Analysis Of Presumptive Taxation In Oromia Regional Administration: Law And Practice In Ambo Town

Abstract

The main focus of the study was to analyze presumptive taxation in Oromia Regional Administration law and practice in Ambo Town. The study sought to find out challenges of Category “C” taxpayers or small business taxpayers during the presumptive tax assessment and the payment process in Ambo Town and how could be these issues be addressed. It also focused on that how Category “C” taxpayers perceive the presumptive tax regime with respect to its fairness, administrative simplicity, equity and administrative capacity in the study area. The study adopted a descriptive research design and questionnaires were used to collect quantitative data. The total population size consisted of 3,250 respondents and the representative sample size for this study is 356 Category “C” taxpayers selected in Ambo Town Administration respondents for questionnaires. After accomplishment of the data collection procedure, the collected data were analyzed using descriptive statistics frequency, percentage, mean and standard deviations through SPSS version 20. The study found out that there are problems such as lack of equity and fairness in presumptive tax assessment, poor perception of taxpayers on tax evasion, lack of clarity and simplicity of tax procedure, the complexity of tax rules, Category “C” taxpayers,' poor awareness on the tax system, poor participatory tax systems, and poor social norms between taxpayers and the revenue authority. The study recommended that the government ought to play an active role by making sure that presumptive tax assessment implemented by the revenue authority has a legal basis. The government should regulate that tax liability imposed on Category “C” taxpayers in line with major principles of taxation stipulated under Oromia tax system such as Equitability; Efficiency; Clarity & Simplicity and Effectiveness and Fairness. The research also recommended the revenue authority to avert the problem of the lack of efficiency and taxpayer’s knowledge about presumptive tax laws the Revenue Authority requires further assessment and training including awareness creation.