HERAMBE UNIVERSITY FACULTY OF BUSINESS AND

ECONOMICS

DEPARTMENT OF MBA.PROGRAM

TAX ASSESSMENT AND COLLECTION CHALLENGES IN LODE

HETOSA : EVIDENCE FROM CATEGORY “B’’ TAX-PAYERS

BY : BESHIR KEDIR

ADIVESOAR : Dr.ABDI

MARCH, 2021
ADAMA, ETHIOPIA

i
 TABLE OF CONTENTS
Page

CHAPTER ONE............................................................................................................................1

1.INTRODUCTION......................................................................................................................1

1.1.Background of the study............................................................................................................1

1.2. Statement of the problem..........................................................................................................3
1.3.Research questions/ hypotheses.................................................................................................3
1.3.1.General objective........................................................................................................................4

3.3.2Specific objectives........................................................................................................................4

1.5. Significance of the study..........................................................................................................4

1.6. Scope of the study.....................................................................................................................4
1.7. Limitation of the study..............................................................................................................4
1.8.Organization of the study...........................................................................................................5
CHAPTER TWO...........................................................................................................................6

2.REVIEW OF LITERATURE....................................................................................................6

2.1.Theoretical concepts..................................................................................................................6
2.1.1.Theoretical review of tax administration.....................................................................................6

2.2. Empirical studies......................................................................................................................8

2.2. with regard to global studies 1.Empirical evidences................................................................8
2.3. Conceptual framework..............................................................................................................8
CHAPTER THREE.......................................................................................................................9

.Research Methodology.................................................................................................................9

3.1. Description of the study area....................................................................................................9

3.2 Research design.......................................................................................................................10
3.3Source of Data..........................................................................................................................10
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3.4 Data and Collection method....................................................................................................10
3.5 Sampling Design......................................................................................................................11
3.5.1 Sampling techniques.................................................................................................................11

3.5.2 Sampling frame..........................................................................................................................11

3.5.3 Sampling Size.............................................................................................................................11

3.6.Study variables.........................................................................................................................12
3.7 .Data analysis and presentation methods.................................................................................12
3.8.Ethical considerations..............................................................................................................12
. Work plan schedule..................................................................................................................13

Budget plan...................................................................................................................................14
REFERENCES..............................................................................................................................15
Appendex--------------------------------------------------------------------------------------------------------------------------16

