Chapter One

Introduction

1.1 Background of the study

Tax from the Latin word tax are: to estimate which in turn is from tangier to touch) is be defined
as a compulsory contribution payable by an economic unit to government without expectation of
defect and equivalent return from the government for the contribution made from the
government for the contribution made (Bhatia a 2003).

tax administration refers to the identification of tax liability and the collection prosecution and
penalties imposed or recalcitrant tax payers tax administration therefore covers as wide area of
study encompassing aspects such as registration of taxpayers assessment returns processing
collection and audits (kangave 2005) tax administration therefore should aim at improving on
laws regarding the registration assessment collection revenue and exploiting full taxation
potential of a country world bank 1991 in most developing countries like Ethiopia the revenue
general by the government is quite less than the expenditure spent this low revenue yield of
taxation can only be attributed to the fact provisions are not properly enforced either on account
of the in liability of administration or an account of straight forward collation or on account
straight forward collusion between the tax administration and tax payers.

In Ethiopia tax is administrated at federal or control and regional levels. The contribution of
federal democratic republic of Ethiopia (FRDE) has separated the tax revenue to be collected by
federal government state or regional government and jointly by the federal and state government.

The regional government of Ethiopia collect taxes and revenue proclamation No 33/1992 by
bureaus of regional in land revenue authorities from privately own enterprises and organs of
regional governments where as the control government revenue collection organs are responsible
to collect revenues of federal and joint revenues of owned by both central government and
regional governments from different organization including those owned by both control
government and regional governments from different organization including those owned by
federal government.

The sharing of revenue between the federal government and regional governments take
consideration like owner ship of resources of revenue the regional character of the sources of the
1
revenue. Conveniences of levying and collection of the tax or duty population distribution of
wealth standard of development of each region and other factors that are basic for integrated and
balanced economy.

The tax assessment for those who are required to maintain financial records is done based on the
records that taxpayers maintain however if they fail to maintain financial records estimated
assessment will be done for the rest of the tax payers who are not required to maintain financial
records it is based on the standard assessment method (council of ministers 2002)

Specifically the object of the study is to identify the main problems and their causes in tax
assessment and collection system relating to category “A” tax payers faced by the tax payers and
the tabor revenue authority.

1.2 Back ground of the organization

Back ground of the study. The revenue of the Ethiopia government comes from different source
such as public borrowing. Sales of public assets and transfer payments. The main purpose of
generating revenue from these various sources is to finance government expenditure. The public
expenditure are meant for public goods and services that are very essential for development and
well being of the society. Among the various aforementioned sources of revenue taxes the
primary and sustainable sources of government revenues as can be observed in the following in
the follow table according to Ethiopian calendars the government revenue by component

2005/04 years amount of total revenue demotic

2004/05 - Revenue

2005/06 - tax Revenue

2005/07 - direct Revenue

2006/07 - indirect revenue

2007/08 - non tax revenue

-external grant source mister of final and economic development

Table 1.1 summary of general government revenue by component I million birr of Ethiopian.

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Year Domestic Tax revenue Direct Indirect Non tax
Tax revenue revenue revenue revenue

2003 12811 11652 2260 6334 5321

2004 13613 12854 2667 6838 6321
2005 81112 24812 3997 8422 9335
2006 42432 36844 4856 9112 9862
2007 - - - - -
2008 - - - - -

1.3 Statement of the problem

A government finances its expenditures through the fund acquired from the service given by the
government tax loan. And donation from all sources of finance tax is the most developing
countries it is common phenomena to notice serious problems in developing adequate tax
system. That permits government to sufficiently finance its expenditure. A long with the growth
in the overall Ethiopia economy. It has been observed that there has been an increased
government spending and deficit financing. In principle government could use both domestic and
foreign sources of finance that a country can tap to finance deficit. The government collected
significant amount of revenue including grants which could not fully finance the total
expenditure without grants. The deficit could have been also significant. This makes the
borrowing and grant elements of governments total expenditure counts too much of the expend
of external grant constitute part of government revenue. Almost half of it comes in the form of
grants in kind and the remaining comes in the form of united each (IMF 2006) income tax
regulation No. 284/1994 Tax assessment collection and controlling care process owner has
conducts comprehensive audit of business organization.

According to this study tries to identify the problem on the tax assessment and collection
activities of the Tabor sub- city in southern Ethiopia of Hawassa.

This study tries to assess tax assessment and collection activities in case of Tabor sub-city
The main researches are:-

 What is the problem in the implementation of VAT in Tabor sub-city?

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  Are the tax payers having awareness about tax assessment and collection activities?
 What problem is occurred in collecting and assessing tax?
 What is benefit of collecting tax?

1.4 General objective of the study

1.4.1 Objective of the study

The main objective of this research is to investigate tax assessment and collection problem in
respect of sub city faced by both taxpayers and the authority.

1.4.2 Specific objective of the study

- The ultimate aim of the study is to identify the main problems and their assessment relating to
category ‘A’ tax payers faced by the different parties involved in the tax assessment.

- To identify the challenge faced in tax collection system.

1.5 Significance of the study

The finding of this study will contribute in enhancing tax revenue of the selected sub-city and
government at large by uncovering the care problem on the tax assessment and collection
activates so as to enabling them to put their effort to triumph over the observed problem thus the
government will be able to adopt a comprehensive strategy and minimize the observed tax
administration problem to increase tax revenue similar approach can be replicated in identifying
the problems in tax assessment and collection procedure of revenue administration in other sub-
cities besides. It may be also used as an input for other intersected researchers for conducting
further study the finding of this study.

1.6 Scope of the study

The research encompassed carrying out a detailed examination or industry, especially on tax
assessment and collection process regarding profit tax, value added tax (VAT) and rental income
tax in respect of category “A” tax payers found and obligated to pay to tabor sub-city of Hawassa
in order to identify situation passing undusted influence on tax revenue.

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1.7 Limitation of the studies

To investigate the changes in tax administration of tabor sub city more time caucus survey and
extreme openers from the respondents are required however most tax payer lack opines in
reacting to some question forwarded to them in addition due to lack of sufficient knowledge
extracting necessary data from the computer system that the tax office is using was difficult.
Therefore based on the above information limitation the study mainly relied on the responses.
Gathered from the category “A” tax payers and the interviewees in the tax offices generally this
study is faced with the problem of adequate secondary data resource and limited time.

1.8 The organization of the paper

This study is organized in the five chapters

- The first chapter presents information.

- The second chapter shows the literature review.
- The third chapters contain brief description of the research design.
- The fourth chapter presents analyze the results while the fifth chapter presents the
conclusion of the study respectively.

