Abstract:
The purpose of this study was to the determinants of tax audit practice in North West Addis Ababa small tax payer’s branch office. The researcher employed explanatory research design supported by quantitative research approach. From the total 6350 employees and tax payers select 376 representative samples. Stratified random sampling technique was employed to select the representative samples. The primary data were gathered from the research participants through structured questionnaire from 376 employees and tax payers. The collected data analyzed by statistical package for social science. The methods of data analysis employed in this study descriptive and inferential (regression and correlation). The descriptive statistics result shows majority of the respondents were male, educational status certificate or less, 27-34 age category. The inferential regression analysis shows that from the tax office related determinant were complexity of the tax system, corruption, probability of error detection, and audit case selection method were the significant factors that affect tax audit practice but perceived role of government and effective tax audit program had insignificant effect on tax audit in North West Addis Ababa small tax payers’ branch office. Moreover, from tax payers related determinant attitude towards tax audit and awareness of tax payers had significant effect on tax audit, but income level was had not significant effect on tax audit in North West Addis Ababa small tax payers’ branch office. We conclude that tax office related determinant played vital role to tax audit. In addition to this the tax audit also affected by attitude towards tax audit and awareness of tax payers. Audit case selection not based on risk based selection as the result the tax audit not effective so, the tax office should properly job assignment to professionals. The tax payers should construct positive attitude to tax audit because the tax audit objective beyond generating income encourage self-assessment tax
