Factors Affecting the VAT Revenue Collection Performance: The Case of West Shoa Zone of Oromia Regional State, Ethiopia

Abstract

Tax revenue is one of the fastest growing sectors of the economy in Ethiopia. Nonetheless, the West shoa Zone VAT revenue collection performance has been inconsistent over the last five 2010/18-2014/22 years. The main Objective of this study was to identify the factors affecting VAT revenue collection performance In Nono and Jibat Woreda revenue Office. The researcher Has been used 64 sample size from VAT registered tax payers and 41 employees Using census method from both Woreda, In total sample size of this study was 105. Cross sectional data was collected based on the registry from 2018 to 2022, a Five years period .This study was carry out using both quantitative and qualitative research approach. The study used both primary and secondary data; primary data was gathered through the use of a structured questionnaire, focus group discussion and interview while secondary data was obtained from annual reports .The survey data analysis methods such as mean, Standard deviation, frequency, Analysis of variance and percentages were analyzed by using STATA (Statistical Data Analysis) Software descriptive statistics. To determine the relationship between the dependent and independent variables, a correlation andmultiple regression analysis were performed. The regression result shows that Modern technology usage, educational status of Taxpayers, Enforcement, and VAT Administration policy have positive and significance influence on the performance of VAT collection whereas, Fraud have negative and insignificance influence on the performance of VAT collection. Finally, based on the findings researcher conclude thatAccording to the descriptive statics result the VAT Administration policy has below midpoint average mean score which means the administration policy. The recommendation given were include; Both Woreda revenue office should increase the number of Modern technology usage that is Continuous supply of cash register machine, Minimize VAT fraud activities, establish effective enforcement mechanisms, Educational status of tax payers is significant. Therefore, revenue office officially should announce short and long term training programme. In addition revenue office should properly and consistently implement VAT Administration policies to develop its consumer relationship strategy for the future, and to improve client loyality in reference to improving on competencies and integrity of tax payers.