The discussions in this chapter are organized to have eight sections

-It presents back ground of study, show the statement of problem, presents the general objective,
presents the specific objective, presents the research methodology, presents scope of the study,
presents the significance of study, presents limitation the study and finally presents organization
of paper. It also study three articles from FDRE constitution namely art 96, 97 & 98.

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 CHAPTER TWO

LITERTURE REVIEW

This section presents a brief review of existing theoretical and empirical literature of tax
administration. At the end of the review, an attempt is made to summarize the major
draw backs of the existing empirical studies and to identify the knowledge gap to be filled in by
further investigation.

2.1 Theoretical review of tax administration

Tax administration refers to the identification of tax liability based on the existing tax
law, the assessment of this liability, and the collection, prosecution and penalties imposed on
recalcitrant taxpayers. Tax administration, therefore, covers a wide area of study, encompassing
aspects such as registration of taxpayers, assessments, returns processing, collection, and audits
(Kangave, 2005).

The low revenue yield of taxation can only be attributed to the fact that tax provisions are not
properly enforced either on account of the inability of administration to cope with them
or on account of straight forward collusion between the tax administration and taxpayers.
Since taxes are an involuntary payment for government services, taxpayers have a strong
inventive to minimize their tax liabilities either through avoidance (legal) or through
evasion (illegal). Tax administration has to secure compliance with the laws by applying an array
of registration, assessment and collection procedures. A government can keep taxpayers from
doing these activities, and thus successfully avid tax evasion depends on the nature of economy’s
actual tax base. Tax administration therefore, should aim at improving on laws regarding
the registration, assessment, collection revenue, and exploiting fully taxation potential of a
country (World Bank, 1999).

2.1.1 Legal structure for effective tax administration

The legal rules required for effective tax administration might be categorized under four broad
headings:

• Rules for the establishment of an individual’s tax liability;

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• Rules establishing a system of appeals from the initial assessment of tax;

• Rules for the collection of taxes that have been established to be owing; and

• Rules relating to tax offences and their punishment.

The importance of a sound legal structure for effective tax administration and the
importance of incorporating principles that will further tax compliance in the design of that legal
structure. Since each stage of the administrative process is dependent upon the other, to
achieve a significant improvement in the overall effectiveness of the tax administration
each element of the legal structure needs to be designed for maximum effectiveness
(Asian Development Bank, 2001).

In addition to the legal structure for tax administration, obviously, the organizational
structure of the tax administration is also of crucial importance. According to the Asian
Development Bank, 2001, the range of issues that must be resolved, in this regard,
include

• Agreement of autonomy from the executive branch

• Accountability to legislative assembly

• Relationship to the Ministry responsible for the tax legislation

• Type of organization structure in relation to taxes administered

• Decentralization

• Personnel policy

• Policies for internal audits

• Mission statement and strategic plan

2.1.2 Importance of tax administration

According to Asian Development Bank, 2001, tax administration dictates tax policy.
Indeed, tax administration and compliance issues determine the broad evolution of tax
systems. The shift in industrialized countries over a century ago from reliance on excise,
customs and property taxes to corporate income and progressive income taxes can be
7
explained, in large part, by the relative decline in the rural sector, the concentration of
employment in large corporations and the growing literacy of the population. In recent years,
the shift away from these taxes - corporate income and progressive individual income tax
- and toward tax systems that rely more on broad-based consumption taxes such as the value-
added tax, flatter rate structures, and the adoption of “dual income taxes,” in which a
progressive tax on labor income is accompanied with a low flat-rate tax on capital income, as
adopted in certain Scandinavian countries, can be explained, in large part, by the forces of
globalization and developments in financial innovation and the inability of tax administrators
to develop technologies to cope with these forces and developments (Asian Development
Bank, 2001).

In tax reforms there is a close correlation between successful tax policy and efficient tax
Administration. In other words, there is no good tax policy without efficient tax
administration (Jenkins, 1994).

Over the past century, changes in the size of governments themselves, and differences in the
relative size of governments around the world, can be explained by changes and
differences in the environment, resources and technologies available to the country’s tax
administrators (Asian Development Bank, 2001).

Aside from the role of tax compliance and administrative issues on the evolution and
general features of the tax system, there is no question that administrative considerations
influence, and often impose decisive limits, on particular tax laws. Most obviously, the failure to
tax all sources of economic power, such as the imputed rental value of homes or accruing
capital gains, are often justified by reference to practical concerns of administer ability. It
is futile to design a complex and sophisticated response to a tax policy problem if the
rules to implement the regime cannot be administered (Asian Development Bank, 2001).

Ensuring that taxes are collected from those who owed them has always been an elusive
challenge for tax departments. It has never been easy to collect taxes from lawyers who take cash
for a Saturday office visit; waiters who receive most of their income as tips; Land lords who
collect rent in cash; small business people who skim part of their profits or hire people off the
books; cash-only window cleaners, roofers and painters; or large corporations that contract
out to sweatshops. It has been even more difficult to collect taxes from crack cocaine
dealers, smugglers, hit men and hit-women, and those who make their living defrauding and
8
extorting their clients. The underground economy has always been diverse and even faster than
these examples suggest (Asian Development Bank, 2001).

However, as if these traditional forms of tax evasion were not challenge enough, the
combined effects of information technology and globalization is now alleged to allow
those who have been able to hide in the shadow economy to evade paying their fair share of tax
to disappear altogether. Many individuals are no longer tied to one national jurisdiction;
those that are increasingly receive payments from work and investment abroad; anyone
can have access to an over sea’s bank; anyone with access to a computer can transact business
anywhere in the world; property is becoming increasingly intangible and consumption
difficult to locate; and, capital is becoming increasingly fungible and can be shifted
relatively easily between jurisdictions. These and other developments are said to call into
question governments’ continued ability to levy taxes in a world in which companies, assets
and people are infinitely mobile (Asian Development Bank, 2001).

Tax administrators face a formidable number of challenges in every country. According to

Asian Development Bank, (2001), in many developing countries tax administration
reforms are needed simply to achieve macroeconomic stability. In countries with economies
in transition there is a need to establish a tax administration that can respond to the demands of a
growing market economy and the resulting increase in the number of taxpayers. Moreover, there
is the need to establish the legitimacy of tax collection. In all countries tax administrators face
the challenge of modernizing the tax administration so that it can operate effectively in an
increasingly global economy.

In spite of these challenges, several countries’ recent experiences in improving the

effectiveness of their tax administration have shown that fundamental reform is possible.

In recent years, there has been a considerable amount of study on the steps that should be taken
to improve tax administration and reform. Of fundamental importance to all reform efforts, to
improve the effectiveness of tax administration significantly, the government must be
politically committed to reform, the major obstacles to an effective tax administration
have to be identified, and there has to be well-designed strategies for addressing them
(Asian Development Bank, 2001).

