The Effect Of Tax Exemption For Agricultural Multi-Purpose Cooperative Growth; The Case Of Jimma Zone, Oromia, Ethiopia

Abstract

The study was entitled effect of tax exemption for the growth of agricultural multipurpose cooperatives. The main objective of the study was to analyze the effect of tax exemption on growth of MPCs. The specific objectives of the study were; To determine the effect of tax exemptions on capital growth of agricultural multipurpose cooperative; To analyze the effect of tax exemptions on operational performance of Agricultural Multipurpose Cooperatives; To assess the role of government supports on Agricultural multipurpose Cooperative developments of the study area. For the purpose of the study from three districts of Jimma zones‟ 6 (six) multipurpose cooperatives were purposively selected. The study thus by employed non probability sampling methods for the selection of the study areas and study cooperatives. Descriptive and explanatory research design was used to describe through descriptive statistics and to explain the results of the study in a concise form that everyone can understand the results of the study. The study used qualitative and quantitative types of data. Primary and secondary source of data were used. Primary data collection tools like FGDs and KIIs were used. A secondary source of data was collected from audit report of each selected MPCs. A total of 6 (six) FGDs were conducted at each PMCs which is formed from a total of 40 (forty) participants and a total of KIIs with 17 (seventeen) key informant interviews participants like; cooperative promoter, control committee, district cooperative expert and control committee was used. The results of the study show that tax exemption was contributed and benefited to some extent for the capital growth of the studied MPCs. However, income tax exemption alone can‟t benefits and contributes more for the growth of the capital of the study. Thus it require to exempt the cooperatives from all types of outflows of money that the MPCs would pay for through revenue and custom authority specially on agricultural output processed and go for searching of markets. In addition the results of the study showed that tax exemption contributed for operational performance of studied MPCs to some extent. However income tax exemption alone can‟t guarantee the success of operational performance of the cooperatives. The results of the study showed that government supports were crucial and determinant for the growth of agricultural cooperative. In addition, the study recommended that tax exemption contributions was so far as good, however additional exemptions other than income tax exemption should be permitted and granted for agricultural cooperatives to ensure the full exemption that allow them grow their capital.