Determinants of Tax Compliance in Ethiopia: Case Study in Revenue and Customs Authority, Hawassa Branch

Abstract

This study aimed to investigate determinants of tax compliance in Ethiopian Revenue and Customs Authority (ERCA) the case of Hawassa Branch. Survey conducted using primary data collected from 185 sample tax payers’ and secondary data collected form published and unpublished documents. A combination of both stratified and simple random sampling techniques were used to select the sample tax payers. The study used descriptive method to assess the compliance situation and ordered logistic regression was applied to examine the main determinants of tax compliance level. The results of the study revealed that the compliance situation of the branch was low. Tax audit, strength of the tax authority and educational level, tax rate, tax compliance cost, corruption, referent group, tax payers’ attitude towards tax and tax payers’ awareness about the tax law were found to be statistically significant effect on tax compliance. Thus, these factors should be given due consideration to enhance tax payers’ compliance behavior and improve government’s revenue collection in Ethiopia.

Keywords: Tax compliance, Determinants, Ordered logistic regression, Ethiopia.