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 CHAPTER ONE

1.INTRODUCTION

1.1.Background of the study

Tax revenue collection is one significant issue of economic development among others. Taxation
is defined as government revenue to fulfill public necessities. That is for social, economic and
political aspect of the society. Generally tax revenue is an important for the improvement of the
living standard of the general public for a country growth and for implementing policies and
strategies. Taxation is one of the best instruments to boost the potential for public sector
performance, to finance the social insurance program and for the repayment of public debt .
Taxation, even if often ignored, is a central component in the development of both low and
middle income. Taxation has led to tax structures throughout the developing world that are
largely complex, inelastic, inefficient, inequitable, and quite simply unfair . A country’s revenue
generation primarily depends upon its sufficient capacity to tax more in both economic and
administrative term, lack of homogeneity across time and culture, the existence of gap between
the tax payments required by the law and those actually surrendered to the state because of the
inadequacy of the tax authority manpower, institutionally weak and lack in potential support are
not in a position to collect the amounts outstanding (Cheibub, 1998). The two important
components of revenue tax administration and tax system reforms (Brondolo et al. 2008). Indeed
corruption functions like a tax itself, and likely a particularly regressive one as are other
governance indicators (weak rule of law, political instability). The other problem of low revenue
generation is political instabilities in developing countries. One of the important characteristics of
the political instability is unstable and shifting behaviors of government, which hinders the
process of long-term reforms in the system, Gupta, (2007). In Ethiopia the authorized body to
collect tax (ERCA) has three taxpayers’ categories). They are: category of taxpayer A, B and C.
Category A tax payers whose annual turnover > 500,000 and category B tax payers whose annual
turnover in between 100,000 500,000 have a mandate to prepare financial statements. Whereas,
category C tax payers may not have. But revenue come from those tax payers are not sufficient to
finance the government expenditures because the tax revenue performance is low in developing
countries due to various problems. Therefore, developing countries receive a very low amount of
1
revenue from taxation because these countries face a number of problems in the process of
revenue generation. The situation of East Arsi where Lode Hetosa District is found is not
different from the above situations (as part of Ethiopia). The study town namely Huruta is
currently facing daunting challenges in relation to the overall taxation system, tax assessment,
collection and service delivery of tax authorities. Hence, the town may not able to collect tax
efficiently which is a serious problem that has the possibility to result in the failure of providing
basic social services and infrastructure to the communit.Tax is defined as an obligatory levy,
imposed by government or other tax raising body, on income, expenditure, or capital assets, for
which the taxpayer receives nothing specific in return .But, not all expenses to government are
considered tax payments: for example, charges, tolls and other levies are paid to obtain a specific
service and are not strictly tax payments. If tax is levied directly on individual or corporate income,
then it is a direct tax. If tax is levied on the price of a good or service, then it is known as an indirect tax.
A tax payer doesn’t expect direct and equivalent return from the government for the compulsory
contribution made (Ethiopia .as mentioned in Ethiopian the federal income tax proclamation
no.979/2016, source of income has classified into five schedules: Schedules A (income from
employment), Schedule B (income from rental of buildings), Schedule C (income earned from
business) and Schedule D (other income not categorized in any of the three, e.g. Income from
royalties). Schedule E (exempt income).Schedule ‘’B’’ type of tax system, which is the topic of
this study, is further divided into three major categories, namely Category “A”, “B”, and “C”
based on the volume of their sales, form of their business and annual turnover. Category “A”
Taxpayers: Ethiopian Tax proclamation 979/2016 indicates category ‘A’ tax-payers as any
company incorporated under the laws of Ethiopia or in a foreign country and any business having
an annual turnover of Birr.

1.2. Statement of the problem

Revenue generated from taxation have got the attention of governments as a major source of
funds necessary for the countries overall development. According to (Brautigam et al. 2008),
2
taxation is the new frontier for those concerned with state building in developing countries. But
revenue come from tax are not sufficient to finance the government expenditures because the tax
revenue performance is lowin developing countries due to various problems. As per Crandall and
Bodin (2005), the developing countries tax revenue is in a weak position because of both a
complex tax system and widespread corruption. Complex and fragmented tax administration has
its source in part in developing countries. According to Gupta (2007), tax revenue is affected by
corruption, political and economical stability, and structural factors such as tax system, tax
administrative procedures, capacity to collect tax Government investments its expenditures
through the finance acquired from the service given by the administration, tax, loan and donation.
From all sources of business, tax is the major source; still, in most developing countries, it is a
common observable fact to notice serious problems in developing countries ample tax systems
that permits a government to sufficiently finance its expenditures .all along with the growth in the
in particular Ethiopian economy, it will be observed that there will be an increased government
expenses and scarcity financing. In principle, government could use both home and outdoor
sources of finance that a country can tap to finance the deficit. The government collected
considerable amount of income including grants, which could not fully finance the total
expenditure.

1.3.Research questions/ hypotheses

At the end of this study, the researcher will address the following research questions:
1. What is the current status of tax assessment and collection challenges from category “B’’
tax- payers?
2. What are tax payers’ challenges that causes for poor tax revenue collection?
3. What are tax administration challenges that causes for poor tax revenue collection?

