The Paradox of Digital Enforcement: Analyzing the Implementation Friction of EFRIS among Urban SMEs in Kampala

Abstract

The global shift toward digital tax administration promises enhanced efficiency and transparency, yet its implementation in developing economies often faces severe structural headwinds. This study investigates the “implementation friction” of the Electronic Fiscal Receipting and Invoicing System (EFRIS) among Small and Medium Enterprises (SMEs) in Rubaga Division, Kampala. Utilizing a qualitative case study design, the research gathers data from 35 participants, including SME owners and tax officials, to understand the operational dissonance between policy design and grassroots reality. Guided by the Technology Acceptance Model (TAM) and the Slippery Slope Framework, the study reveals that the imposition of high-tech digital solutions on a semi-formal sector lacking basic digital infrastructure has created a “compliance paradox.” Instead of simplifying tax payment, EFRIS has introduced new barriers related to connectivity, cost, and technical literacy, leading to alienation and resistance. The study concludes that without parallel investments in digital literacy and infrastructure, digitization efforts may inadvertently widen the tax gap. It recommends a phased, human-centric digital integration strategy and the adoption of “offline-capable” compliance mechanisms.