Acceptance Level of Value Added Tax (VAT) Implementation in Somalia.

Abstract

In August 2024, the Somali government introduced a 5% sales tax, sparking mixed reactions from various segments of society, particularly traders and consumers. Many opposed the tax, citing concerns over its potential negative impact on businesses and the economy. In response, we conducted a study to examine public concerns about the Value Added Tax (VAT) and assess its level of acceptance in Somalia

Purpose: To assess the public acceptance level of VAT implementation in Somalia

Methodology: The research employed a quantitative approach, using questionnaires as the primary data collection tool. The target population consisted of individuals directly affected by VAT, particularly those engaged in business activities. The study initially aimed for 400 respondents, but valid responses were received from 300 participants, resulting in a 75% response rate. A random sampling method was used to ensure fairness and diversity in the sample. Data were analyzed descriptively using SPSS version 27 for Windows to determine frequencies and percentages.

Findings: The findings reveal a significant gap in public awareness regarding the 5% sales tax. Additionally, the study identified a widespread perception that the tax is unaffordable. The belief that taxation disproportionately impacts lower-income groups is also reflected in the study's findings.

Research Limitations: This study focused solely on the level of public acceptance of VAT implementation in Somalia. Therefore, the findings may not be generalizable to other countries.

Originality/value: To the best of our knowledge, this is the first study sheds light on level of public acceptance of VAT implementation in Somalia.