Determinants of Tax Evasion in Addis Ababa City Administration: The Case of Bole Sub City Category “A” Taxpayers

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Addis Ababa University


Tax administration in Ethiopia, similar to other developing countries, is characterized by low tax compliance level. This has resulted in a reduction of revenue yields and public services. The overall objective of the study was to identify determinants of tax evasion. Out of 1,625 study population, 335 questionnaires were distributed to randomly selected-taxpayers in seven strata and 260 questionnaires were returned. The category “A” taxpayers were stratified into import, export, wholesaler trade, retail trade, construction, service sector and manufacturing (process). The primary data was collected through structured questionnaire from category “A” taxpayer of Bole Sub City Small Tax Payers Revenue and Customs Branch Office. The raw data was analyzed using descriptive and inferential statistics. The regression analysis showed that tax rate, income level, probability of detection, penalty rate, complexity of tax system, perceived role of government, peer influence on tax evasion, age, gender and education factors are statistically significant. The research also suggested that efforts to be made with regard to revising the perceived high tax rates, engage in national campaign to raise awareness and increase education about the benefits of voluntary compliance, increase the percentage of audit coverage of taxpayers, penalize defaulters and “name and shame” them, simplify tax laws, close tax law loopholes, and, train tax inspectors.


A thesis submitted in partial fulfillment of the Requirements for the degree of Master of Science in Accounting and finance


Tax Compliance, Tax evasion, Public Services