3
1.3.1.General objective
The main objective of the study will be to identify tax assessment and collection challenges of
category ’’ B’’ tax payers: A case of in Lode Hetosa Revenue Authority

3.3.2Specific objectives
1. To examine the status of tax assessment and collection challenges from category “B’’ tax-
payers.
2. To investigate the challenges associated with tax payers in category “ B’’ tax- payers
3. To explore the challenge associatewith tax revenue authority of the in Lode Hetosa.

1.5. Significance of the study

The findings of this study will be contribute in enhancing the tax revenue of the selected Town
and the government at large by uncovering the core problems on the tax assessment and
collection activities so as to enabling them to put their effort to triumph over the observed
problems. Thus, the government will be able to adopt a comprehensive strategy, and minimize
the observed tax administration problems to increase tax revenue. Similar approach can be
replicated in identifying the problems in tax assessment and collection procedures of revenue
administrations in other Town. Besides, it may be also used as an input for other interested
research proposal for conducting further study..

1.6. Scope of the study

This study will be delimited with a specific topic and geographical area for the purpose of in
depth analysis. Conceptually, the scope of the study will be limit to tax assessment and
collection challenges: evidence from category “B’’ tax-payers..

Geographically, the study will be impounded within Lode Hetosa district boundary,Though
there are many problems generally the macroeconomic factors have a huge impact on qualities
and performance of loans, the study will be not encompass them.

1.7. Limitation of the study.

The study will be limited to examine the tax collection is restricted to category “B” tax-payers
which are found in in Lode Hetosa revenue authority . This Study will be encountered the
problem of obtaining secondary data due to poor recording and data base management system in
the office of town and lack of well-organized data in the Woreda . Similarly the officials of the

4
relevant sector in the target may have no time to answer and hence, it has been difficult to
interview most of government officials in case Coved 19 pandemic desease if not fully recovered
until that time.

1.8.Organization of the study

The study will be organized into this research proposal in five chapters. The initial chapter
consists of introduction, background of the study, statements of the problem, research hypothesis,
objectives of the study, the significance of the study, the scope of the study and limitation of the
study . The second chapter deals in relation to the theoretical concepts , empirical related
literature reviews and conceptual framework.. The third chapter of this study presents the
research methodology. In the research methodology part, description of the study area, the
research design, data sources ,sampling Technquei,Sample Size,Ethical considaretion, and
data collection are also included.

CHAPTER TWO

2.REVIEW OF LITERATURE

2.1.Theoretical concepts

2.1.1.Theoretical review of tax administration.

2.1.1.1.The Meaning and Concept of Tax.

A tax is a compulsory payment force by the government with no any anticipation of straight
return in gain. In additional words, a tax is a necessary payment or contribution by the people to
the government for which there is no direct return to the taxpayers (Bhatia, 2003). Tax imposes
a personal obligation on the people to forfeit if they are liable to pay it. The general public should
be taxed according to their ability to pay, i.e., the people in the same financial arrangement

5
should be taxed in the same way without any discrimination. So, tax can be defined as, "an
obligatory fee or more specifically, "unreturned payment", paid by individuals or businesses to a
government (Richard, 2005). Tax has been defined by different authors and professionals in
various ways. Taxes are the chief source of the public revenues. Government needs financial
property to act as a government and play a role that is expected from it by the public.

2.1.1.3.Filing returns taxpayers

Tax payers are required to file returns within specified months of the end of their tax accounting
year. The return should be filed in quadruplicate and should hold all the particulars of the
taxpayer. All documents respecting taxation should be presented to the tax authority office where
the taxpayers have their file .A head receiving a taxpayer’s return, the tax authority officers
examine the accurateness of the depart by determining whether the return is properly completed,
whether tax has been appropriately computed, and whether there are any penalty payments to be
made by the taxpayer.

2.1.1.4.Audit and examination

The role of tax audits and examinations is to check the accuracy of the information that taxpayers
provide to tax authorities. .

