Abstract:
This study was to assess the practices and challenges of value added tax administration in case of
Ambo town revenue office. Specifically, the investigation was emphasized to the discussion on the
issue of the awareness level of value added tax registrant taxpayers about the value added tax rules
and regulations, the challenges of value added tax administration and the value added tax
administration practices in Ambo town revenue office. In order to attain the stated objective, the
study adopted mixed research approach and particularly descriptive research design was applied.
The study used both qualitative and quantitative research methods to collect and analyze both
primary and secondary data. For this purpose, a sample of 261 Value added tax registrant taxpayer
drew through simple random sampling technique and 3 concerned official employees and 1revenue
office head drawnthrough purposive sampling technique. The researcher also used questionnaires
and interviews to collect primary data and the last five years (2009-2013) annual report revenue
office and relevant documents to collect secondary data. The collected data were analyzed by using
Statistical Package for Social Scientists (SPSS) version 23. Descriptive statics, such percentages,
tables, mean and standard deviation used. The finding of the study indicated the poorness of the
value added tax administration system involved in the Ambo town revenue office. This has occurred
due to the lower value added tax collection enforcement capacity, the poorer performance of
penalty for non-compliance, lack of awareness of value added tax registrant taxpayers about value
added tax rules and regulations, ineffective value added tax audit practices, summiting illegal
invoices, lack of participatory planning system, and absence of continue value added tax education
program are the main constraints. Therefore, to bring an effective value added tax administration
system, the Ambo town revenue office should take action on the enforcement of value added tax
collection, effective value added tax audit practices, development of a participatory planning
system, enforcement of taxpayers to be eligible registrants of value added tax, and development of
continuous value added tax education program.
Keywords: value added tax, administration, practices, challenge
