Factors Affecting Tax Revenue Performance In Addis Ababa City Administration Revenue Authority at Markato # 2 Branch Office.

Abstract

The major objective of this study was to assess the factors that affect Tax Revenue performance in Addis Ababa city Administration Revenue Authority at merkato No.2 Branch Office. The study employs quantitative method which constructing from secondary data (from report and plan). The choice for quantitative approach was based on the fact that, the researcher is able to gather broad and quantifiable data. Further, the findings of these studies were represented by descriptive forms and statistical presentation. The data collected for the key variables of the studies analyzed using multiple linear regression analysis with the help of Eviews 8 and statistical package for social scientists (Stata) application software. As a result of Descriptive Analysis indicates the Tax revenue performance 320.10 million Birr in 2009/2010 to 760.7 million Birr in 2018/19 representing a 139% increase in tax revenue in 10 years. And the correlation Analysis result indicates the Tax Audit and education of Taxpayers have positive relationship with tax revenue performance having correlation coefficient value of 0.91 and 0.95 respectively). While Taxpayers registered for VAT has negative relationship with Tax Revenue performance having correlation coefficient of (-0.79). Thus, the two variables (Tax Audit and education of taxpayers) with positive correlation increase tax revenue performance, and Taxpayers registered for VAT with negative correlation are reduced tax revenue performance. In additions, the Multiple Regression Analysis result shows Tax Audit, education of Taxpayers and Taxpayers registered for VAT are significantly affect the tax revenue performance. According to The results we reject the null hypothesis and we accept the alternative hypothesis. Because the p-value of the all independent variable less than α=0.05.so we can conclude that the Tax Audit, education of Taxpayers and Taxpayers registered for VAT are significantly affect the tax revenue performance at level 0.05 significant. Key recommendations of the study are:-The Tax Authority should increase the number capable audit staff and provide them sustainable training for his employs and better to provide &education to tax payers on how to keep records (Revenue and expenditure) In addition to the above, it will be nice if they simplified how to registered to VAT and their benefits from VAT to achieve and improve overall compliance and future tax revenue performance.