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As a preliminary step to developing a successful strategy for the reform of a revenue
agency, the “Tax Policy and Administration Thematic Group” of the World Bank has
developed a useful diagnostic framework for revenue administration. It includes a description
of quantitative indicators and indicators of effectiveness and efficiency that might be used to
get a general idea of the physical dimensions of the revenue administration and how
effectively and efficiently it is currently performing its functions and where performance
problems might be acute. It also provides a framework and checklist of questions relating to
all aspects of revenue departments operations, environment, resources, history, organization
and management functions and informal culture that can be used to assess its operations
and diagnose its failings (Asian Development Bank, 2001).

A reform strategy to increase compliance requires a concerted, long-term, coordinated and

comprehensive plan. It is vital that tax administrators ensure that every compliance policy
instrument at their disposal is being used as effectively as possible. The uses of these instruments
complement one another.

2.1.3 Tax administration challenges

The efficiency of a tax system is not determined only by appropriate legal regulation but also by
the efficiency and integrity of the tax administration. In many countries, especially in
developing countries, small amounts of collected public revenue can be explained by either
incapability of the tax administration in realization of its duty, or with some degree of corruption.
Regardless of how carefully tax laws have been made, they could not eliminate conflict
between tax administration and tax payers. Tax administration with a skilled and
responsible staff is almost the most important precondition for realization of "tax potential" of
the state. It is generally known that tax laws and tax policy are as good as good is the tax
administration (Kaldor, 1980).

Tax administrators face a formidable number of challenges in every country. In many

developing countries tax administration reforms are needed simply to achieve
macroeconomic stability. In countries with economies in transition there is a need to
establish a tax administration that can respond to the demands of a growing market
economy and the resulting increase in the number oftaxpayers.

10
Human resource is essential in tax administration. Trained personnel are what actually most
developing countries lack and this forced them, for instance, to organize their activities
under the existing tax administration structure.

During the past decade, diverse developing countries have introduced radical reforms in their
collection of taxes. In more than 15 countries, traditional tax departments have been granted the
status of semiautonomous revenue authorities, which are designed with anumber of
autonomy-enhancing features, including self-financing mechanisms, boards of directors with
high-ranking public and private sector representatives, and generic personnel systems
(Robert 2003).

All transition countries had a very huge fall of GDP, which, with serious limitation of tax
administration, resulted in an alarming revenue gap. Moreover, in all countries, revenues from
taxes collected from big, mostly state firms, declined, and were not replaced with increased taxes
collected from private, mostly small enterprise. This has created pressure to increase tax rates
and introduce new, very often ad hoc taxes. These diversities, which are called "patches" in the
tax system, are to a great extent a result of the inefficiency of the tax administration in collecting
the existing taxes (Kornai, 1990).

This situation would lead to a permanent need for new taxes, changes in the tax system and
almost never-ending tax reforms. In transition countries income tax is gaining on importance.
Taxpayers are not used to this form of taxation and when they are faced with it for the first time;
they will obviously regard it as a burden. As Kornai (1990) explained the citizens in these
countries are not used to paying taxes at all. The tax administration and bodies which produce
political decisions have to foresee the attempts to evade taxes and have to design a tax system
that will not question the loyalty of its citizens.

Most developing countries continue to face serious problems in developing adequate and
responsive tax systems (Richard, 2008). No matter what any country may want to do with its tax
system, or what anyone might think it should do from one perspective or another (ethical,
political, or developmental), what it does do is always constrained by what it can do. Economic
structure, administrative capacity and political institutions all limit the range of tax policy
options (IMF 2006).

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Heavy tax distortions in transition economies come from various sources. First, base rates are
often high. In transition economies with many fledgling small enterprises and weak tax
administration, high tax rates are likely to encourage already widespread tax evasion and
participation in informal economy. Second, many countries still rely heavily on payroll taxes
to finance social expenditures. If payroll taxes are levied mainly on employers (as is the
case in the great number of transitional economies) this can discourage entrepreneurial
efforts, disincentive formal hiring and push economic activity underground. Third, and as
World Bank estimations as the most important, the many exemptions and special tax rates
in parts of the economy often coexist with higher tax rates on other activities, undermine
revenue performance, complicate tax administration and distort revenue allocation. The key
precondition for efficient tax administration is tax structure with minimizing distortions, strictly
tax exemptions and elimination of the differences in tax treatment of particular parts of economy.
This will mean extending the

VAT to all but a few goods and services (notably export, which should be zero - rated, and
banking and insurance services, where it may be difficult to determine the amount of value added
to be taxed).

2.1.4 Efficiency of tax administration

The key precondition for efficient tax administration is tax structure with minimizing
distortions, strictly tax exemptions and elimination of the differences in tax treatment of
particular parts of economy. This will mean extending the VAT to all but a few goods and
services (notably export, which should be zero - rated, and banking and insurance
services, where it may be difficult to determine the amount of value added to be taxed) (Hesse,
1993).

Badly conceived or unnecessarily complicated tax structure greatly complicates the operating
function of the tax administration, while simple and transparent tax structure could affect it in the
opposite way. So, the increase of efficiency of the tax administration could be attributed mainly
to the simplification of the tax system. Tax administration cannot change legislation as a means
for improvement of tax structure, but could propose necessary changes in laws that can improve
tax structure and / or could aid in application of the law (Mansfield, 1990).

12
Effective tax administration in a market economy is based on voluntary compliance by a large
number of decentralized taxpayers. Most transition economies have only recently started to
address compliance issues and build up a modern tax administration with better overall revenue
performance. A first step is restructuring how the work is organized. In transitional countries,
tax administration can be organized respecting the functional principle (collecting,
recording, auditing, and enforcement) according to the type of taxpayers; the type of
taxes; and type of enterprises in economy. Tax administration should develop around
activities (such as recording or auditing), as in Hungary, rather than according to the type of
tax and taxpayers. More generally, tax payment needs to be assessed, collected and recorded
more efficiently. Current procedures are rarely up to the job of dealing with a growing number of
taxpayers, many of which - particularly private businesses and service enterprises are tricky to
tax at best. The government might start by assigning an identification number to all taxpayers,
focusing its efforts on large taxpayers who generate the bulk of revenue, and withholding wage
tax at the source. This, however, does not mean that results of successful monitoring of large
taxpayers can be excused for neglecting medium and small taxpayers. This can lead to the
decrease of their compliance, resulting with lower total revenue. Next should be improved
auditing and follow-up actions against those who fail to file returns or make payment.
Latvia, for example, has issued regulations for an improved taxpayers' register: every taxpayer
must register with the State Revenue Service; financial institutions will not be allowed to open
accounts for any business or individuals without a taxpayer code (Hesse, 1993).