2.1.1.5.Tax collection and enforcement

Tax collection and enforcements another procedure in the tax administration. When the taxpayer
have not made payment on the due date, and does not object to the tax assessed, tax authority can
enforce payment in a number of ways. The tax administration may bring a suit against the
taxpayer or request a person owing or holding money for the taxpayer to pay the money on a
specified date or institute distress proceedings against the taxpayer’s moveable property.

2.1.1.6.Importance of tax administration

tax administration dictates tax policy. In reality, tax administration and compliance issues
determine the broad evolution of tax systems. The change in developed countries over a century
ago from reliance on excise, customs and property taxes to corporate income and progressive
income taxes can be explained, in huge part, by the relative refuse in the rural sector, the attention
of employment in large corporations and the growing literacy of the population.
6
2.1.1.7.Tax administration challenges
The effectiveness of a tax method is not determined only by appropriate legal regulation but also
by the competence and truth fulness of the tax administration. In many countries, especially in
developing countries, small amounts of collected public income can be explained by either
inability of the tax administration in realization of its duty, or with some degree of fraud.

2.1.1.8.Efficiency of tax administration

Inadequately conceive or unnecessarily complicated tax structure greatly complicates the
operating function of the tax administration, while simple and transparent tax structure could
affect it in the opposite way. Tax management cannot change legislation as a means for
improvement of tax structure, but could propose necessary changes in laws that can improve tax
structure and / or could aid in application of the law (Mansfield, 1990). Efficient tax
administration in a market economy is based on voluntary compliance by a large number of
decentralized taxpayers. .

2.2. Empirical studies

2.2. with regard to global studies

1.Empirical evidences
Kangave (2005) discussed tax administration in Uganda’s context. It then discussed Uganda’s tax
arrangement, the problems face in administering taxes, and it gave achievable solutions to the
troubles the author identified in his research. The author, in his research, recognized fraud, tax
avoidance, and insufficient resources for tax administration poor quality of audits and inadequate
support for tax administration as problems or challenges of tax management that have weakened
the ability to achieve desired revenue targets. The writer did not purport to address all of the
problems. Neither does it set out to attend to in detail the causes of these problems. Instead, it
points out the problems
Moreover, the author recommendations for solving the tax administration problems were adopted
from the Canadian tax administration method. the effect of plummeting the administrative costs
of identification, assessment, auditing and enforcement. The organizational simplicity of "tax
handles", however, while influencing tax policy, should not be allowed to dictate it. Focused

2.3. Conceptual framework

The conceptual framework scrutinizes the independent and Dependent variable related to factors
affecting the effectiveness of tax assessment and collection challenges of category ’B’ tax payers.
The interrelationship between and among the variables is presented diagrammatically for
supplementary understanding of category ’B’ tax payers. Independent variables will be Taxpayer
7
Over Estimation (OE), Training (Tr), Tax Rate Management (TRM) ,Transparency (Trn) and
Non participatory(Nop). All these factors highly affect the effectiveness of Tax Assessment and
collection challenges of category ’’ B’’ taxpayers: A case of in Lode Hetosa woreda, Arsi Zone
revenue Authority Oromia, in Ethiopia.

Over Estimation (OE)

Training (Tr) Effective of
Tax Rate Management(TRM) Tax
Assessment
Transparency (Trn)
(ETA) and Tax
Non participatory(Nop) Collection
CHAPTER THREE Challenge
(TCC)
.RESEARCH METHODOLOGY

3.1. Description of the study area

Lode Hetosa District is one of the districts of Arsi zone. The name came from two Ethnic
Groups called Lode and Hetosa living in the area. Huruta located at 164 km from Regional
Capital City, Addis Ababa and 39 km from zonal capital, Asella Town to Eastern direction on
Iteya-Arsi Robe main road,(Socio-Economic profile of Lode Hetosa. Lode Hetosa Administrative
district is an area of great physiographic diversity. There are great altitudinal differences between

8
the highest and the lowest points.

