcharts and ERD. Validation is the process of determining whether a conceptual
prototype can accurately represent a system under study. Law and Kelton (1991)
suggested that if the prototype was ”valid”, then the decisions made with the prototype
should be similar to those that would be made by the physical experiment on the final
system. The system was presented to the users for testing to ensure that it fulfilled their
requirements .Validation involved checking for the form validation and how errors are
handled.
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CHAPTER 4
SYSTEMS ANALYSIS AND DESIGN
4.1 Introduction
This section is about defining or drawing up the system requirement specifications,
creating an acceptance test plan and beta test plan. As regards the design, design
specifications were developed through flow charting and process maps that define inputs,
outputs, and process interactions. The Systems Development Life Cycle methodology has
been adopted in this project. The software tools used included Microsoft professional
suite of Visio and word.
4.2 System study and analysis
4.2.1 System study
The manual system makes it harder for the entrepreneur to file tax returns, since the
trader has to personally go to the tax offices, where the returns are captured manually by
the tax officers. The manual process sometimes leads to loss of data due to improper
storage, making retrieval also difficult. The process requires a large number of staff to be
able to handle that big number of traders who want to file returns
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Figure 4.2.1 the income tax filling return process.
4.2.2 System Analysis
System analysis is defined as work that involves applying analytical processes to the
planning, design, and implementation of new and improved information systems to meet
the business requirements of an organization; It is a phase of the systems development
life cycle (SDLC) in which a current system is studied and alternative replacement
systems are proposed. SDLC, a method for developing information systems, is made up
of four main stages: analysis, design, implementation, and evaluation.
4.2.3 System overview
19
A study of existing manual system was done. The weaknesses of the system were
identified. A client - server architectural system design that consists of at least key
elements: the client, user, internet link, documents/ data flow and server(s) was
developed. Inputs and outputs were tested and validated at every critical stage of the
proposed system. Conclusions have been drawn from the obtained results.
Recommendations have been made and documented.
Strengths
1. It saves time both the tax players and the URA officials in terms of revenue the
returns.
2. It saves cost to the taxpayers in data they do not go the offices.
3. It has made easy storage and retrieval of reports by the URA officials.
It increases voluntary compliance levels when small traders are registered.
Weaknesses
1. The e-tax portal has a small server that is not able to cater for the large number of
users who would want to file and pay electronically by the due dates of payments.
Many tax payers have been frustrated when they attempted to get a bank payment
slip or upload their tax date only to get an error message from the e-tax portal
about overload.
2. It requires a fast internet speed to download and upload those file which is not
easy found in some computer centers (cafés).
3. The e-tax system is subject to frequent updates and taxpayers are not informed in
time so in the end they find difficult in uploading their returns.
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4.2.4 Requirements Analysis
The main objective of this project was to develop a mobile based income-tax return
management system. Therefore systems requirements needed to be defined. These
requirements were gathered from users during the interviews process, and from the
business process described above. The requirements were grouped into two categories,
that is functional and non functional requirements.
Functional Requirements
Non-Functional Requirements
4.3 System Design
System design began after gathering user requirements and the current processes. From
the analysis of the requirements, the main goal of the required system was to develop a
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mobile based income-tax return management system. The overall system architecture was
modeled, followed by the behavior and data modeling.
4.3.1 System Architecture
The system architecture defines the key components of the proposed system together with
the interactions between these components.
Accessing the System
Storing of Records
Process Data
22
Data Store
User InterfaceLogin using the following attributes:UsernamePasswordEntry of recordsSubmitting of returnsViewing of RecordsQuerying for Reports
Processing system
Reports on Returns submitted, Tax payable
4.3.2 User Stakeholders
The proposed mobile based income-tax return management system involves stakeholders
each one playing different roles as shown in the Table below:
No Actor Description Actions/ Permissions1. Trader System End User Registers, submits his/her income 2. A mobile
based income-tax return management system
System backend Manage security in every procedure, control duplicity, generate reports, securely store all data for future use, and provide end-to-end communalization.
3. Tax officer System End User Manages the income values received by the system.
Figure4.3: User stake holders of the a mobile based income-tax return management
system
Use Cases
In order for the researcher to determine all system requirements and be in position to
properly plan for the needed solution. Use case was used to represent actors using the
system and the different goals or functions they fulfilled. The system scenario in the
proceeding section is summarized in the use case diagram below.
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Figure 4.3: Use case diagram for a mobile based income-tax return management system
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4.3.3 Conceptual DesignSystem flow diagram shows the flow of information from the user by logging in up to the
time of log off.
Relations
Below are the entities that were identified:
Trader
Tax Officer
Product
Returns
Premises
Sales
Relationship
The following relationships were identified:
Trader – Returns relationship
Files
A trader files different returns meaning the relationship is one to many
1…1 files 1*
Trader – Premises Relationship
Rents
One trader can rent one or more premises meaning the relationship is one to many
1..1 Rents 1*
Trader – Product Relationship
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Trader Returns
Trader Premises
Deals in
A trader deals in one or more products meaning the cardinality is one to many
1..1 deals 1*
Tax Officer - Returns Relationship
Receives
One or more returns are received by a tax officer meaning it is a one to many cardinality
1..1 Receives 1*
Trader – Sales Relationship
Makes
A trader makes many sales of on a given product meaning the relationship is a one to
many cardinality
1..1 makes 1*
Sales – Product Relationship
Made on
Sales may be made on a given product or there may be no sales on the product, giving a
zero to many relationship.
