FACTORS INFLUENCING EMPLOYMENT INCOME TAX COMPLIANCE AMONG WOREDA 12 PRIVATE BUSINESS ORGANIZATIONS: THE CASE OF BOLE SUB CITY,ADDIS ABABA, ETHIOPIA

Abstract

Income tax evasion is a significant problem faced by most of the countries around the world including Ethiopia. The phenomenon interferes with economic efficiency, socially desirable income distribution, long term economic growth, and price stability. Therefore, a reform strategy to increase tax compliance with a concerted, long term, coordinated, and comprehensive plan is required. It is also vital that tax administrators ensure that every compliance policy instrument at their disposal is use as effectively as possible. The title of this study was factors influencing employment income tax compliance among woreda 12 private business organizations in bole sub city. The main objective of the study was to assess the major factors for employment income tax payment among private business organizations. Regarding the method of the study was The total target population from private business organizations (manufacturing and service) in the whole woreda for the purpose of this study were about 14,211. Given this information the minimum sample size of employees for reliable results is found to be 154 based on standard formula obtained from literature. The researcher distributed 154 questionnaires and all filled and returned. The study was utilized frequency descriptive statistical tools and binary logistic regressions to analyze the data collected. The result obtained revealed that false information about monthly income, unfair tax rate, penalty for tax delay, group influence, dishonest tax collectors, inconvenient time, complicated tax procedure and. negligence, As a conclusion of the study, lack of knowledge/awareness about rules and regulations, lack of ability to pay were the major responsible factors affecting tax compliance, lack of adequate and skilled man power in the woreda, absence of suitable and transparent system affects tax payment practices in the woreda. However, gender, age and perception towards the role of government have no significant impact on tax fulfillment behavior. Based on the result recommended as Taxpayers‟ education and training are very essential in promoting compliance, Improving the efficiency of tax administration, shall be given due attention by policy makers andThe tax authority also requires to arrange regular high quality training system for taxpayers .