9
3.2 Research design

Research design is the plan of scientific research proposal that guides the research in collecting,
analyzing and interpreting observed facts (Kothari, 2004).The study will be focuse on non-
experimental design that involved asking questions a representative sample of the population
using questionnaires to get both quantitative and qualitative data.

. The researche has described research design as follows below.

qualitative data and quantitative data

 The qualitative data will be obtaine from the Manager and customers.

 quantitative data will gather from organization profile, research works, books and web
pages.

3.3 Source of Data

The study will be undertaken using both primary and secondary sources of data.

 The primary data will be obtaine through personal interviews with the managers and
questionnaire will be distribute to the customers.

 Secondary data will be collected from Internet web sites, manuals, magazines, journals,
plan and reports. In addition, the researche uses to collect by investigating a number of
written materials such as from books, records, publishe and unpublishe research papers,
articles and proclamations that will use to conduct this research.

3.4. Data and Collection method

The qualitative data will be obtaine from the Manager and customers, where as, quantitative data
will gather from organization profile, research works, books and web pages. Primary data will be
the major source of data for the research as there are no research works done on tax assessment
and collection challenge in Lode Hetosa woreda revenue authority both empirically and
theoretically. Secondary data also have their own contribution as they are helpful to define the

10
 population and select the sample in primary data collection. Secondary data will be collected
from different sources such as Lode Hetosa woreda administration office and revenue authority.

3.5 Sampling Design

3.5.1 Sampling techniques

To come up with a representative and reasonable sample size, which enables the research to
conduct the study, an appropriate sampling technique is vital. Lode Hetosa Town selected by
using purposive sampling because many customers can be accessed and the responsible managers
are found at the Lode Hetosa Town tax administration office The target populations of the study
are managers and customers . The selection of the customer respondents is carried out by using
non probability sampling technique. Among the various non- probability sampling techniques
accidental or convenience sampling have used to contact customers.

3.5.2 Sampling frame

The sampling frame is the list from which the sample will select or it is the list of population.
The sample frame will be Tax payers of category’ B’ in the woreda.

3.5.3 Sampling Size

many samples will be appropriate to study that population is determined by sample size
calculation.as Lode Hetose Revenue Autorty Report( 2021) indicates there are a total of 93 tax
payers in category’ B’. I will take all tax payers in this catagorty and I will interview 8 Office
worker perpesivelly from Lode Hetosa Revenue Authorty.This is shown here under in table 1.

Table1:Description of Sampling Size

Items Population Sampling size Sampling techniques

Lode Hetosa Revenue Authorty experts 8 8 purposive sampling

Tax Payers Category “B” 93 93 All Tax payers

Total Samples 101 101
Source: Lode Hetosa Revenue Authorty ( 2021)

11
3.6.Study variables
Challenges of tax assessments and collection: The prevailing shortcomings of tax assessment
include investment of extra administration cost, escaping of tax net, under-taxation, low tax
compliance behavior, and/or uncertainty on the part of the tax authority and taxpayers attributable
to the difficulty of locating the actual amount of tax liability to be paid. The indictor of this
variables 1 if the taxpayer faces the challenge and if the taxpayer does not faces the challenges..

Tax Rate Management: Tax management refers to the identification of tax liability based on the
existing tax law, the assessment of this liability, and the collection, prosecution and penalties
imposed on disobedient taxpayers.

3.7 .Data analysis and presentation methods

Data analysis is a procedure of bringing order, structure and analyzing the wide range of data
collecte (Smith, 2013). After data are collected from relevant primary sources, the data will be
edite, code and entered into a computer by using statistical package for social sciences (SPSS ).

3.8.Ethical considerations

The following ethical considerations will be given concentration by the research proposal while
conducting the research or collecting the data:

A. Respect for persons: The privacy of the participants has been respected.

B. Voluntary participation: No participants will be forced to take part in the research and
participants will free to withdraw from the research at any moment.C. No harm to
participants: The researchers make sure that there is no any physical or psychological harm
done to the participants as a result of the study.

