Assessment Of Tax Audit Practices And Challenges: The Case Of Addis Ababa Medium Tax Payer Branch Offic

Abstract

The overall objective of the study was to assess the challenges and practice of tax audit in Addis Ababa NO 1 Medium Tax Payers Branch Office. The study engaged mixed research Approach where survey design and in-depth interviews were employed. The Survey was conducted with team leaders and tax auditors working at the branch. The Actual sample size was achieved (96.5%) for the tax auditor’s survey. In addition, in-depth interviews were conducted with the team coordinator of the tax audit department of the branch. The results of this study revealed that, Tax Auditors do not make sufficient efforts to interpret complex tax rules and regulations for Taxpayers and detect the noncompliance behavior of individual taxpayers. They usually focus on gathering and collecting information on the health of the Tax system, the office does not proportionally focus on all types of Tax Audit techniques; most of the time Tax Audit activities were not done within the time planned. Moreover, there are no well-established strategies that make Tax Auditors competent and efficient in understanding and knowledge of Tax related rules and regulations. In general, the results of the study revealed that the overall tax audit practice of the branch is found at a low level. Concerning challenges that influence the practices of Tax Audit of the branch office; factors related to traditions of corruption, requests for informal payments to get things done in the course of tax assessment and tax audit, inconsistency and frequent changes of regulations and laws related to tax audit practices, limited capacity of management and leadership on the part of the branch office on tax audit administration and absences of coordinated efforts among sector offices of the branch engaged on tax audit related responsibilities, are the sever challenges which strongly affected the practice of tax audit of the branch office. The branch should improve the overall tax audit practices to collect a reasonable amount of tax revenue and promote the satisfaction level of tax payers. Moreover, Strategies and policies should be formulated to minimize most of the challenges found in the study which faced the branch and the government in general