Problems Related to Implementation of Value Added Tax on Revenue Generation in the Case of Ministry of Revenue Eastern Addis Ababa Branch office Ethiopia

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Addis Ababa University


The objective of the study is to assess problems related to implementation of VAT practice and revenue generation performance with respect to the challenge and opportunity in the case of Ministry of revenue eastern Addis Ababa branch office. The paper further assesses to showing the share of VAT income in related to total government revenue. The study used both qualitative and quantitative research methods to collect and analyze both primary and secondary data. The information gathered from MOR eastern Addis Ababa branch office taxpayers and employee's attitude towards VAT implementations problems, compliance level of the taxpayers to VAT rule and regulation and tax authority potential to administer VAT. Questionnaires were distributed for 381 and 216 VAT registered taxpayers and employees of the branch respectively and to analyze the data, statistical package for social science (SPSS) software version 20 was used. Further, secondary data was collected to measure the VAT revenue performance of the authority. The major challenges of the authority in the collection of VAT revenue were: - consumers are not willing to transact with a proper VAT receipt, Ministry of revenue Poor tax enforcement capacity, unfair competition between VAT registered and unregistered tax payers, lack of skill and experience to detect any tax fraud and evasion, tax authority lack of potential to refund excess VAT credit, administration system of penalty is weak and lack consistency. The paper suggests that ministry of revenues should improve the information technology (IT), system to implement like filling ,payment system, recording system ,registration and others related issues in order to overcome the complexity of tax collection and to reduce the administration cost. The tax ministry could also upgrade the skill and competency of tax officials in order to handle tax related offences in a better way. Un-registered taxpayers can affect VAT payer's transaction and profitability Therefore, It also suggested that actions should be taken to narrow the gap between them. Finally, ministry of revenue may take these findings worthwhile for corrective action as the researcher put some helpful recommendations.


A Thesis Submitted to the School of Graduate Studies of Addis Ababa University in Partial Fulfillment of the Requirements for the Master of Art in Public Administration (MPA)


Implementation of VAT, Revenue generation performance, VAT income in related to total government revenue