| Abstract: | This study examines Problems of Tax Audit of Categories “A” tax payers: a case of manufacturing companies in Kirkos Sub City”, and investigate key problems in tax audit operation regarding the appropriateness of tax audit type used, effectiveness, convince of audit case selection methods and audit examination types used, and the experience and capability of tax auditors and investigators. The study adopts mixed methods approach in order to achieve the research objectives and to answer research questions, specifically , the techniques used in the study include survey with Manufacturing companies tax payers, tax auditors and investigators, open ended questioner and close ended questioner with tax officials and manufacturing companies tax payers. With these research methods, the results of the study reveal that the tax payers’ confidence on tax auditor, investigator is unsatisfactory and tax audit program remains undeveloped with tax audit rule, law and instruction performed targeting aptly specific risks. The tax audit program is a toddler tool in improving voluntary compliance and increasing future revenue collection through educating and helping manufacturing companies’ tax payers to understand their tax obligations. The study also shows no fairness tax audit coverage, the absence of compliance risk-based tax audit performance, scarcity of tax auditor behavior, tax auditor professional competent. In the end, the study forward the possible measures to be taken by the manufacturing companies’ tax payers and ERCA to mitigate problem in tax audit |
