In case of wolaita zone revenue authority, southern ethiopia 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 relationship between competence of revenue clerks and optimal revenue collection by nakuru county government is not significant. From the works of literature, the smallscale sector is known to be a tough party when it comes to paying tax. This approach emphasizes both the tax payers responsibility to report their income and to determine their own. Taxable business income would be determined per tax period on the basis of the profit and loss account or income statement, which shall be drawn in compliance with the generally. Hence, one measure that can be used to improve the level of tax compliance is tax audit. Aside the trust issues, there are several noneco nomic and economic factors affecting tax evasion in ghana. Tax compliance does not significantly influence optimal revenue collection by nakuru. Pdf factors influencing taxpayers voluntary compliance attitude. Pdf factors influencing taxpayers voluntary compliance. This approach emphasises both the taxpayers responsibility to report their income and the need for them to determine their own tax liability. Interview and questionnaires were used to get information from the respondents.
Abstract tax compliance issues for small to medium enterprises smes is an area of keen interest to the revenue authority in zimbabwe. Accordingly, using oneway anova, two samples and one sample t test, this study examined the determinants of tax compliance behavior in ethiopia. Past studies have shown that there has always been a reluctance among taxpayers to pay taxes. This study aimed to assess tax payers attitude on factors that affect voluntary complianceof category c taxpayers in arba minch city, snnpr, ethiopia. This issue is independent of the overall tax take from gdp. Evidence from kaffa, bench maji and sheka zones category b tax payers, snnpr, ethiopia. The basic idea in the theory is that tax compliance is a function of three broad factors. Evidence from kaffa, bench maji and sheka zones category b. Alm 1991 and jackson and milliron 1986 defined tax compliance as the reporting of all incomes and payment of all taxes by fulfilling the provisions of laws, regulations and court judgments. In this study, we therefore examine the factors affecting attitudes towards compliance. Statement of the problem one of the more vexing problems for policy makers in developing and transition economies is encouraging high levels of tax compliance.
Going beyond the ambit of tax policy instruments one can look at social norms to understand. The federal democratic republic of ethiopia, national planning commission. Improving tax compliance 2 international monetary fund approved by vitor gaspar prepared by michael keen, juan toro, katherine baer, victoria perry, john norregaard, junji ueda, john brondolo, duncan cleary, eric hutton, oana luca, enrique rojas, mick thackray, and philippe wingender. So far, the potential gains from using the insights of the tax evasion literature in. Factors influencing taxpayers voluntary compliance attitude with tax system. This paper aims to explore factors influencing the effectiveness of tax audit in tanzania. Determinants of tax audit effectiveness in tanzania. Economic factors of tax compliance in the tradition of tax compliance research, a number of factors have been considered important for explaining tax compliance. Factors affecting voluntary compliance of category c. This research sought to obtain opinions about tax compliance behaviour of small and medium business profit taxpayers in addis ababa. This study sought to identify the factors that influence tax compliance in kenya, specifically focusing on smes operating within nairobis industrial area. Factors affecting tax compliance behavior of addis ababa.
It was found that high tax rates and complex filing procedures are the most crucial factors causing non compliance of smes. Estimating the impacts of tax policy, enforcement, and irs responsiveness 1. Using the tpb, tax compliance is conceptualized as a function of three broad factors. Determinants of tax revenue efforts in developing countries. Factors affecting tax evasion nevila kiri phd candidate, faculty of business, university aleksander moisiu, durres, albania kiri. Tax compliance and its determinant the case of jimma zone, ethiopia 1amina ahmed 2 saniya kedir, 1,2 msc, jimma university, business and economics college email. However, tax payer s tax awareness level and perception and the extent of their influence on voluntary tax compliance decision was not well investigated and similar studies in this topic have not been carried out particularly in snnpr, ethiopia. The countrys tax mobilization was also the lowest among most african countries and thus, identifying the factors that determine tax compliance behavior has been open for empirical investigation.
Factors affecting the performance of value added tax vat revenue collection administration practices. Determinants of tax compliance behavior in ethiopia. Tax rates, tax burden, income level, tax audits, penalty, etc. Pdf determinants of tax compliance behavior in ethiopia.