D. Anonymity and confidentiality: All information gathered during the study has been handled
confidentially and permission from the participants will be obtained for all information to be
shared openly.

E. Beneficence: The researcher will give rise to norms requiring that the risks of research be
reasonable in the light of the expected benefits.

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 WORK PLAN SCHEDULE
Time plan

Activity Nov Dec Jan Feb Mar Apr MAY Jun Jul

Title 

Problem 

Literature 

Proposal writing 

Proposal submission 

Proposal Presentation 

Question  

Data collection   

Analysis 

Thesis submission 

Thesis Defense 

. Budget plan

No Description Unit Quantity Unit cost Total cost

measurement

13
1 Transportation Birr 500.00 500.00

2 Flash Pcs 1 10.00 210.00

3 Paper Dast 2 321.00 642.00

4 Pen Pcs 10 10.00 100.00

5 Ruler Pcs 1 50.00 50.00

6 Binder Pcs 1 300.00 300.00

7 Interview Pcs 93 100.00 9300.00

8 Contingency (10%) 1,110.00

Total 12,212.00

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Asamnew Gebresilasse, 2013.. ment and colleTax assessction problems of Category “A”
taxpayers: A case of Yeka Sub City.( AAU). Retrieved from
http://hdl.handle.net/123456789/3310
Asian Development Bank, 2001. Tax Conference, Challenges of Tax Administration and
Compliance.
Burns ,R.P., and Burns,R.,2008. Business research methods and statistics using SPSS.
Burgess, R., and N. Stern, 1993. “Taxation and Development,” Journal of Economic

Literature, vol. XXXI, June, pp.762-830.Center, Singapore, in Jenkins (1994).

Damme, L, T. Misrahi and S. Orel, 2008. “Taxation Policy in Developing Countries: available

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 at <http://visar.csustan.edu/aaba/LaurenDamme.pdf>, accessed on January14

ERCA, 2010. "Federal Government Tax Collection,” Ethiopian Revenue and Custom
Authority. Addis Ababa.
Esay Solomon , 2014. Factor Affecting Fairness of Taxation on Category “B” Tax payers. In
Partial Fulfillment of the Requirements for The Degree of Master of Science in
Accounting and Finance Hawassa University.
Ethiopia Trade and Investment ,2015 . Ethiopia trade and investment rule and regulation

September 2015.

Field .A.,2009. Discovering Statistics Using SPSS(3rd edition).London :SAGE Publication ,Inc.

Gebrie Worku ,2006. Tax Accounting in Ethiopia Context.

Gebru Tareke, 1991. A History of Modern Ethiopia, 1855–1991: Second Edition.

Gupta Alka, 2001. "Public Finance and Tax Planning", Anol Publication, New Delhi.
Hair F.,Pinto,S.and Brito,C.,2007. Multivariate Data Analysis .5th Edition .Upper Saddle River .
NJ: Prentice-Hall International.
Hesse, eds., 1993. Administrative Transformation in Central and Eastern Europe, Towards
Public Sector Reform in Post-Communist Societies, Blackwell Publishers, Oxford, UK.
And Cambridge, MA.
H.L Bhatia, 2003. Public finance, Delhi, College of commerce, 23 edn.
IMF, 2006.Domestic Taxes and International Trade: Some Evidence Prepared by Michael Keen
and Murtaza Syed1 Authorized for distribution by Michael Keen February 2006
James, 1999 .Tax Compliance and Administration, in Handbook on Taxation, edited by W.

Bartley Hildreth and James A. Richardson (New York: Marcel Dekker, Inc.), pp. 741-

768.

James, S. and Nobes, C, 2000. The Economics of Taxation: Principles, Policy and Practice

7th ed. Prentice-Hall.

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Jenkins H.,1994.Formulation and estimation of stochastic frontiers production function of

models, “Journal of Econometrics.”

