Assessment of Value Added Tax Administration (Case of Dilla Town, SNNPR) For the partial fulfillment of MBA in Finance

Abstract

Tax administration is a component of public administration designed to control the processes and operations of public revenues in accordance with new public management approaches which focuses on efficiency, performance measurement and requirements of good governance.VAT is one of the indirect taxes levied on consumption where the value of goods and services increases as they charge hands in course of production, distribution and final sales to the uniform rate of 15% on most consumption of goods and services. Since VAT is applied on the value added at each stage of production and distributions, it solves VAT is applied on the value added at each stage of production and distributions, it solves the tax cascading effect and reduces tax evasion with its modern administration system that sales tax cannot. Governments require tax administration and compliance to produce revenue from private entities to provide public goods and services. Ethiopia needs to use domestic based resources mainly obtained form tax like value added tax. The study will focus on addressing issues relating VAT administration factors affecting VAT revenue performance. In order to generate appropriate VAT, its administration should be efficient. Therefore, the study conducted on assessment of VAT administration effectiveness in Dilla town. The goal of this study is to assess the problem of VAT administration and registration in Dilla town. The study raised major research questions related to VAT registration, Administration, collection and Tax payers Service Delivery. To achieve this objective, the researcher will use both qualitative and quantitative descriptive research designs and random sampling method. The researcher will use questionnaires, interviews and relevant documents to collect primary and secondary data from the data sources. Charts, graphs, table, percentages will use in analyzing the data (findings). Moreover, most taxpayers lack sufficient knowledge of VAT thus, most of VAT payers do not know why they are paying taxes and the applicable rules and regulations. Due to this and other factors mentioned in the analysis of this study, negligence, delay in tax payment and evasion are taken by taxpayers.