Determinants of Tax Evasion in Addis Ababa City Administration: The Case of Bole Sub City Category “A” Taxpayers
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Date
2019-05
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Addis Ababa University
Abstract
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.
Description
A thesis submitted in partial fulfillment of the
Requirements for the degree of Master of Science in
Accounting and finance
Keywords
Tax Compliance, Tax evasion, Public Services