Practice and Challenges Of Vat Administration: - The Case Of Category “A” Tax Payer In Kolfe Keraniyo Sub-City

Abstract

The general objective of the study was to assess the practices and challenges of VAT administration for category "A" tax payers in Kolfe Keranio sub-city. To achieve this objective, the researcher used a mixed research approach with descriptive research designs and a total of 196 taxpayers and 98 employees were selected as samples using non probability sampling techniques to get representative primary data. From the total questionnaire distributed to respondents, 268 were filled and returned, which was a 91.15% response rate. Interviews were also conducted with taxpayers and employees of the organization as a method of data collection to strengthen the facts collected through the questionnaire and to get additional information on the topic of the study. Then, the data gathered through questionnaires was analysed by using a software package for social science version 20 and the results were thoroughly analysed. According to the study's findings, the major obstacles that impede VAT administration practices are a lack of taxpayer awareness, a lengthy registration process, the majority of taxpayers' sales of goods and services without VAT invoices, unfair competition between VAT registered and unregistered tax payers, and taxpayers who fail to properly record their transactions in accordance with VAT laws and regulations. Finally, the study recommended that the branch office should create continuous awareness with VAT taxpayers about VAT rules, regulations, and procedures. The branch office should also work more on creating continuous awareness with business communities and internal capacity building of the authority itself.