Analysis of Tax Compliance and Its Determinants: Evidence from Kaffa, Bench Maji and Sheka Zones Category B Tax Payers, SNNPR, Ethiopia

Abstract

Despite the fact that tax is an important stream of revenue for government of any country, there is tax avoidance and tax evasion which are constraints serving as a bottlenecks for efficient tax collection performance. Therefore, this study examines tax compliance and its determinants in Kaffa, Bench Maji and Sheka Zones category 'B' business income tax payers, Ethiopia. To do this, data was collected with the aid of structured questionnaires, administered to 311 respondents using proportionate simple random sampling procedure. The data was examined with the use of descriptive statistics and econometric model particularly ordered logit model. The result of ordered logistic regression showed that, among different variables tested, tax compliance was positively affected by education level of tax payers, tax knowledge and awareness of tax payers, simplicity of the tax system, attitude of tax payers towards tax, perceived role of government expenditure, and rewarding scheme for loyal tax payers. It is therefore recommended that the tax authority ought to conduct effective and sustainable awareness creation programmes and tax education to the general public in general and to tax payers in particular through printed and electronic medias and face-to-face cessions. The tax authority should also simplify the tax system particularly the tax return, tax forms and tax laws so that they become easily and clearly understandable to tax payers. Moreover, the government should consider provisions of trophy in terms of tax rewards and inducements to honest and dedicated tax payers. Lastly, the government shall maintain accountability and transparency on how the revenue collected from taxation was being disbursed and provide social services efficiently and effectively to the society so that tax payers will have trust and positive attitude towards the tax that they pay and b the tax system.

Tax Awareness, Taxpayers’ Perceptions and Attitudes and Tax Evasion in Informal Sector of Ekiti State, Nigeria

“…The three dimensions of the taxpayer"s attitude towards tax evasion were measured using the instrument developed by (Eriksen & Fallan, 1996) and used by other authors (Alabede et al, 2011). On a Likert scale 1-5, the responses below three (3) are regarded as negative attitude while responses from above 3 to 5 are regarded as a positive attitude Similarly, Taxpayers awareness was measured on a five-point Likert scale using five items derived from the instruments of the previous authors (Assfaw & Sebhat, 2019;Lodha et al, 2017;Zhang et al, 2016). In like manner, Taxpayers perception about government spending and Tax evasion was measured on a five-point Likert scale.…”

“…The economic development of any nation is contingent on the revenue"s generation and its availability for both capital and recurrent expenditure (Assfaw & Sebhat, 2019). In Nigeria, tax revenues mainly come from the formal sector (companies, organisations and salaries earners) while the informal sector has been widely neglected.…”

“…That is why evasion of tax is linked directly to the budget deficit and hence the lower revenue collection as well as investments in public goods. Tax evasion can be said to be inimical to a country's growth (Assfaw & Sebhat, 2019;Mansor & Gurama, 2016).…”

The Effect of Taxpayer Religiousity, Tax Amnesty, and Tax Sanction on Taxpayer Compliance with Medium Small Micro Business Taxes (Msmes)

“…According toBenk, Slaves, Yüzba, & Mohdali (2016) taxpayer religiosity can affect taxpayer compliance. Religiosity has a positive effect on tax morale and taxpayer compliance voluntarily in paying taxes (Wahl et al, 2010) In Indonesia, tax compliance is in the low category when viewed from the high level of development of business entities, especially in micro, small and medium enterprises (Sebhat & Assfaw, 2019). According to data from the Ministry of Cooperatives, Small and Medium Enterprises in 2018, the number of MSME players was 64.2 million or 99.99% of the total business actors in Indonesia.…”

Self-Assessment, Tax audit, Tax knowledge and Tax Compliance a Structural Equation Model (SEM) Approach

“…Consequently, tax compliance behaviour has been the subject of research in developed and developing nations (Assfawa, & Sebhatb, 2019). In trying to address the menace of tax evasion and avoidance, different countries like Australia, the United States of America, the United Kingdom, Malaysia and Nigeria have introduced self-assessment over government assessment for voluntary compliance, as well as effective and efficient tax administration.…”