ASSESSMENT OF VALUE ADDED TAX ADMINISTRATION - THE CASE OF ADDIS ABABA No.1 MEDIUM TAXPAYERS BRANCH OFFICE

Abstract

The general objective of this research was to assess the current VAT Administration activities of the Addis Ababa No. 1 Medium Taxpayers Branch office. To achieve this objective, the researcher used both qualitative and quantitative descriptive research designs and a sample of employees and tax officials of the authority were selected using simple random sampling method were used to select appropriate and representative sample size from the branch employees and tax officials as result ,from 340 employees 60 samples were selected whose activity is directly related to the Value Added Tax assessment ,VAT collection, audit ,refund and enforcement. The researcher used questionnaires, Interviews and relevant documents to collect primary and secondary data from the branch by reviewing documents from annual reports. Graphs, table, Percentages were used in analyzing the collected data (findings). Secondary data were obtained from the; audit, enforcement and refund performance reports of the branch. Tables, percentages and graphs were used for data analysis. The Statistical Package for Social Sciences (SPSS) version 23 was the tools used for quantitative data analysis. From the outcome of the study the major obstacles that hinder VAT Administration are low rate of voluntary compliance, lack of taxpayer’s awareness, shortage of audit and refund process, and affect the follow-up and controlling activities, relatively low rate of audit and enforcement, and late payment system. The business communities they should perform their activities according to the current VAT laws as well as start to work in cooperation with the authority in fighting against those tax payers that are violating the rules and regulations of VAT. The paper suggests that in the branch, attempting to implement what is legislated in the main areas deserves the Government’s due attention. The study also emphasizes the need to strengthen the administration capacity in general and the VAT administration system in particular as efficiently as possible. The empirical analysis disclosed that VAT contributes significantly to the increase of the total government revenue and the economic growth of Addis Ababa City at large. Therefore, the following points are recommended. Develop taxpayer’s awareness to increase voluntary compliance, refund process and strengthen audit and enforcement capacity of the branch office.