| Abstract: | Tax administration in Ethiopia, like other developing countries, is characterized by low tax compliance level. This has been resulted in a reduction of revenue yields and public services. The overall objective of this study was to identify determinants of tax evasion. The study was conducted using a formal survey in which a total of Out of 456 questionnaires were distributed to randomly selected category “A” and “B” taxpayers in two strata in a 7,671 study population from the distributed questionnaires 361 were returned. The primary data was collected through structured questionnaire from category “A” and “B” taxpayer of Addis Ababa City revenue authority, Gulele Sub city Branch Office. Secondary data such as, branch office report also used for the study. The collected raw data was analyzed using descriptive and inferential statistics. The regression analysis showed that tax rate, income level, probability of detection, penalty rate, complexity of tax system, perceived role of government, peer influence on tax evasion, age, gender and education factors are statistically significantly affected. The research also suggested that efforts to be made by branch office with regard to revisit the perceived high tax rates, engage in national campaign to raise awareness and increase knowledge about the benefits of voluntary compliance, enhance the percentage of audit coverage of taxpayers, penalize defaulters, simplify tax laws, close tax law loopholes, and, train tax examiners. |
