FACTORS AFFECTING TAX COMPLIANCE UNDER ELECTRONIC TAX SYSTEM: THE CASE OF LARGE TAX PAYER’S OFFICE IN ADDIS ABABA

Abstract

The Ethiopian Ministry of Revenue Authority has taken major tax reforms initiatives to modernize tax system and to increase revenue capacity. The electronic tax system is one of the initiatives implemented recently. The main objective of the study is to investigate the effect of perceived usefulness, ease of use, tax awareness, compliance cost and system stability on tax compliance under electronic tax system in context of Large taxpayer office in Addis Ababa. The study used survey explanatory research design in which quantitative primary data had been collected using structured closed ended questionnaires. A random sampling technique is used `to select a sample size of 154 respondents from 630 registered large taxpayers at LTO. Data form respondents had been described and correlation and regression analysis had been conducted using SPSS (24) Software. The study confirmed that amongst the independent variable perceived ease of use; tax awareness and system stability had a statistically significant effect on taxpayer compliance under electronic tax system. The coefficient of determination (R Square) indicates the variance on the dependent variable attributed to the three independent variables. In this context, the coefficient of determination (R Square) of 0.715 indicates that the three independent variables contributed to 71.5% of the variance in the dependent variable further indicated the strength of the variance in tax compliance can be predicted from perceived easy of use, tax awareness and network stability. Relevant recommendation made to the tax authority to take appropriate policy intervention to boost taxpayers’ compliance and revenue collection capacity