Determinants of Tax Audit Effectiveness: In Case of Gondar Zone Revenue Offices

Abstract

This study was conducted with the aim of identifying the determinants of tax audit effectiveness in Gondar zone revenue offices. Six tax audit effectiveness determinants were examined under four categories; competency of tax auditors, independency of tax auditors, management support, awareness level of  taxpayers, attitude of taxpayers towards tax audit, and tax legislation. Tax audit effectiveness is affected by various factors and identifying these factors in order to maintain tax audit effectiveness at satisfactory level and treating the factors accordingly should be the central premises of any tax system. Mixed research approach with explanatory research design is used in the study by employing census survey method to select the participants. The researcher has collected primary data through questionnaires and unstructured interviews. The collected data was analyzed by using STATA11 software and regression and correlations analyses are made to achieve the objectives. Given the ordered ranking of information related to the dependent variable (tax audit effectiveness), ordered logistic regression model is used to identify determinants of tax audit effectiveness in Gondar zone revenue offices. According to the study, factors such as competency of tax auditors, independency of tax auditors, management support, awareness level of taxpayers, attitude of taxpayers towards tax audit were found to be the determinant factors that affect tax audit effectiveness. Finally the study suggested that the office should establish audit center of Excellency, hire competent staff, educate and reward taxpayers to improve the level of tax audit effectiveness.

Keywords: tax audit, tax auditor, taxpayers, tax evasion, tax compliance

DOI: 10.7176/RJFA/11-23-03

Publication date: December 31^st 2020