Determinants of Tax Evasion in South Omo Zone Revenue and Custom Authority

Abstract

Tax evasion is a major obstacle that highly affects tax revenue which the government consumes to support its activities. It hinders socio economic and political aspects of every country whether it is developing or developed nation. With this background problem that this study focused on assessing the factors affecting tax payers to evade government revenue in south Omo Zone. To achieve the objectives, explanatory type of research was used because the intension of the study was to investigate the cause and effect relationships between variables. In addition; both primary and secondary data was collected from tax payers, officials, and written materials using questionnaires, interview, and reviewing were used. The participants for the study were selected through purposive and stratified sampling techniques. Finally, the collected data were edited, coded, and analyzed using statistical software. Accordingly, the result of the study revealed that that high tax rate, unfair tax system, ineffective tax audit, low accountability and transparency of public institution and low level of taxpayers’ awareness are the main factors increasing tax evasion in south Omo. The researchers through their assessment find out that there is high amount of evasion exist in south Omo zone revenue and custom authority. Finally researchers recommended that, to lower tax evasion rate the tax authority should develop a fair taxing system. Tax system should be easy & easily understandable for the public. Tax revenue authority should have to be accountable and responsible in the use of funds and give appropriate service to the public in return for their payment to discourage evasion of taxpayers.

Keywords: tax evasion; taxpayers’ awareness; tax rate; tax system; tax audit

DOI: 10.7176/RJFA/12-5-03

Publication date:March 31^st 2021