Most transitional economies are in the midst of a comprehensive reform of their

government (that include the tax administration) and tailor them to the changing needs of a
market environment. In that task they can use the experiences from West European
countries and from countries that have recently realized tax reforms as a stepping stone to further
development and/or as a challenge and incentive for reaching a higher level of efficiency
and success (Musgrave, 1991). The reform of tax administration in these countries is a part of
a complete transformation of public administration, so there are no reasons to be too optimistic
about the speed of change and about expected results (Hesse, 1993).

2.1.5 Improve tax administration

In reform of tax administration the importance of tax structure is clearly reflected,

because tax administration and tax structure are interconnected and they have to be

13
improved simultaneously in the tax reforms (The World Bank, 1991). Reaping revenues from
tax rate changes (whether up or down) requires effective tax administration. Raising
revenues through base expansion requires even better administration. New taxpayers must be
identified and brought into the tax net and new collection techniques developed. Such changes
take time to implement. The best tax policy in the world is worth little if it cannot be
implemented effectively. What can be done to a considerable extent inevitably determines what
is done. One cannot assume that whatever policy designers can think up can be
implemented or that any administrative problems encountered can be easily and quickly
remedied. How a tax system is administered affects its yield, its incidence, and its
efficiency. Administration that is unfair and capricious may bring the tax system into disrepute
and weaken the legitimacy of state actions.

Good tax administration is a difficult task even at the best of times and in the best of
places (Auriol and Warlters 2005). Conditions in few developing countries match these
specifications. How revenue is raised - the effect of revenue-generation effort on social capital,
equity, the political fortunes of the government, and the level of economic welfare - may
be more important from many perspectives than how much revenue is raised. The private
costs of tax compliance as well as the public costs of tax administration must be taken into
account. Assessing the relation between administrative effort and revenue outcome is by no
means simple: it is important, for example to distinguish the extent to which revenue is
attributable to the active intervention of the administration rather than its relatively passive
role as the recipient of revenues generated by other features of the system. Improving
administrative efforts and outcomes is not impossible but it is neither easy nor quick.

2.1.6 Service commitments of tax administration

The tax administration should provide impartial and professional courteous service and must
keep private and confidential information regarding the individual taxpayers. It should also
offer clear, understandable and current tax information and will make this information
available to tax payer through various media and provide timely, accurate written
information that one can rely on to questions and requests for tax information (Asian
Development Bank, 2001).

Education and information programs on specific tax issues should be arranged with
taxpayers to enhance their awareness and taxpayers should be allowed to voluntarily
14
disclose their tax situation without incurring a penalty or being prosecuted for tax
violations under certain conditions (Asian Development Bank, 2001).

2.1.7 Tax assessment

A tax assessor is responsible for preparing and maintaining the assessment roll, the tax roll and
collecting the tax levies in accordance with the quality standards. The core service
responsibilities include:

• preparing annual market value assessments for all properties

• preparing the business assessment valuations for all business premises

• maintaining accurate property information and ownership on all realty accounts

• maintaining accurate business information and ownership on all business accounts

• defending assessments before municipal and provincial assessment tribunals

• responding to inquiries and requests for information related to assessment and taxation

• producing and mailing annual assessment and tax notices to tax payers

• reporting assessment rolls and meeting annual audits

2.1.8 Procedures for tax collection

It is expected that people’s tax payments should be in line with their income and they are
required to pay a tax in proportion to their level of income. On the other part of the tax
collectors, collection of tax should be time conscious and convenient and the cost of
collecting the taxes should not be high to discourage business. Alternatively, this means that the
ideal tax system in developing countries should raise essential revenue without excessive
government borrowing and should do so without discouraging economic activity and without
deviating too much from tax system in other countries (Tanzi, 2001).

The procedures undertaken by tax authority to ensure compliance are discussed as

follows.

2.1.8.1 Identification and registration of taxpayers

15
Tax Identification Number (TIN) is used to identify taxpayers. Every taxpayer has a unique
TIN, which he or she is supposed to use in all his or her correspondence with the tax authority,
and no taxpayer should have more than one TIN. In countries like Uganda, they issue TIN free
of charge upon the taxpayer completing a TIN application form (Kangave, 2005).

2.1.8.2 Filing returns

Taxpayers are required to file returns within specified months of the end of their tax
accounting year. The return should be filed in quadruplicate and should contain all the
particulars of the taxpayer. All documents respecting taxation should be presented to the tax
authority office where the taxpayer has their file.

2.1.8.3 Returns processing

Upon receiving a taxpayer’s return, the tax authority officers examine the accuracy of the return
by determining whether the return is properly completed, whether tax has been properly
computed, and whether there are any penalty payments to be made by the taxpayer. The
officer then allocates an assessment number to the return and issues the taxpayer with a
Bank Payment Advice Form, stating the tax payable.

2.1.8.4 Payment of taxes

Taxes are due on the due date of the submission of the self-assessment returns. Tax
should be paid to an authorized bank, using the Bank Payment Advice Form.

2.1.8.5 Audit and examination

The role of tax audits and examinations is to check the accuracy of the information that taxpayers
provide to tax authorities. The audits range from simple field and desk audits to comprehensive
audits.

The paragraphs that follow give a detailed discussion on the criteria that the Canada
Customs and Revenue Agency (CCRA) uses in selecting returns for audit. The criteria are laid
out in Information Circular IC 71-14R3, dated 18 June 1984.

The Screening Process: The majority of cases for audit are selected during this process. Here,
comparison is made between returns of taxpayers who engage in similar businesses or
occupations, and between information contained in returns of current and previous years
16
for a taxpayer. Where inconsistencies are detected, CCRA officials put the returns aside for
possible audit and specific returns are selected for audit. The selective and careful
scrutiny not only saves resources but also increases the chances of detecting evasion.

Auditing Projects: Under these projects, the CCRA tests the compliance of a particular group of
taxpayers. If the test results show that the group is non-compliant, the group members
may be audited.

Leads: The CCRA at times uses information from investigations or external sources, such as
informers, to select cases for audit. Since these audits are not conducted arbitrarily, it is almost
always likely that cases of non compliance will be discovered.

Secondary Files: Here, a file is selected for audit because of its association with another file that
has already been chosen for audit. For instance, where taxpayers conduct business in the
same area and under the same control, if the CCRA decides to audit one taxpayer, it may decide
to audit all the other taxpayers in that place of business.

Random Audits: At times the CCRA randomly picks returns for audit. These returns are then
periodically audited to check whether the audits affect compliance in any way. (Gorman,
2001).

2.1.8.6 Collection and enforcement

When the taxpayer has not made payment on the due date, and does not object to the tax
assessed, tax authority can enforce payment in a number of ways. The Commissioner may
bring a suit against the taxpayer or request a person owing or holding money for the taxpayer to
pay the money on a specified date or institute distress proceedings against the taxpayer’s
moveable property. In a wider context, the issue of enforcement includes offences committed by
the taxpayer, and the penalties for these offences.

