Influence of Digitalization, Tax System and Tax Compliance on Revenue Mobilization in Sub-Saharan Africa as Moderated by Religion and Culture

Enoch Kojo Ackom (), Evans O. N. D. Ocansey () and Felix Oppong Asamoah ()

Journal of Accounting, 2025, vol. 7, issue 1, 86 - 113

Abstract: Purpose: The purpose of the study is to examine the influence of digitalization, tax system efficiency, and tax compliance on revenue mobilization in Sub-Saharan Africa (SSA) while considering the moderating roles of religion and culture. Methodology: Using panel data from ten SSA countries spanning 2010 to 2022, the study employs random effects regression models to estimate the relationships between key tax variables and revenue outcomes. Diagnostic tests, including stationarity, multicollinearity, and heteroskedasticity tests, ensure the robustness of the empirical model. Findings: The findings reveal that digitalization significantly enhances revenue mobilization, but its effects are influenced by infrastructure quality, taxpayer digital literacy, and enforcement mechanisms. Tax system efficiency emerges as a strong positive determinant of tax revenue, reinforcing the importance of broad tax bases, simplified tax structures, and efficient administration. However, tax compliance burdens negatively affect revenue collection, indicating that excessive procedural complexities and high administrative costs discourage voluntary tax participation. The study also finds that religion negatively moderates the digitalization-revenue relationship, suggesting that religious beliefs and informal giving patterns may reduce taxpayer willingness to engage with digital tax platforms. In contrast, culture positively moderates the tax system-revenue link, indicating that tax policies aligned with cultural norms and governance traditions are more likely to succeed. Unique Contribution to Theory, Policy and Practice: Theoretically, the study contributes to the development of institutional and fiscal models of taxation in developing economies, illustrating how governance quality, institutional readiness, and tax morale mediate fiscal outcomes. For policy, the study emphasizes the need for targeted tax reforms that reduce compliance burdens, improve digital tax infrastructure, and formalize the informal sector without stifling entrepreneurial activity. In practice, it advocates for greater collaboration between tax authorities, local governments, and civil society organizations to foster voluntary compliance and improve trust in public financial management. The study provides empirical evidence to support adaptive, inclusive, and technologically-enabled tax policies in the context of SSA.

Keywords: Digitalization; Tax System; Tax Compliance; Revenue Mobilization; Religion; Culture; Sub-Saharan Africa; Fiscal Policy; Tax Reforms. (search for similar items in EconPapers)
Date: 2025
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