Tax compliance leads to increases in income and decreases in tax rates. To assess how tax compliance influences optimal revenue collection by nakuru county government research hypothesis h 01. The issue of tax compliance has long been discussed. Factors affecting tax compliant attitude in africa. The problem of voluntary tax compliance is as old as taxes themselves. Factors influencing tax compliance among small and medium. Factors affecting presumptive tax collection in ethiopia. Pdf factors affecting tax compliance behaviour in self. Darcy 2011, our measure of tax compliance attitude is new in the context of crosscountry studies in africa. While this has been done in some previous studies using afrobarometer data levi et al. Factors influencing international accounting system development have been investigated by accounting researchers since the 1960s mueller 1967.
Countrylevel factors affect tax compliance, so studies based on crosscountry data are crucial for understanding the behavior of tax compliance. It is important to understand how environmental factors shape accounting reporting and disclosure standards in order to predict the progress towards harmonization efforts. Realizing the significant effect of tax evasion on an economy and a lack of study in this area for malaysia, this study attempts to fill the gap. Blackwell 2007 carried out a metaanalysis of studies and found that raising either the fine rate or the probability of audit will increase tax compliance.
Pdf challenges of revenue collection muhammed yismaw and. Compliance is also greater when the individuals perceive some benefits from a public good funded by the tax payments while changes in fine rates appear to have little effect on tax compliance behavior murphy, 2004. Pdf challenges of revenue collection muhammed yismaw. Factors affecting tax compliance among malaysian smes in e. Tax knowledge and tax compliance determinants in self. Tax compliance challenges in fulfiling tax obligtaions among smes in zimbabwe. To examine the relationship between economic factors perceptions of government spending, compliance cost, tax. Tax compliance is a major concern among many governments in the world. By hamelmal azene hgebriel thesis submitted to the school of graduate studies, college of business, economics and social sciences, unity university in partial fulfillment forthe requirement for the degree of master in accounting and finance. Tax non compliance occurs through failure to file tax return, misreporting income or misreporting allowable subtractions from taxable income or tax due kirchler, 2007.
In addition to raising revenue directly from audit activities. In the study, we use an indirectly phrased question to capture tax compliance attitude of individuals in order to avoid direct implication of wrongdoing by the respondent. Factors affecting the performance of value added tax vat. Hence, the purpose of this research is to bring attitudes and these factors to light in relation to the rental.
Taxation in ethiopia direct and indirect taxes categories of tax payers. For many years, the internal revenue service irs has presumed that its activities promote better income tax compliance in the general populationboth through deterrence and. Factors affecting tax compliance attitude in africa. External factors affecting voluntary taxpayers compliance.
For this purpose, they are appropriated a finite level of. Determinants of tax audit effectiveness in tanzania emerald. Therefore, this study was conducted using smes in zaria, northcentral nigeria to evaluate and rank the factors that encourage noncompliance with tax obligation by smes. Factors affecting tax compliance of small and medium business. The research work is based on my desire to investigate the factors that affect tax compliance in ethiopia particularly addis ababa medium.
Therefore, the intent of this study is to examine the impact of tax audit on tax compliance in ethiopia. Specifically, this study attempts to estimate factors that cause tax evasion and their relative contribution in malaysia. While a number of studies have analyzed the principal determinants of tax revenue, in this paper we extend the literature by using a. Economic and social factors of voluntary tax compliance. Tax awareness, perception, voluntary tax compliance, snnpr, ethiopia. Determinants of tax revenue in ethiopia johansen co. The factors like equity and fairness of the tax system, level of awareness of taxpayers, effectiveness and efficiency of tax authority, sociocultural factors and political factors. Descriptive research design was used in this study.
Factors that affect tax comp liance among small and medium. Estimating factors affecting tax evasion in malaysia. The revenue of the ethiopian government comes from different sources. Factors relating to political and economic ties, reliance. Tax compliance has been an important subject of research in a large number of developed and a number of developing countries. This study adopts the firstdifferenced approach to estimating the determinants of tax compliance based on the index of tax compliance for 58 countries over the period 19962000. The objective of this study is to examine factors affecting category a tax payers in addis. Pdf analysis of tax compliance and its determinants. Financial and tax reporting conformity has been associated with a decrease in value relevance of accounting earnings ali and hwang, 2000, and a decrease in capital mobility young.