In general, the discussions so far focused on the review of the literature on the theoretical aspect
of tax administration. The following section presents the empirical evidence on tax
administration and their problems from the perspective of developing countries, Ethiopia in
particular.

17
2.2 Empirical literature review

Kangave (2005) discussed tax administration in Uganda’s context. It then discussed Uganda’s
tax structure, the problems faced in administering taxes, and it gave possible solutions to the
problems the author identified in his research. The author, in his research, identified corruption,
tax evasion, and inadequate resources for tax administration poor quality of audits and
inadequate support for tax administration as problems or challenges of tax administration that
have weakened the ability to achieve desired revenue targets The author did not purport to
address all of the problems. Neither does it set out to address in detail the causes of these
problems. Instead, it points out the problems.

Besides, the author recommendations for solving the tax administration problems were adopted
from the Canadian tax administration system. The researcher do not believe that the tax
Canadian tax administration system should not be taken as standard for measuring the
performance of tax administration system. In addition to this, the author used interview with the
tax officials and relied on secondary sources. However, author could have also gathered
responses from the target taxpayers to get additional information for his research.

James (1999) examined issues affecting the formulation of tax policy through the
development of actual proposals by tax policy-makers. This was done taking account of the
possibility that too narrow an approach to this process can produce misleading conclusions
and that proposals for tax reform may be inappropriate when the wider context of the tax
system as a whole and the environment in which it has to operate are considered. Two issues
ware used to illustrate the situation – tax compliance and tax simplification. The paper
concluded that in developing tax policy it is important to ensure that the wider context is taken
into account and it also outlines a practical approach to achieve this aim.

The removal of exemptions, loopholes, and concessions can simplify administration and reduce
evasion. Taking a systematic view of the tax system, rationalization, simplification, and the
removal of anomalies should have the effect of reducing the administrative costs of
identification, assessment, auditing and enforcement. The administrative simplicity of "tax
handles", however, while influencing tax policy, should not be allowed to dictate it.
Concentrating on just a few handles can lead to highly distortion structures (Burges and Stern,
1993).

18
The following part will be discussing the empirical review specific to Ethiopia related to tax
administration in the country.

There were studies on tax components and tax systems for different period’s indifferent regimes
in Ethiopia. Wogene (1983) tried to examine the contribution of taxation. He argued that
taxation and tax system was used as a tool for establishing the material basis of socialism. He
estimated the buoyancy and built-in elasticity of the total tax revenue and examined the
difference between the two measures to reflect the impact of the tax reforms on tax revenue for
the period 1975-1981. He used the constant rate structure method to separate the revenue impact
of discretionary tax measure. His result indicated that the tax reforms have significantly
contributed to increasing tax revenue in the country.

A study by Teshome (1979) also tried to see tax elasticity in Ethiopia. The author used built-in
elasticity method to examine the revenue effectiveness of the Ethiopia's coffee export
taxes. His empirical finding shows that revenue elasticity with respect to change in volume and
value of exports is unity i.e. The revenue was price inelastic. He thus concluded that the
present coffee tax formula requires constant revisions of tax laws whenever significant
changes in the price and /or volume of coffee exports occur.

The study by Wegene (1083) showed that for the period 1975-81 tax reforms had enabled an
increase in tax collection. This study employed the constant rate of adjustment method to
estimate elasticity of the tax system. Likewise, the study by Eshetu compared tax productivity in
the pre revolution, post revolution periods of Ethiopia, and found out that there was certain
improvement in the tax collection of the government in post revolution Ethiopia.

The study by Teshome, (1979) showed that coffee export tax in Ethiopia was inelastic while
study of agricultural tax share in capital formation by Kifie showed that tax collected
from this category was very small. Teame (1985); studied the overall productivity of the tax
system for the period 1968-83 and found out that the system had a buoyancy greater than unity
but an elasticity which is less than one from which the conclusion was that the tax system
was unstable and inflexible. This study employed the CRS and DV techniques of estimating tax
elasticity. Zelalem (1999) studied the productivity of the Ethiopian tax system for the period
1961 -1998.Thtimated the buoyancy and elasticity of the overall and major individual tax
categories p using the method of division index. The results of this study showed that the
Ethiopian system was inefficient for most of the coefficients were found to be less than one. The
19
exrlirrion given for the low productivity of the tax system was that the system suffered from the
problems of weak administration and extensive tax evasion. Generally, one can see that the
empirical studies undertaken thus far for developing countries, particularly for Ethiopia,
bothered little or no to see the potential challenges faced by taxpayers and the tax
authorities in administering different tax activities such as tax assessment and collection. The
performance of the tax administration will have a bearing on the capacity to raise
revenue for a country since it includes primarily the assessment and collection activities.
Therefore, this research will not only identify the problems of the Tabor sub city tax
administration and tax payers, but also the cause of these problems. Because the researcher
believes that identifying the root cause of the problems is the best ground to provide
appropriate solutions.

2.3 Meaning of Value Added Tax (VAT)

Different authors who wrote about the tax have defined value added tax ( VAT ), According to
encyclopedia Britannica VAT is “A sales tax designed like other sales taxes to tax private
consumption by individual of the goods or services subjected to tax” this definition failed to list
out other features that distinguishes VAT from other kinds of taxes. One can understand from
this definition VAT is a variety of sales tax and the tax is imposed on consumer. Black law
dictionary on its parts provides that “VAT is a tax assessed at each step in the production of a
commodity production on cost and its selling price “(Yohanes and Sisay, 2009 pp.66).
The VAT belongs to the family of sales tax a VAT way be defined as “a tax to be paid by the
manufactures or traders of good and service on the basis of value added by them” . It is not a tax
on the value of the commodity being sold but on the value added to it by the manufacture or
trader. They are not liable to pay the tax on the entire value of the commodity. But have to the
tax only on the net value added by them in the production or distribution (Dr. R. parameswaran,
2005, p. 105).
It is broad tax based because it is charge in different stage at production and distribution chain
rather than on – time imposition. It also affects sectors, that is, import manufactures whole seller
and retailer sector. VAT is family at sale tax sales tax is a tax imposed on a sale of goods or
services and computed as a percentages of the total tax collected at multiple stage. VAT is a self
assessed tax since the VAT liability is calculated paid by the tax payers (proc, No 285/2002).

