Despite the vital share of tax revenues in total government expenditures, tax to GDP ratio remains low in Rwanda amounting 15.0 % in 2014/2015 compared to the average of 18% in some developing countries. In addition to this low tax to GDP ratio, the informal sector which accounts for 44% of GDP, also contributes to government revenue loss. This study aimed at investigating factors affecting tax compliance both in formal and informal sectors using Multinomial Logistic Regression Analysis and the sample under study was made up by 793 respondents. The study revealed that the level of income, compliance costs, penalty rate, attitudes towards taxes, equity and fairness of the tax syste
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