Abstract:
A value-added tax is a consumption tax on goods and services levied at each stage of
the supply chain where value is added, from initial production to the point of sale.
The study's main objective was to examine the effects of factors such as controlling
value-added tax evasion, value-added tax management, value-added tax registration,
value-added tax penalty, technological factors, awareness of both employees and tax payers, and competency of employees on the effectiveness of value-added tax
collections. The study employed a quantitative research approach supplemented with
a minor interview-based qualitative approach combined with descriptive and
explanatory research designs. The entire group of the population of the study consists
of 1 top-level manager, 6 middle-level managers, 63 employees, and 605 value-added
taxpayers. Using the census method for all the employees and using a simple random
sampling formula, 241 taxpayers were included in the study. For supplementary
interview purposes, one top-level manager and three middle-level managers were
selected using a census and purposively, respectively. Both primary and secondary
data were employed. The primary data was collected using a questionnaire and
interviews, while secondary data was obtained by reviewing annual reports. The
questionnaires were distributed to both employees and value-added taxpayers. The
researcher analyzed the data using the Statistical Package for Social Sciences version
26. Descriptive and inferential statistics were employed in analyzing the collected
data. The questionnaire items were measured based on a 5-point Likert scale. The
Cronbach’s Alpha was used to measure the validity and reliability of the data. The
study conducted a multiple regression with a Pearson correlation coefficient. The
finding showed that independent variables have a positive relationship and
considerable influence on the effectiveness of the value-added tax collection. Thus,
the overall model was statistically significant. The study recommended that consistent
on- and off-the-job training for both employees and taxpayers, enforcing tax laws,
controlling Value- added tax evasion, promoting a good administrative approach, and
fostering technology should be undertaken to improve value-added tax collection
effectiveness in Ambo Tow