20
2.4.2 TYPES OR KIND S OF VAT
The VAT can be determined in different forms. It may way depend up on the form of tax base.
The forms may differ on the items to be included in the tax base.
The common type of VAT is given below:-
A. Consumption VAT: in the type of VAT the firm is allowed to deduct from gross value of its
product not only the non- capital input purchased from other firm but also the capital equipment
purchased.
B. Production VAT ; in the production type VAT the value of the input purchased by the firm
from other firms is not dedicated in full only the value of non capital purchases in dedicated.
C. Income type: - according to this form the firm is allowed to deduct the depreciation the capital
goods (during the years) a part of the full value of its non capita purchase. Here, firms cannot
deduct the entire value of its capital goods purchased during the year but they can deduct the
respective amount of depreciation attributable to that year (Dr. R. parameswaran, 2005 p.106).

2.5 Value Added Tax (VAT) IN ETHIOPIA

In Ethiopia, registration for VAT is categorized in to two:-
2.5.1 Registration for VAT
i. obligatory registration
ii. Voluntary registration
I. OBLIGATORY REGISTRATION
Any person conducting a commercial enterprise or instancing to conduct commercial enterprises
or intending to conduct a commercial enterprise may apply to be registered for VAT. However
if the taxable turnover of the enterprise, which is gross income for 12 calendar monthly
exceeds or is likely to exceeds birr 500,000, the person conducting the enterprise must be
register for VAT with FIRA or. The Federal Inland Revenue. If the turnover is below birr
500,000 of business activity one may apply for voluntary registration (Gebrie, 2008, pp.201-
2002).
II .VOLUNTARY REGISTRATION
A person, who carried on taxable activity and is not required to be register for VAT, may
voluntarily apply to the authority for such registration. If he/she regularly is supplying or
rendering at least 75% of his good and services to registered persons (Gebrie , 2008, pp. 202-
203)

21
 2.5.2 VAT Refund
VAT registered person shall got refund if at least 25% of the value of a registered person in a
single transaction of substantially all of the asset of a taxable activity provide a notice in writing
signet by the transferred is finished with 21 days after the supply taken place is taxed at a zero
rate the authority shall refund the amount of VAT applied as a credit in excess of the amount of
VAT charged for the accounting period within a period of two months after the registered person
files an application for refund accompanied by documentary proof of payment of the excess
amounts. In the case of other registered persons the amount of VAT charged for the accounting
period is to be carried for word the next five accounting period is to be carried for word to the
next five accounting periods and credited against payment for these period and any unused
excess remaining after the end of this five month period shall be refunded by the authority with a
period of two months after the registered person files an application for refund accompanied by
documentary proof of payment of the excess amounts. Where the tax authority satisfied for
refund application in over paid tax the tax authority shall. First apply the amount of the excess in
reduction of any tax levy interest of penalty payable by the person under the customs
proclamation the income tell proclamation and excise tax proclamation. The repay any amount
remaining to the person amount to be refunded is more than 50 by. When registered person is
entitled to refund and the tax authority is satisfied but does not pay the refund within specified
date the authority shall pay the person the refund plus interest set at 25% over and above the
highest cam mercies lending interest rate that prevailed during the preceding quarter (Gebrie,
2008, p. 119)
2.5.3 Cancellation of registration
VAT registered person can apply for cancellation of registration
 If tax payer ceased to make taxable transactions.
 At any time after a period of 3 years of the date of his most recent registration for VAT if the
registration persons total taxable transactions in the period of 12 months then beginning
reasonable are expected to be not more than 500,000.00 birr.

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 CHAPTER THREE

METHODOLOGY OF THE STUDY

3.1 Types and sources of data

The types of data that used in this research shall be primary data. It will be collected from two
sources from tax authority officials and from the tax payers..

3.2 Data Collection Method

Primary data collected through questionnaire which includes closed and open ended question for
the tax payers as well as officials. The question will prepare for the tax payers included closed
end that have four alternatives. Three alternatives and with two alternative. On the other hand
some questions will be designed open and this type of question shall prepare to gather
information which is not covered by the close ended question the interview question will be
designed only for the tax collection official and this designed to gather information freely which
is not coverall by the close ended question the interview questions will be designed only for the
tax collection officials and this will be designed to gather information from the respective bodies
and to strengthen the data will collect from tax collectors.

The interview prepared to collect the data from the government employees of and sub city
including sub city of tabor development revenue agency.

An in depth interview conduct on face to face basis by using structured and instructed questions.

3.3 Sampling Techniques

This research sampling design included detail plan of the sample size. Sample area and sampling
techniques depending on the nature of the respondent. The study will be used to two sampling
design methods the cluster random sampling and the purposive method. The cluster sampling
technique will be used to select proper officials from whom relevant information will be
gathered. From the total population of the category “A” tax payers of tabor sub city, the sample
size will be determined. And then the sample population will also divide proportionally and
within the selection of individual sampling. On the other hand, the tax collectors will be selected
to gather proper and relevant information for this case purposive (non random) sampling
technique will be used on their responsibility one respondent from expert and one from the head

23
 from each sub city total population of this study will be the whole category “A” tax payers in
tabor sub city authority. The number of respondents will be determined wisely and properly
considered the affordable cost and the manageable number of respondents.

3.4 Method Of Data Analysis

The data analyzed to examine the consequences of tax assessment on tax collection of category
“A” tax payers if different constraints and the extent of problems of tax assessment on tax
collection.

- Means
- Ranges and frequencies will be calculated to describe and interpreted the data collected

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 CHAPTER FOUR

RESUALT AND ANALAYSIS

The previous chapter presented detail of the research design adopted in the study based up on the
methods mentioned in the research design this section the data obtained from the category “A”
tax payers and the tax officers of the tabor sub city this chapters tax assessment and collection
problems and factors that caused the problem this part has three section

4.1 Back ground information

Whereas section 4.2 presents the data obtained through self administered semi-structured
questionnaires and in depth interview finally section 4.3 presents the analysis of the data
presented in section

The tax administration in Ethiopia is divided on two levels as federal and regional. At the lowest
level area number of Kebeles in different regions. The tasks of Kebeles are assessment and
collection of taxes and other liabilities of category “C” the other are different sub cities that are
in change of tax assessment collection and based declared by category “A” and “B” tax payers in
their jurisdiction at the federal level ERCA is chard of collection revenues both tax and none tax
from different organization owned by federal government and from customs duties the study
focus here is tabor sub city in the sub city tax assessments and collections are carried out
according to income tax regulation No 78/2002 article 18 and value added tax proclamation No
285/2002.

Category “A” tax payers are those having separate legal personality in corporate under the law of
Ethiopia or in a foreign country or any registered business having annual turnover of birr
600,000 and over 9.

