TAX AUDIT PRACTICE IN ETHIOPIAN REVENUE AND CUSTOMS AUTHORITY: CASE OF ADDIS KETEMA SUB CITY

Abstract

This study examines tax audit practice in Ethiopian Revenue and Custom Authority (the case of Addis Ketema Sub City), and investigates key problems in tax audit operation regarding the appropriateness of audit type used, audit rate, aptness of audit case selection methods and audit examination techniques used, and the experience and capability of audit staff resources. The study adopts mixed method approach in order to achieve the research objectives and to answer research questions. Specifically, the techniques used in the study include survey with tax auditors and team leaders, in-depth interviews with the section headof tax audit and department of risk management and documentary analysis. With these research methods, the results of the study reveal that tax audit program remains undeveloped with slight range of tax audit activities performed targeting aptly specific risks. The tax audit program is a toddler tool in improving voluntary compliance and increasing future revenue performance through educating and helping taxpayers to understand their tax obligations. The study also shows low audit coverage, the inadequacy of compliance risk-based audit case selection strategy, scarcity of audit resources, tax auditors in particular, and absence of proficient and experienced tax auditors. In the end, the study forwards the possible measures to be taken by the Ethiopian Revenue and Customs Authority of Addis Ketema Sub City to mitigate problems in tax audit operation.