Factors Affecting Voluntary Compliance Of Vat Registered Enterprise Taxpayers: The Case Study Of North West Addis Ababa Small Taxpayers Branch Office

Abstract

Valve Added Tax is a tax not on the whole valve of products sold or services rendered however only on the incremental valve or newly created valve by last vender. The main objective of the study is to identify factors affecting tax compliance status of VAT registered enterprise taxpayers the case of North-western Addis Ababa small taxpayer branch office. The study used quantitative research approach with descriptive and explanatory research design. Quantitative type of data from primary and secondary data sources was collected for the study; primary data was collected from 358 sample respondents of which (321 from VAT registered Enterprise taxpayers and 37 from tax office employees of the branch office). These were selected by stratified sampling techniques for VAT registered business firms respondents and purposive sampling techniques for tax official respondents. For the sake of data analysis method binary logistic regression was conducted by using SPSS software. The result shows that tax knowledge gap, perception to equity and fairness, perception of government spending, efficiency of tax office, tax audit issues, tax rate issues, compliance costs and employees integrity have significant influence on the tax compliance status whereas, income level of the taxpayer has insignificant influence on the tax compliance status. The study recommends that, continues training of taxpayers, fairness, cautious on government spending and facilitating tax audit structure, encouraging and facilitating employees, minimizing taxpayers compliance costs and during amendment caution of tax rates may be done in order to improve on the voluntary tax compliance status in the tax centre.