- TIN system is registering mechanism in which each tax payers is given a single
identification number to be used taxes 10.
- The TIN system encompasses personal and business of profiles or the tax payers
including full name address business information and related information of the tax
payer.
- The TIN system has the advantages of facilitating proper use of various systems and
enhancing the financial recording importers and or exporter hotels and restaurants

25
 wholesale and retailers lessons contractors, consultancy firms, academic institutions
insurance, companies ,butcher shop, travel agency, printing shops, and clinics and
hospitals transport fuel station stationary vegetables shops the main expected tax are:-
- Business profit tax value added tax rental income tax employment income tax from their
employee category “A” tax payers are require to submit balance sheet profit and loss
statement to the tax office within Hamle to Tikemit 30 of Ethiopian calander next the
auditors receive the document and then it is reassessed based on proclamation No
286/2003 and 311/2003 during the period of Hamile to Tikemit 30 and then assessment
- Notification will be distributed to tax payers for payment 9 income tax regulation No.
78/2002 art 18,10 income proclamation no 286/2002 article 43

4.1.1 Tabor sub city finance and Economic development bureau

Tabor sub-city fence and economic development Bureau is the tax authority which is delegated
to assess and collect both direct and indirect taxes from category ‘A’ and category ‘B’ tax payers
performing different types found in tabor sub-city. The office is found around belay taka …. In
Hawassa city. In the statutory authority of the tabor sub city the tabor sub city the tax assessment
collection and controlling care process office performs assessment of taxes and collection based
on income tax proclamation No 286/2002 and Hawassa city government character Proclamation
No 311/2003 which are delegated power to sub-city and Kebele for the purpose of efficient
provision of various social good and service. Tabor sub city finance and economic modern
revenue assessment and collection systems and provide equitable efficient and quality services to
tax payers. Who are considered customers and cause tax payer voluntary discharge their
obligation by enforcing the applicable tax laws. SIRM (standard integrated revenue
management) and (SIGTAS standard integrated government tax administration system) software
are applicable for regular tax assessment and collection.

4.1.2 The structure and promise of Tabor of sub- city finance and economic development
Bureau.

The organization structure is designed on the basis of different activities to be performed rather
than depending on the different tax types the Hawassa city administration has eight sub cities and
8 kebede including which Keble found around the city of these tabor sub city has 820 employees
including even Kebeles office worker

26
Fig 4.1 organization structure of tabor finance and economic development bureau sources tabor
sub city tax assessment collection and controlling core process office report. According to the
business process re-engineering Tax assessment and collection officer is accountable and
responsible for the data or documents presented by tax payer and collection the assessed amount
properly tax payer’s registration and indoor motion officer are responsible for registration of tax
payers based on the regulation of licensing by receiving necessary information and then passing
the document to documentation section. Tax assessment auditors of the required books and
supporting documents with regard to category ‘A’ tax payers to verify according to business
income tax regulation for the purpose of taxation. After statement are verified a copy will be
given to the tax payers and also send to documentation section which is based on the send to
documentation section which is based on the approval of income tax assessment collection and
controlling care process owner. Tabor sub city finance and economic development bureau
documentation officers’ section income intelligence and investigation officer and income law
accomplisher and controlling process.

4.1.4 Value added tax (VAT) administration

The introduction of VAT part of the overall tax reform program Ethiopia establishment of a new
ministry of revenue was the first step to improve tax collection and combat fiscal fraud precedes
the tax reform program in October 2001. A draft VAT legislation was submitted to the
parliament beginning January 1:2005 VAT was introduced in Ethiopia by VAT proclamation
No.285/2002 replaced sales tax its objective is to minimize the reduced tax revenue tax which
caused by attempt to evade tax by ascertaining the profit of the tax payer and to enhance
economic growth in the country VAT is applicable to tax payers that met the minimum there
should of Br 500,000 and above annual turnover and selected business activities like super
market contraction material distributors voluntarily. It is also applicable on those who perform
majority of their transaction with registration of VAT has started manually and then processed
through a locally developed in term VAT computerized system units standard integrated
government tax administration (SIGTAS) started operation in February of tax offices such as
registering tax payers. Issuing certificates payments and declaration and revenue and tax payers
accounting according to articles 22/07 the VAT proclamation all persons registered for VAT are
required to issue VAT invoices to the person who receives the goods or services which there
unregistered do not hove right to issue according to VAT proclamation No. 285/2002 Articles

27
registered person is required to file VAT return with tax office for each accounting period and to
pay the tax for every accounting person by the dead the for filling the VAT return.

As to article 26/2 the VAT return for every accounting period shall be filed not later than the last
day of the calendar month following the accounting period consumers need to make sure that
businesses that levy the tax are resisted as evidence by the registration certificate which is
expected to be posted visibly on the stably premises the should receive receipts for the goods and
services the purchase and they have to make sure that the receipts clearly indicates the VAT
registration number and the taxable items; in this context the tradition of receiving receipts by
customers was not given due attention which lead the registered business of receiving receipts by
costumers was not given due attention which lead the registered businesses to use the money
collected in the form of VAT for their own expansion, however to some extent a cash register
machine distributed to few taxpayer is believe to reduce such problems every registered person is
required to file as VAT return with the authority for each accounting period whether or not tax is
payable in respect of the period. The VAT return for every accounting period shall filed not later
than the last day of the last day of the colander month following the accounting period.

4.1.5 Rental income tax administration

Tax on income form rental of building is the tax imposed on the income form rental of building
if the tax payer leased furnished quarters. The amount received off rebuttable to the leas of
furniture and equipment would be include in the income and taxed, the owner of building who
allows al to sub- lease liable for the payment of the tax for in the event the sub – leaser fail to
pay when the construction of rental building is completed when the busing is rented the owner
and the building are required to notify the administration of the Kebele in which the building is
situated about such completion and the name address and the tax identification number of the
person or persons subject to tax on income from rental of building the Kebele administration has
the obligation to communicates the information obtained to the appropriate tax authority- tax on
income from rental of property is tax on income derived form casual rental of property
(including any land building or moveable asset) not retiled to business activity. This types of
income is subject to tax at a float rate of 15% of the annual gross income.

28
 4.2 survey result

The objective of this study is to investigate tax assessment and collection problem in respect of
category ‘A’ taxpayers residing in Tabor sub city in order to achieve this objective ninety self
administered semi structured questionnaires were distributed to selected taxpayer

Table 4.1 – the response rate

- Particular
- Frequency
- percentage

Sex Respondent Non respondent Total

Male 56 34 90
Female 62 38 100
Source tax payers survey form the semi structured questionnaires distributed 62% of them
returned questionnaires where as the remaining did not (table 4.2)

Table 4.2 general of respondents

- Gender
- Frequency
- Percentage

Gender
Male Female Total
12 43 56
24 76 100
Sources taxpayers’ survey of the fifty six responded around 76% of them were men and 24%
were female
Table 4.3 respondent business sector
- Business sector
- Frequency
- Percentage
Importer and exporter Manufacture Whole sealers and Service provider Total
retailers
8 9 22 17 56
14 10 39 31 100
From this importer is 14% exporter is 14% manufacture is total 32% service provider 61

29
 CHAPTER FIVE

5. Conclusion and recommendation

The main objective of this project have been to investigate tax assessment and collection
problem in respect of category ‘A’ taxpayers found in Tabor sub city of Hawassa Both survey
and in depth interview techniques were employed to investigate exiting problem in tax
administration of the selected sub city based on the presentation and analysis of the data obtained
form the main conclusion and recommendation are summarized in this chapter.

