The Opportunities and Challenges of the Federal Tax Administration Legal Framework of Ethiopia in Combating Tax Corruption
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Date
2015-01
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Addis Ababa University
Abstract
The objective of this research was to examine opportunities and challenges of the federal tax
administration legal framework to combat tax corruption, in ERCA. To this end, the researcher
employed qualitative approach and documentary analysis, and thereby uncovered the following
findings.
The legal framework has provided the following types of autonomy to ERCA that are helpful to
combat tax corruption. Accordingly, law has given ERCA personnel administration power that is
enabling to implement effective hiring, firing, rotation, and salary increment policies. The
autonomy of ERCA from the MOFED and the MOCS under law is also enabling, respectively, to
create administrative specialization (professionalization) on tax and organizational structure
determination. Similarly, law has provided for ERCA planning autonomy that is enabling to
strength tax administrationaccountability. Apart from the foregoing opportunities, the legal
framework has failed to give ERCA financial autonomy which is important to protect it from
financial limitations may be necessary to undertake effective tax administration operation.
The legal framework which determines ERCA’sorganization suffers from a number of challenges.
Accordingly, it has failed to share clear cut role between the head and the branch offices of ERCA,
and provided wide space to the former. It has also centralized power structure of the head office,
that is by design legitimatize top-down tax administration decision making with fragile control
arrangement. It is also not responsive to maximize functional involvement among tax officers (and
units) operate on tax assessment, tax information administration, and tax law enforcement tasks.
That in turn may openmonopoly room to the respective tax officers who are in charge on such
tasks.There is also no strong commitment under lawto ensure adequate, planning and operational
independence, to internal audit and anti-corruption units of ERCA. Consequently, there is a room
which exposes tax corruption detection and investigation operation to be influenced by other tax
officers of ERCA. Besides, the absence of commitment toestablish units which have specific
responsibility to conduct periodic review on tax administration operations islimitation to
effectively detect tax corruption in ERCA.
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Keywords
The legal framework of tax administration, tax corruption, and ERCA.