0* made 1*
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Trader Products
Tax Officer Returns
Sales Product
Trader Product
4.3.4 Entity Relationships Diagram
Based on the results of the Systems Study and the questionnaire, an Entity Relationships
Diagram (ERD) for the proposed system was developed showing the entities, attributes,
cardinalities, and their inter-relationships. Microsoft Office Visio was used to draw-up
the ERD.
27
4.3.4 Logical design
Mappings
Mapping 1:M Relationships
Trader files Returns Relationship
trader( traderId (PK), fName, lName, address, telNo, tinNo(FK))
return (tinNo(PK), amountPaid, taxofficerId(FK), dateOfPayment, chequeNo,
traderId(FK))
Trader rents Premises Relationship
premises (OwnerId(PK), amountOfRent, ownerName, location, plotNo)
Trader deals in Product Relationship
product (productId(PK), productName, mandate, Color, size, supplierID)
TaxOfficer receives returns Relationship
taxOfficer (officerID(PK), name, branch, noteOfPayment)
Trader makes Sales Relationship
sales (salesId(PK), amountSold, productId(FK), sellingPrice, costPrice)
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Resultant Tables
trader( traderId (PK), fName, lName, address, telNo, tinNo(FK))
return (tinNo(PK), amountPaid, taxofficerId(FK), dateOfPayment, chequeNo,
traderId(FK))
premises (OwnerId(PK), amountOfRent, ownerName, location, plotNo)
product (productId(PK), productName, mandate, Color, size, supplierID)
taxOfficer (officerID(PK), name, branch, noteOfPayment)
sales (salesId(PK), amountSold, productId(FK), sellingPrice, costPrice)
29
CHAPTER 5
SYSTEM IMPLEMENTATION
5.1 Implementation
This chapter shows how the system was implemented. The main aim of this chapter is to
show how the implementation was carried out using the available technologies to realize
the system specification, design and the requirements of a mobile based income-tax
return management system.
The project was developed using relevant application software such as MYSQL for the
database, WAP gateway which provides the connectivity between the mobile phone and
the web server with the by the help of languages such as WML,WMLScripts,CSS to
create user interfaces with PHP for system connection to the database.
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CHAPTER 6
DISCUSSION, CONCLUSION AND RECOMMENDATIONS
IntroductionThis chapter presents a summary of the challenges encountered during the project,
conclusions and the recommendations in regards to the project.
6.1 Challenges met during the project
During performance of the project, the following challenges were met:
Time challenge: The time was not enough for the researcher to comprehensively perform
all deliverables as proposed like getting the performance data.
Budget Constraint: There weren’t enough funds to facilitate the researcher to get
valuable assistance from the tax payers (traders) from different parts of kampala district
therefore the researcher sampled a few traders.
6.2 Conclusion
Effective and efficient computer systems are cornerstone for better deliverance of
information in an organization. This project was undertaken to develop pan alternative
automated system that would complement (not to replace) exiting manual processes
within URA. The main product of this project, presents new return tax filling means that
reduce on the time you spend at URA offices
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6.3 RecommendationsThe following are the recommendations that could be used to facilitate effective usage of
the system:
Making the E-Commerce System Operational:
Uganda Revenue Authority should make this E-Commerce system operational, because it
compliments exiting tax administration means like VAT Plus, Electronic Cash Book in
facilitating taxpayers to make their different tax payments. This system shall be accessed
from anywhere at any time even beyond the URA working hours.
Improving some components:
Because of time and budget constraints as stated above, we were not able to deliver
completely some functionalities of the Electronic Commerce System. We request URA to
make upgrades of the notification Mechanism either via mail or short message
mechanism.
Announce and promote the system:
If the system is made operational, URA should announce and promote the Electronic
Commerce System to help the small traders in order to make it known to traders and
URA staff members otherwise it may not be used.
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33
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34
APPENDIX ONE
ESTIMATED BUDGET (Uganda shillings)
Item No Item Rate(shs) Units Total cost (shs)
1 Laptop 2,000,000 1 2,000,000
2 Stationery 10,000 8 80,000
3 Transport 4,000 50 200,000
4 Binding 15,000 5 75,000
5 Software 800,000 800,000
6 Secretarial
work
300,000 300,000
7 Online journals 300,000 300,000
8 Miscellaneous 300,000
TOTAL 4,055,000
35
APPENDIX TWO
PROPOSED TIME FRAME
NO. ACTIVITY START DATE END DATE
1 Proposal
Preparation to
approval and
presentation
17/10/2008 11/11/2008
2 Requirements
analysis and design
11/11/2008 25/11/2008
3 System
Implementation
1/11/2008 11/12/2008
4 Testing and
evaluation
12/12/2008 22/12/2008
5 Preparation of final
report
27/12/2008 10/1/2009
36