Key factors determining tax compliance in federal small tax payers፡ Evidence from Ministry of Revenue’s west Addis Ababa federal small tax payer’s branch office

Abstract

The aim of this study is to assess key factors determining tax compliance behavior of small tax payers at the federal level by focusing on the Ministry of Revenue West Addis Ababa Small tax payer’s branch office. For making a good analysis which gives a sound result both descriptive and explanatory research design were used. In order to best achieve the objectives of the study, the study was employed both purposive and convenience sampling techniques to collect data from the tax payers. From unit 613 taxpayers that are identified as high risk tax payers were taken as a population and 237 respondents were selected by using sample size determination formula. To analyze the data both descriptive and inferential statistics were employed to analyze and interpret the data. From the descriptive analysis result most of the determining factors (Tax administration and tax fairness, knowledge of the tax law, penalty and strength and service delivery of the authority) were poorly implemented. The regression analysis should that tax compliance behavior has significant as well as positive relationship with perception of Tax administration, tax fairness, knowledge of the tax law, strength and service delivery of the authority, However penalty has insignificant and positive relationship with tax compliance. The study was recommended improving taxpayers' tax knowledge and altering taxpayers' attitudes through long-term tax education initiatives.