Factors Contributing to Tax Evasion: the Case of Small and Medium Enterprises in Addis Ababa City Administration
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Date
2023-12-04
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A.A.U
Abstract
The study's objective was to determine the elements that influence tax evasion in Addis
Ababa’s Small and Medium Enterprises. In addition to using purposive and stratified sample
procedures, the research used both descriptive and explanatory research designs.
Questionnaires and interviews were used to collect the primary data for the study, and it was
then analyzed using descriptive and inferential statistics. Just 310 out of the 371 surveys
questionnaires that were collected from randomly chosen taxpayers were fully completed,
returned, and used in the research. The study's findings demonstrated that tax evasion is
positively and significantly impacted by the negative attitudes of taxpayers regarding taxes,
the cost of tax compliance, and corruption. Yet, tax knowledge, tax fairness, and tax fines and
enforcements each have a negative and significant impact on tax evasion. The most positive
and substantial impact on tax evasion is caused by negative attitudes of taxpayers regarding
taxes from the six predictor factors. The study then made the suggestion that in order to
reduce the expense of tax compliance, the tax authority should make sure the tax system is
clear and straightforward. The study also recommended that the government use taxpayer
funds wisely and transparently, communicate with taxpayers about tax programs to promote
the benefits of paying taxes in order to improve tax compliance and reduce tax evasion, in
order to change the negative attitude developed by taxpayers toward tax.