5.1 conclusions

The result of the in-depth interview carted out showed that sub city tax offices has faced different
financial operational and administrative problems and challenges to handle the tax payers. It may
be considerate as the implemented tax collection and assessment system is not successful.

That is there exist inefficient and insufficient number of tax assessment and collection officers
on the Tabor sub city finance and economic development Bureau furthermore, there are
corrupted tax officers in the sub city training is considered an over head activity which does not
justify much attention or resources. There are fewer or no training professional on staff.

The emphasis of staff training is on teaching the content of tax law as opposed to applying the
law little of not attention as paid to skills techniques procedures, customer relation or managerial
training during my observation the tax collection system of the sub-city is man any it is not well
organized while there are different alternatives to pay their debts easily tax collection system
have faced by man challenges.

The tax office does not offer sustainable training to crate tax awareness by tax payers father
more the office does not procedure report for separate annual plan of collection in each category
of tax payers based on the survey results. The study found that there exist lack of tax knowledge
by tax payers most of them do not know rule and regulation of different types of taxes of taxes
the pay. Due to this negligence delay in tax payments and evasion are taken by tax payer as
solution to escape from payment of taxes. In addition newly implemented system of using each
cash register machine is causing challenged to tax payers. Power failure is the major problem
mentioned that caused this problem besides tax payer do not reared their problem mentioned that
caused this problem besides taxpayer do not record their book timely and do not summit their

30
book of records timely for assessment furthermore, tax payers do not pay their taxes on time due
to negligence and the prevalence of unfair competition has led to less voluntary compliance
generally tax payers and tax offices have tax administration problem of different nature the
following section present different recondition as to which observed tax administration problem
can soled

5.2 Recommendations

This section presents the appropriate suggestion that can be unitized to minimize the tax
administration problem in Tabor sub city.

An efficient and paper tax administration is required by setting clear and transparent rule and
regulation beside all these tax offices should be equipped with new technology and adequate
skilled human resources the tax authority must maintain adequate management information
system so that tax payers must be receiver clear. Concise and up to date information on
describing what is to taxable how to calculate their tax liability and procedures for calculating
taxes where and when they pay taxes. The tax office should offer sustainable training and
prepare discussion or forum for collaborator such as legal bodies city administrator and security
bodies as they have direct or indirect tax contribution for the implementation of the tax besides
extensive work must be done by the tax office to gather information and register tax payer who
have refused to be registered more over it should also identify tax payer who present under
invoicing commit sale without invoice and extra ordinary credit declaration accordingly there
should be continuity on the aridly started activities of giving feedback and awareness vastly to
the community. Sound use of such information technology approach as with lading information
reporting web- based client focused interface with private sector and value chain.

Analysis and monitoring all activities going on in both private and public sectors can be
enormously effective in reducing corruption curbing evasion and improving revenue Yield to be
effective however such technological need to be implemental effectively. The core process
should establish approximate procedure and system of tax collection and assessment procedure
and assigning relatively best and capable professionals the management of the revenue authority
should work toward bringing the team authority should work toward bringing the team sprit by
solving internal problem. The care process must also give high attention on employee training
and personal development. To cap up the new science and technology.

31
The tax office must also maximize its capacity so that taxpayers complaints in respect of chase
register machine are solved quickly. Furthermore tether than delegating of the tax providing
support for machine to the supplier the tax officer must be equip its employ about the technical
knowledge so that they do the activities by themselves.

32
 Reference

- Asian development Bank (2001) tax conference challenges of tax administration and
compliance.
- James, tax compliance and administration (1999) in Hadn book on taxation edited by W.
Bartely
A Richardson (new yorki marcel Dekker inc)741-768
- Bird and casanegra dejant scher eds Tax administration in developing country
(Washington international monetary found)
Manfested 1990 “tax reform in developing countries the administrators Dilemma
Bulletin for international Bureau of fiscal documantatin Vol 44 No 1 pp 137-43
- Gorman candian income tataxion policy and practice policy and practices 2 nd Tornto
2001, 591
- Kangave 2005 Improving tax case study of the Uganda revenuew authority law 145-176
- Tanzivito and zee interview with H.E Getachew Belay EBIZGUDES Julay 2003
- Kandor (1980) the rule of taxation in economic development essays on economic policy I
duck worth Landon
- OW A.s.s (1992) developments in tax administration insigaphore 9th Asian
Pacific tax conference Asian Pacific
- Tax and investiment regearch center Singapore in Jenkins (1994)

33
 Appendix A

Hawassa University

College of business and Economics

School of Management and Accounting

Department of Accounting & Finance

Part one Tax assessment and collection problem of category‹‹ A›› tax payers Questionnaire

This questionnaire is prepared by a prospective graduating student from Hawassa University to

identify Tax assessment and collection problem of category‹‹ A›› tax payers.

The outcome of the study will help to suggest possible solutions from the problems observed.
You are kindly requested to response the questions as reasonable as possible. The researcher
assures you that the response it kept confidential and for academic purpose only.

Thank you in advance for your cooperation

General directions

Dear respondent, for the questions followed by choice write a mark (X) in the space provided.

A. Information regarding respondent’s background

1. Gender male female

2. Age 18-25 year 26-30 years

31-35 years 36-40 years

Above 40 year

3. Your educational background?

PhD Special training

Masters-degree High school

Bachelor-degree Diploma

Other, please specify ____________________________

4. In which Keble do you operate your business?

Keble Name of village

34
B. The questionnaire concerning about the tax and tariff
5. Do you pay tax at time?

Yes No
6. If you say << yes>> how many you pay at a time?

7. Do you know why you pay tax and tariff?

Yes No
8. What are the main problems that limit you to pay tax at time?

A. is lake of income C. is domination of Author

B. is lockdown D. is corruption related with authority

E. lack of modern tax payment system

9. Do you have certificate of VAT in you trade? In your services? In your company?

Yes_____ No______

10. If you say <<yes>> for Q No 09.

What are benefits of VAT?

C. Merchant activities concerning tax & tariff

11. Do you think tradition taxpaying system is good or modern taxpaying system is good?
Yes No

12. If you say yes for Q No 10 what is case the best way (put in mark)?
A. by saving time
B. limiting corruption

13. What are the domination for the merchant at collection of tax and tariff?

A. is amount of tariff

B. is season of paying taxes

C. is cost of machine of recording tariff

35