Value Added Tax Refund Practices and Revenue Performance in Ethiopia
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Date
2018-11
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Addis Ababa University
Abstract
This study examines VAT refund practice and revenue performance in Ethiopia. Specifically the
study investigates key problems on VAT refund operations, in respect of the appropriateness of
document verification and time to refund pay, type of refund claims and its legal framework,
cause for VAT refund, trends of VAT refund and revenue performance in Ethiopia focusing on
federal government. The study adopts mixed method approach specifically, the study uses indepth interviews with tax officials and taxpayers and documentary analysis as principal way of
acquiring data. With these research methods, the results of the study reveal that VAT refund
practice remains infant. Since, it did not get appropriate attention of tax administration and the
activities performed targeting specific taxpayers (medium and large taxpayers office) with the
absence of developed risk-based refund claim verification and absence of effective IT support in
refund processing (the refund process is mainly performed manual based) which results slow
VAT refund process and due to enormous document verification the tax officers are tedious even
some illegal taxpayers applied duplicated refund claim resulting loss of revenue.
Finally, the performance of VAT reduced due to VAT refund fraud, resulting in average 14% cefficiency ratio which is lower when compared to competitor’s country in Africa and in the
world. At the end, the study forwards the possible measures to be taken and the necessary
emphases should be given mainly on document verification that should be risk based and develop
effective use of IT system to perform VAT refund process by the Ethiopian Revenue and Customs
Authority to mitigate problems of slow VAT refund practice and low VAT revenue performance.
Description
A thesis Submitted to the Department of Accounting and Finance of Addis Ababa
University in Partial Fulfillment of the Requirements for the Degree Master of
Science in Accounting and Finance
Keywords
Administration, Ethiopia, Performanc, VAT