Abstract:
The purpose of the study was to evaluate the tax collection practice and its challenges on category "C" tax payers in Holeta town. The challenges with tax collection relating to the tax office and taxpayers were identified. The data was collected from 346 taxpayers and 41 tax office employees by using questionnaires and interview questions and the data was analyzed using the descriptive tools. The study's results revealed that the failure of taxpayers to keep accurate books of accounts to manage their business operations, a lack of raising awareness on the part of taxpayers, a lack of objective tax estimation procedures and the estimation of tax under- and over-statement, a lack of knowledge on the part of taxpayers about the tax system, dishonesty on the part of tax collectors, and a lack of a positive relationship with taxpayers are just a few of the major challenges on category "C" tax assessments. The study recommended that the tax authority should make easy to understand, and transparent with regard to category "C" business income tax assessment laws, rules, and regulations. Furthermore the Holeta revenue administration office must develop positive relationships with the taxpayers. In order for the tax office to be strong and powerful, tasks including tax assessment, collection, awareness rising, information sharing, and enforcement must be carried out successfully and efficiently
