CHALLENGES OF TAX ADMINISTRATION IN ADDIS ABABA CITY ADMINISTRATION: THE CASE OF ARADA SUB CITY SMALL TAX PAYERS BRANCH OFFICE

Abstract

The main objective of the study focused on assessment of tax administration challenges in Addis Ababa Revenue Authority: The Case of Arada Small Taxpayers’ Branch Office. To achieve the objective, the mixed research approach was employed and sample data was collected from 100 Small taxpayers. A questionnaire and indepth interview was used to collect the data. Interview guides were designed to collect relevant data from tax officials and experts of the branch office. The study found that taxpayers’ were disagreed on the effort of tax office to Promote tax compliance; compliance cost; tax audit risk selection method ; Presence of responsible tax employees; fairness of tax assessments ; tax collection practice; practice of e-filing and e-payment; tax law clarity and simplicity; awareness creation programs, capacity of tax law enforcement; capacity of tax office on penalizing the big tax defaulters; tax office rewarding and motivating system for hard working employees and compliant taxpayers; Tax employees willingness to assist, help and cooperate with taxpayers positively. Moreover, the study also found that, low level of tax compliance of taxpayers; poor tax service delivery; weak tax law enforcement; Incompetency of tax employees; un faire tax assessment and poor tax collection practice; network and power problem, Weak taxpayer education and Staff ethical problem were identified as major Challenges of tax administration in Arada Small Taxpayers Branch Office. Therefore, it was recommended that tax office should enhance taxpayers’ compliance, make the tax service deliver modern, fair and fast; strengthen its tax law enforcement capacity; improve competency, skill, knowledge and attitude of tax employees by solving the challenges strategically. Finally, a due attention should be given to the challenges of tax administration in the tax office.