Kaldor, 1980. “The Role of Taxation in Economic Development”, Essays on Economic

Policy I, Duckworth, London.

Kangave, 2005. Improving tax Administration: A case study of the Uganda Revenue Authority,

journal of African law, 145-176

Kasimbazi .E,2004. Taxpayer's rights and obligations: Analysis of implementation and

enforcement mechanisms in Uganda (DIIS working paper,No.2004 :Copenhagen

,Denmark :The Danish Institute for International Studies.

Kothari, C.,2004. Research Methodology: Methods and Techniques. second Revised Edition ed.
Kornai,Y.,1990.Designing VAT Systems :Some Efficiency consideration , “ Review of

Economics and Statistics”.

Kussi, 1994. Tax reform and Revenue productivity in Ghana Published by The African

Economic Research Consortium.

Lymer, A. and Oats. L., 2009. Taxation: Policy and Practice. 16th ed. Birmin Fiscal

Publications.

Mansfield, C.Y., 1990. “Tax Reform in Developing Countries, the Administrative Dimension”,

Bulletin International Bureau of Fiscal Documentation.

Misrak Tesfaye, 2008. "Ethiopian Tax Accounting: Theory and Practice", Senior Essay,

School of Economics, Addis Ababa University, Addis Ababa.

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Oberholzer. R., 2008. Attitudes of South African Taxpayers towards taxation: A pilot

Study. Accountancy business and the public interest.

Rankers, 2002. The politics of revenue mobilization: Explaining continuity in Namibian tax
Policies.
Richard N.,2008. Managing Income Tax Compliance through Self- Assessment , S.I :IMF
:International Monetary Fund .
Richard M. Bird and Joseph L. Rotman., 2005.Value Added Taxes in Developing and
Transitional countries: Lessons and Questions.
Sahota. G.S., 1961.Indian tax structure and economic development, Asia, publishing house,

Bombay.
Sahota, 1931.The performance of the Indian tax system for the period 1948-58.
Smith,S.A.a.m.,2012.Fundamental of marketing Research 1st ed .S.I. SAGR publications, Inc.
Simiy.D.,2013.Challenges Affecting Collection of Turnover Tax in Nairobi ,Kenya (Master’s
Thesis) .Retrieved from Kenyatta University Repository.
Teame H.,1985. Measuring the Efficiency of decision making Units, “European Journal of
Operational Research”.
Teshome ,1979.Category “C” Tax Assessment and collection problems :The case of keble 01/18
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Wogene.,1983 . The contribution of tax reform, the changes in its structure (1983: 26-7).
World Bank ,1999 .Lesson of tax reform the World Bank ,Washington ,D.C.

Zelalem.Y, 1999. Revenue Productivity of the Tax System in Ethiopia. M.Sc. Thesis, Addis
Ababa University.

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 APPENDIX
Appendix I : Questionnaire for tax authorities employee.
Harambe University

Department of facult of Business and Economics

A Research proposal Partial Fulfillment of the Requirement for

Master Degree in Public Business Adminstration

Tax Authorities’ employee Questioner

Dear Respondents: _
The reason of this questioner is to collect data for the proposal work in requirement for partial
fulfillment of Harambee University. The study aimed at identifying the tax assessment and
collection challenges by giving special emphasis on category “B” tax payers found with Lode
Hetosa Woreda revenue branch Authority . I will be like to stress that your response is extremely

18
valuable for the successful completion of this paper and I will be immensely appreciate your
response for all questions be responded genuinely. I can promise you that your identity will be
completely anonymous. I thank you very much in advance for your collaboration and for
sacrificing your invaluable time.
Address: Tel. 0913199259.
E-mail; beshirkedir2021@gmil.com
Tax Authorities Employee
I. Personal Background
A. Personal Information
Please kindly tick (X)  at the appropriate choice in the given box for close ended question and
write briefly for open ended question at the given blank spaces.
1). Gender  Male  Female
2). Age  From 21-30  from 31-40
 From 41-50  Above 51
3) Educational Level
Certificate  diploma
 BSc. /BA Degree MSc/MA and above
4) Work Experience
 Years and Below  5-8 Years
9 Years and above…………
5) What is your current marital status?

