ASSESSMENT OF VALUE ADDED TAX ADMINISTRATION PRACTICE: THE CASE OF LIDETA SUB CITY SMALL SCALE TAX PAYERS BRANCH OFFICE

Abstract

The objective of the study is to assess VAT administration practice in the case of Lideta sub city small scale tax payers' branch office. The study used both qualitative and quantitative research methods to collect and analyze both primary and secondary data. The target populations of the study were the staff members of the Lideta sub city small scale tax payer’s branch office. In the branch office there were 222 total workers out of this 100 of them were workers who are directly or indirectly involved in VAT collection and administrating department, the others are staff members. The study used purposive and convenient non-probability sampling technique to select representative sampling from the 100 workers. Accordingly, the total sample size considered by the researcher was 80. The information gathered from employee's attitude towards VAT administration problems, and factors. Questionnaires were distributed for eighty employees of the branch office and to analyze the data, descriptive data analysis technique and statistical package for social science (SPSS) software version 20 was used. Further, secondary data was collected to measure the VAT administration practices of the branch office. The major factors for the problem in VAT administration practices are:- consumers are not willing to transact with a proper VAT receipt, lack of sellers commitment on VAT sell, tax authority Poor tax enforcement capacity, unfair competition between VAT registered and unregistered tax payers, lack of employees skill and experience to detect any tax fraud and evasion, employees lack of awareness on VAT proclamation,. The paper suggests that branch office should create continuous awareness about VAT and receipts for the customers and sellers, in order to overcome the complexity and frauds related to of tax collection. The branch office could also upgrade the skill and competency of tax officials in order to handle tax related offences in a better way. Finally, the concerned body may take these findings worthwhile for corrective action as the researcher put some helpful recommendations.