PRACTICES AND CHALLENGES OF VAT ADMINISTRATION IN YEKA SUB-CITY OF ADDIS ABABA CITY ADMINISTRATION: THE CASE OF CATEGORY “A” TAX PAYERS

Abstract

This study examines Practice and Challenges of VAT administration in Yeka Subcity Addis Ababa Administration (the case of Category “A” taxpayers), and investigates particularly in VAT administration operation regarding the VAT registration practice, VAT assessment practice and VAT collection practice. The study adopted a cross sectional design which has quantitative and qualitative in nature. It involved descriptive research designs. The study sample comprised of 274 category “A” taxpayers of which 148 responded which was 91.35% response rate. The data was tested for reliability, and analyzed using data analysis tools SPSS 20 program, tables, percentages, frequencies, excel and results presented based on the study objectives. The techniques used in the study include survey with taxpayers, interviews with tax officials. With these research methods, the results of the study reveal that practice and Challenges of VAT administration practice have some pitfalls like decreases the tax revenue of the country, discouraging the business entering to the trade and encourages corruption, the study forwards the corrective measures to be taken by the tax administrators and taxpayers to mitigate some problems in VAT administration. Some of the results are: there is a problem of staff experience on rules regulations and new amended proclamations and the tax officials are less confidential because of job insecurity because some of the employees were fired without any material mistake as a result the majority of the employees particularly VAT assessment and collection officers are in frustration and aggressive in administering and there is no training at all for all tax officials , there is no consistent Vat rules and regulation , there are also intelligence and investigation officers they exercise their duty wrongly that means they add frustrations by looking and informing immaterial things i.e. tax notifications to anticorruption commission due to this fact tax officials develop less confidence and they leave their work, and the tax appeal committees are not professionals and they do not now the tax rules and proclamations due to this taxpayers are not satisfied enough