To the knowledge of the researcher, a study on the determinants of tax revenue in ethiopia is scant. In general, complying with the tax laws and regulations means reporting of the correct tax bases, timely filing. The determinants of individual income tax compliance. The effect ranges from a decline in compliant attitude from 6% in kenya, to 8% in uganda and south africa and as high as 12% in tanzania. Iii,issue42,october 2012 41 factors that influence rental tax payers compliance with tax system. This study contributes to current global literature in this field of the relative importance of tax knowledge in affecting tax compliance, as well as exploring the factors that make people pay taxes in a self assessment system, and discusses methods of increasing voluntary compliance. Growth and transformation plan of ethiopia gtp ii 2016. The study is based on the underlying assumption that sustainable strategies for tax compliance should be oriented toward the use of persuasion rather than coercion. This gets right to the heart of what the irs should be doingaffecting. The results revealed that perception on government spending.
Therefore, this study was conducted using smes in zaria, northcentral nigeria to evaluate and rank the factors that encourage non compliance with tax obligation by smes. A nonprobabilistic sampling technique was employed to. Managing and improving tax compliance 6 summary all revenue authorities are generally required to achieve as good a compliance outcome as possible i. Only a little has been dealt with the issue of tax revenue performance in ethiopia. Since each country has its own approach to managing tax compliance levels and each has different tax laws and regulations, the factors impacting tax compliance behavior appear to vary among countries palil, 2010. Sas have become the key tax administrative approach in developed countries including the usa, uk and australia. By gaining an understanding of these underlying factors, kra and the government will be able to make changes that will greatly improve taxpayers tax compliance level, with the end result being increased government revenues, allowing the tax authority to give quality service to taxpayers and the government as a whole providing more and.
Finally on the measures to be done to encourage voluntary tax compliance, the study found out that tax reforms ought to be carried out to encourage tax compliance. The purpose of the study was to examine the factors affecting voluntarily tax compliance in kenya. However, gender and probability of being audited have no significant impact on tax compliance. In regards to factors influencing kenyan landlord taxpayer. To depict the prevalent factors affecting the tax payers tax compliance behavior. Central to the motivations of self assessment system introduction is an. Graduates of 20182019 ay office of graduate programs 1. According to kirchler 2007 definition, tax compliance is taxpayers willingness to pay their tax liability as per tax laws and regulations.
Evidence from gedeo zone of southern ethiopia article pdf available august 2018 with 2,195 reads how we measure. Recent research on tax administration and compliance internal. Audit can play a major role in improving tax administration and overall taxpayer compliance by impacting on taxpayer behavior. This is the tax imposed on the taxable business income net profit realized from entrepreneurial activity. The level of tax evasion in one country is related with specific characteristics of that country. Factors influencing tax compliance among small and. Self assessment system sas has become the key administrative approach for both personal and corporate taxation in developed countries including the usa, uk and australia. Ubira etheses tax knowledge and tax compliance determinants. Pdf on jan 1, 2019, wondimu sebhat and others published analysis of tax compliance and its determinants. Factors that affect tax comp liance among small and.
Factors affecting tax compliance behavior of addis ababa number two medium taxpayers branch office, in addis ababa, ethiopia. This paper attempts to provide results of a study on the importance of tax knowledge in determining tax compliance behavior in self assessment system sas in malaysia. It was found that high tax rates and complex filing procedures are the most crucial factors causing noncompliance of smes. Factors influencing taxpayers compliance with the tax system. Factors influencing taxpayers compliance with the tax system austlii. Factors influencing taxpayers voluntary compliance attitude with. Moreover, the above studies pointed that, factors affecting tax revenue vary across countries which necessitate the need for country level analysis of tax revenue. This study has attempted to examine external factors affecting voluntary tax payers compliance.
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