Determinants of Value Added Tax Collection Performance in West Shoa Zone, Oromia Regional State, Ethiopia

Abstract

The study was conducted to investigate the determinant factors of Value Added Tax collection performance in West Shoa Zone by giving emphasis on three selected districts i.e. Ambo city Revenues Authority, Dandi and Bako woredas Revenues Authority’s. The researchers used cross-sectional data covering a period in 2017. Since the data was survey in nature the researcher used both qualitative and quantitative (Mixed) research approaches to achieve objective of the study. The researchers used purposive and stratified sampling method to take a sample of Tax payers, Consumers and Revenues Authority Employees.  Descriptive statistics and multiple regressions were used to analyze primary and secondary data to reach the result of the study using Statistical Package for Social Science (SPSS) version 20. The result of the study showed that Tax payers awareness on Value added Tax, Tax payers’ maintenance of account and Value added Tax Rate have  positively influenced Value added Tax collection performance whereas Tax Evasion, Tax avoidance and Tax non-compliance variables have negatively affected Value added Tax collection performance for tax payers. The study results also  showed that Value added Tax Assessment, Value added Tax Audit, Competence training, Adequate manpower, Tax payers identification and Penalization variables have positively influenced Value added Tax collection performance whereas External Legal Environment variable negatively affected Value added Tax collection performance for institutional variables.  Thus, it’s recommended that Revenues Authority should fulfill necessary manpower and create continuous follow up in order to improve Value added Tax collection performance.

Keywords: Value added Tax, Tax avoidance, Tax Evasion, performance, Tax payers

DOI: 10.7176/RJFA/10-21-06

Publication date: November 30^th 2019