Abstract:
This study seeks establish main objective to assess factors affecting tax compliance of small and
medium taxpayer in Shagar city sebeta sub city tax administration. The study used descriptive
research design. The total population of the study was 2875 small and medium in Shagar city
sebeta sub city from which the sample sizes of 351 were determined for data collection. To
ensure the representative of different business sectors of small and medium taxpayers, stratified
sampling technique was adopted.
In order to gather the required data, structured questionnaires have been used. Data collected
was analyzed by Statistical Package for Social Science version 24 and the findings were
presented using tables and figures. The finding shows that Corruption and Tax Evasion have
statistically significant and negative effect on tax compliance of small and medium tax payers,
but the Education level, Tax Audit, Tax Penalty, Social service, Knowledge and awareness,
Service delivery, Attitude, and possible measures were statistically, significantly and positively
associated with tax compliance of small and medium tax payers. The study recommended that
management of tax revenue authority has keep Corruption to the minimum as much as possible,
putting legal sanctions in terms of penalties on non-compliant SME tax payers, the government
shall maintain accountability and transparency on how the revenue collected from taxation was
being disbursed and provide social services efficiently and effectively to the society so that tax
payers will have trust and positive attitude towards the tax that they pay and educating the
taxpayers to create the necessary awareness on tax laws and, to expand and make more regular
and consistent auditing to detection of noncompliance and tax evasion so as to increases tax
compliance of SME taxpayers.
