Tax Audit Practice in Ethiopia: The Case of the Federal Government
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Date
2011-06
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A.A.U
Abstract
This study examines tax audit practice in Ethiopia (the case oj federal govern ment), and
inves tigates key proble ms in tax audit operation regardin g th e appropria teness oj audit
typ e used, audit rat e, aptness oj audit case selection metho d~ and audit examination
techniques used, and the experience and capability oj audit staff resources.
The study adopts mixed method approach in order to achieve the research objec tiv"s
and to answer research question s. Specifically, the techn iqu es used in th e study include
survey with tax audit ors and in ves tigators, in-depth interviews with tax officials and
taxpayers , and documentary analysis.
With these research l1letho d~, the results oj the study reveal th at tax audit program
remains undeveloped with slight range oj tax audit activities peljormed targe ting al'lly
sp ecific risks. The tax audit program is a toddler tool in improving vo l untary
compliance and increasingJuture revenue peljorllJance through educating and helping
taxpayers to understand th eir tax obligations. The study also shows low audit coverage,
the absence oj compliance ris k-based alldit case selection strategy, scarcity oj alldit
resources, tax auditors in particular, and absence oj projicient and experienced teLr
auditors. In the end, the s tudy Jonvards the possible measures to be taken by the
Ethiopian Revenue and Custo ms Authority to mitigate problems in tar audit operatioll.
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Keywords
Tax Audit Practice in Ethiopia, Federal Government