Factors Affecting the Performance of Value Added Tax /VAT/ Revenue Collection Administration Practices: In Case of Wolaita Zone Revenue Authority, Southern Ethiopia

Abstract

The study has focused on identifying factors that affecting VAT revenue performanceand its management prcitces in Soddo, Areka, and Boditi towns in wolaita zone. The study raised major research hypothesis related to VAT awareness of the society, tax technology especially using ETRs, VAT evasion, VAT audit and enforcement, Tax payers Service Delivery of the authority, Tax administration, and politico- legal factors. In order to address the hyphothesis, causal research method and purposive and disproportionate stratified simple random sampling techniques were employed and statistical package for social science (SPSS) version 16 soft ware was employed to gather data.

The findings of the study shows that awareness of the society, tax technology, VAT evasion, tax audit and enforcement, VAT administration and politico-legal factors have statistically significant and positive relationship with the performance of VAT revenue collection. On the other hand, the variable service delivery has a positive relationship with VAT revenue collection but found to be statistically insignificant.

Finally based on the findings, possible solutions were given. These include; the authority should conduct a consistent awareness creation programs to update the business community and the society at large about the concepts, rules and regulations, advantages and uses of the Value Added Tax, should increase the number of users of ETRs and improve taxpayer identification and registration, minimize VAT evasion activities, establish effective audit and enforcement mechanisms, and minimize bureaucracy.

Keywords: Value added tax, factors affect tax admisnstration,tax authority, business owners