| Abstract: | This study assess the tax audit practices in the case of lideta sub city small tax payer’s branch office, and focused on key challenges in tax audit operation regarding the effectiveness of audit program in terms of improving voluntary compliance and tax revenue performance, audit coverage achieved, audit case selection methods used, examination techniques applied, and availability of audit resources, proficient and experienced tax auditors in particular. The study adopted mixed research approach in order to achieve the research objectives and to answer research questions. The techniques used were questioner from tax auditors and taxpayers, in-depth interviews with tax officials, and documentary analysis. The results of the study reveal that gap of understanding tax rules and regulation, absence of proficient and experienced tax auditors, scarcity of audit resource, tax auditors in particular, weak audit performance, lack of tax payers culture, weak accountability, lack of clear available information which are used for tax auditing activity. Therefore the tax audit practice in the branch is very much discouraging. |
