Business Studies

Business Studies

An assessement of Value added tax administration practices : the case of Nekemet revenu and custom office in Ethiopia

Pages: 67  ,  Volume: 5  ,  Issue: 2 , May   2018
Received: 01 Jun 2018  ,  Published: 03 June 2018
Views: 119  ,  Download: 51

Authors

# Author Name
1 Tariku Geremew Zeleke

Abstract

Governments whether in a developed or developing countries generate most of their income from taxes.  Taxes that are directly related to tax payers are direct taxes and those that are paid by an individual through purchase of goods and service are indirect taxes.  As it is well known Ethiopia implements VAT in January 2003 G.C to raise more revenue and encourage investment and funds. 

VAT is a broad tax imposed on consumption of goods and series.  It is collected at all stage in the production and distribution process.  VAT is the principal source of revenue for the Ethiopian government. VAT is imposed only on the value created up on production and distribution but not on the cumulative return. ORCA who has the responsibility for this task is facing with a tremendous problem of VAT administration practices.

 The main objective of this study is to assess the VAT administration practices in Nekemet revenue and custom office for the last five years i.e. 2005 E.C-2009 E.C. To fulfill the mentioned objective both primary and secondary data were used. In order to answer the research questions the study has done extensive literature review and follow a systematic research methodology.

A total of 169 questionnaires were distrusted to all participants I.e. employees and tax payers in Nekemet revenue and custom office and 127questionnaires were returned and used for data analysis. Semi structured interview was used as data collection instrument.

The researcher used both qualitative and quantitative descriptive research design and a sample of taxpayers and employees of the branch were selected using Stratified random sampling technique to assess the VAT administration practices.  The outcome of finding showed that the VAT administration practices are not effeictve. In the VAT administration practices several problems were identified. 

Discussion explained the significance of VAT administration practices in supporting the office in Nekemet.  Eventually conclusion and recommendation were mentioned.\

 

Keywords

  • VAT
  • References

    • Alex Cob ham (2005). Tax evasion, Tax avoidance and Development Finance. Working Paper No. 129.QEH – Working Paper Series – QEHWPS129.
    • Cnossen, Sijbren, 1990, “Taxing Value Added: The OECD Experience,” InternationalVAT Monitor 5 (May), pp. 2 – 16.
    • Desai, Mihir A., C. Fritz Foley, and James R. Hines Jr., International Joint Ventures andthe boundaries of the firm, NBER Working Paper No. 9115, 2002a.
    • Desai, Mihir A., and James R. Hines Jr. (2002). Value Added Taxes and International trade: The Evidence.
    • Ebrill L., Keen M., Bodin J.P., and Summers V. (2001). The Modern VAT. InternationalMonetary Fund. Washington D.C.
    • Federal Democratic Republic of Ethiopia (2008). Proclamation No. 587/2008; A
      Proclamation to provide for the establishment of the Ethiopian Revenue and Customs
      Authority. Addis Ababa.
    • Federal Democratic Republic of Ethiopia (2002). Proclamation No.286/2002; Income Tax Proclamation. Addis Ababa.
    • Federal Democratic Republic of Ethiopia (2002). Proclamation No. 285/2002; Value
      Added Tax Proclamation. Addis Ababa.
    • Federal Inland Revenue Authority (2005). Revenue Collection Manual. Addis Ababa.
    • Girma Tafesse (2005). Value Added Tax, (VAT) Administration in Ethiopia. Paper Presented to the Second Seminar Organized by ACCA Ethiopia Branch in Partnership with the Federal Inland Revenue Authority held 5th June, 2005. Addis Ababa
    • H.L. Bhatia (1996). Public Finance. Nineteenth Revised and Enlarged Edition http://www.erca.gov.et
    • International Tax dialogue; www.itdweb.org (2005): The Value Added Tax experiences and issues.
      • Jantscher, M. Casanegra de (1990). ‘Administering the VAT’ in M. Gillis, C.S. Shoup and
        G.P. Sicat (eds) Value Added Taxation in Developing Countries, World Bank, WashingtonDC.
      • Markos Abraha,(2010) Value Added Tax (VAT) Administration and Revenue Performance. An Msc Thesis Presented to school of graduate studies of Mekelle University .92p 92LE UNIVERSITY MEKELLE UNIVERSITY ME
      • Michael Keen and Ben Lockwood (2007); The Value Added Tax: Its causes and
        consequences.
      • Michael Keen and Stephen Smith, (2007).VAT Fraud and Evasion: What Do We Know,
        and What Can be Done? IMF Working Paper. International Monetary Fund.
      • Richard M.Bird and Joseph L.Rotman (2005): Value Added Taxes in Developing andTransitional countries: Lessons and Questions. A Paper prepared for the first GlobalInternational Tax Dialogue Conference on VAT. Rome, March 15 – 16, 2005.
      • Riga (2004).State Revenue Service, Tax Administration Strategy for year 2005– 2009, State Revenue National Tax Board.
      • Teklu Kassu, (2011) Challenges of Tax Administration  .An Msc Thesis Presented to school of graduate studies of Addis Ababa University 82p . June, 2011 Addis Ababa
      • Wellela Abehodie (2008). Value Added Tax Administration in Ethiopia: A Reflection of Problems. journal of Tax Research (2008) vol. 6, no. 2, pp. 145-16