| Abstract: | The objective of the study is to assess VAT administration practice and revenue performance with respect to the challenge and opportunity in the case of lager tax payers' branch office at Ethiopia Revenue and Customs Authority. The paper further assesses to showing the share of VAT income in related to total government revenue. The study used both qualitative and quantitative research methods to collect and analyze both primary and secondary data. The information gathered from LTO taxpayers and employee's attitude towards VAT administration problems, compliance level of the taxpayers to VAT rule and regulation and tax authority potential to administer VAT. Questionnaires were distributed for eighty and fifty VAT registered taxpayers and employees of the branch respectively and to analyze the data, statistical package for social science (SPSS) soft ware version 20 was used. Further, secondary data was collected to measure the VAT revenue performance of the authority. The major challenges of the authority in the collection of VAT revenue were: - consumers are not willing to transact with a proper VAT receipt, tax authority Poor tax enforcement capacity, unfair competition between VAT registered and unregistered tax payers, lack of skill and experience to detect any tax fraud and evasion, tax authority lack of potential to refund excess VAT credit, administration system of penalty is weak and lack consistency. The paper suggests that ERCA should improve the information technology (IT), system to implement like filling ,payment system, recording system ,registration and others related issues in order to overcome the complexity of tax collection and to reduce the administration cost. The tax authority could also upgrade the skill and competency of tax officials in order to handle tax related offences in a better way. Un-registered taxpayers can affect VAT payer's transaction and profitability Therefore, It also suggested that actions should be taken to narrow the gap between them. Finally, the concerned body may take these findings worthwhile for corrective action as the researcher put some helpful recommendations |
