Assessment of Tax audit practices and it’s Effect in Increasing Governments Revenue in Ethiopia A case study in Ethiopian Revenue & Customs Authority Large Tax Payers Office

Abstract

This paper seeks to explore the effect of Tax audit in promoting tax revenues growth in Ethiopia in the broader perspective. Survey questionnaires as primary data collection instruments were distributed to selected audit officers and some management members of Ethiopian Revenue & Customs Authority equalling to 120 staff and followed by descriptive research design and Secondary data included reports from Ethiopian Revenue & Customs Authority, Large Tax Payer Office from 2002 to 2007 EC and followed by analysis of SPSS software. The results of this research work indicate that, even if the practices of Tax audit are prerequisite for growth of Governments revenue, but the case of ERCA,,LTOs relationship between Amount before audit & Amount after audit is not Statistically significant. This doesn’t mean that they really don’t have correlation; rather it implies that the strength of the relationship is not significant or strong. In conclusion, weaker trend in awareness raising activity for tax payers, Manual based Tax Auditing system and high turnover of experienced tax auditors due was considered as findings in the areas of the Tax Audit activity, which have direct impact on reduction of Tax revenue. The result of this research shows that further studies are needed by maximizing the population including other branches and it has also have the potential to contribute theoretically to public finance but also to the area of institutional performance.