Abstract:
The main objective of the study is to investigate the Value Added Tax administration challenges in the last 10 years in the ministry of revenue North West Addis Ababa small Taxpayers Branch Office. The researcher used descriptive statistics method and qualitative and quantitative (mixed) research approaches to achieve objective of the study. Two main target groups were identified; taxpayers and tax officers. Primary and secondary data were used to analyze. In the study, 4779 taxpayers who are registered for VAT and 357 of tax Officers were selected using simple random sampling method out of them total 369 VAT payers and a total of 35 VAT related Officials were selected & all the questionnaires were returned. Primary data were collected through questionnaires, Interview, experience and observation and secondary data were collected from the branch by reviewing documents annual reports of manuals. Then the researcher used Statistical Package for Social Science (SPSS) Software Version 20, Pie chart, tables, frequency and percentages to data analysis. The result of the finding showed the challenges of the VAT administration in the Branch Office include; policy gap, VAT compliance gap, poor awareness level of VAT payers, consumers failure to transact with a proper VAT receipt, weak tax law enforcement capacity, unfair competition between VAT registered and unregistered tax payers, lack of experienced and sufficient man power to detect VAT fraud, VAT evasion, VAT avoidance , using single VAT rate 15% only, due to lack of potential excess refund VAT credit was carry forward, forgery receipt issuing ,low levels of society knowledge on VAT law and regulation, lack sufficient training, Government VAT voucher not declared and lack of consistency in the administration system of waiver penalty. Based on the finding, its recommended the Branch Office should; upgrading awareness levels of VAT payers, addressing policy gap, reducing the VAT fraud , strengthening VAT compliance gap mechanism high level transparency, fulfill staff capacity law enhancement, institutionalizing technological based VAT administrative systems, applying multiple VAT rate system and tax officers through short term and long term training ,improve tax payer accept and obey the existing law and regulation, Government VAT voucher should declared at the month of withholding payment and taking appropriate legal actions are highly in order to address VAT administration to enhance the challenges in Branch Office
