TAX AUDIT EFFECTIVENESS IN ADDIS ABABA, ETHIOPIA: TAX AUDITORS' PERCEPTIONS IN ETHIOPIAN REVENUES AND CUSTOMS AUTHORITY (ERCA) EASTERN ADDIS ABABA BRANCH OFFICE

Abstract

The main purpose of this study is to investigate the tax audit effectiveness in Addis Ababa City on Ethiopian Revenues and Customs Authority (ERCA) Eastern Addis Ababa Branch Office tax auditors’ perceptions. The researcher used the ability of tax audit staffs to track tax infringements as a measure of tax audit effectiveness. In light of this objective the study adopted explanatory research design and quantitative method of research approaches to test a series research hypothesis. Eighty nine structured questionnaires were constructed and distributed to the total population of the tax audit staffs, who are working in ERCA Eastern Addis Ababa Branch Office tax audit department. Data was then analyzed using Pearson’s correlation, multiple regression analysis and descriptive statistics quantitatively; and a mixed research approach was employed. The results showed that there is positive and statistically significant relationship between information system, experience and training with tax audit effectiveness. But tax legislation is negatively and statistically significant relationship with tax audit effectiveness. The results of the study calls for the direct policy intervention, including simplification of tax legislation, and better training of tax audit staffs in the use of information systems.