 Never Married  Married  Divorced

 Widowed  Cohabiting

II. Tax Related Information

A. Do you think Tax avoidance in category “B” tax payers is significant?
 Yes…….No……….. I don’t know………..
B. If your response is “Yes” for question A which tax do you believe is
evaded more?

19
 Business Profit Tax  Payroll tax  VAT  Rental income
 Others specify
…………………………………………………………………………………………………..
C. If you response for question “A” is “yes” What do you think is the causes
For the challenge?...........................................................................................................
……………………………………………………………………………………………………..

About awareness creation on tax administration and other tax related issue for the following
questions please put tick (x) mark on the choice of your response which shows the level of your
agreement.

No’s. Statement Strongly Disagree Neutral Agree Strongly

disagree agree
1. Adequate Awareness creation
training has been given on the tax
administration.

2. The Existing criteria are not sound

enough to identify tax payer that
engaged in tax evasion

3. Tax Officials cooperate with tax

payers who intend to evade tax
and engage in bribery activity

4. Tax Evasion by most organizations

arise from lack of knowledge on
tax issues like penalty, tax codes
and tax regulation

5. The existing level and extent of

penalties for evaders and tax
personnel who are working in
collusion with tax evaders are
sufficient to discourage tax
20
 evasion /frauds/
6. The existing Penalty for corrupt
officials is not sufficient to defer
corrupt activity.

7. The existing challenges of penal

actions is too weak to discourage
tax payers who evading tax.

8. There is lack of transparency and

consistency in imposing penalties.

9. The education and awareness

creation program through media,
training and others means is not
sufficient to improve tax
compliance

10. No necessary to participate each

category of taxpayers during
estimation .

11. . Discussing on problems exercised

may brought solution to business
operations and with the concerned
bodies.

12. Would you accept estimation on

certain business operation is
proper ?

13. There is corruption during

estimation on business operations.

14. The use of training may reduces

tax evasion and fraud.

21
 III. Please write short and precise response for the following questions.

a. What suggestions do you give that could mitigate problems related to tax education or public
awareness program so that tax evasion is
minimize……………………………………………………………………………………………
………………………………………………………………………………………………............
..............................................
b. Specify the weak links that exist in Lode Hetosa woreda revenue authority that open the
door for corruption by tax officers related with tax ?
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………
c .If you think existing tax enforcement and penalty are weak, what do you
think are the reason(s)
………………………………………………………………………………………………………
………………………………………………………………………………………………………
………………………………………………………………………………
d. What do you think are showing on tax assessment and collection challenges in
general?...............................................................................................................................................
............................................................................................................................................................
............................................................................................................................................................
...............................................................

e. For the future, in what ways do these challenges shall be

improved ?..........................................................................................................................................
............................................................................................................................................................
.......................................................................................................................

f. If you are supposed given the chance to improve the present tax assessment and collection
challenges which part of the rule and regulation should be

22
improved?...........................................................................................................................................
...........................................................................................................................................................

Appendix II: Questionnaire for taxpayers.

Category’’ B’’ Tax-payers responses.
Please dear respondents put (X) in  provided that express your idea.
I. Personal Data
A. Personal Information
1. Gender:  Male  Female
2. Age:  below 20 year  20_30  31_40  41 above
3. Educational Level
 Primary school and below  high school  Diploma
 First Degree  Second Degree and Above
4. Work Experience
 3 Years and below  4_6Year  6_8 Years  9 Years and above
5. What is your current marital status?
Married  Never Married  Divorced
 Widowed  Cohabiting
6. Business sectors
 Manufactures  Importers and exporters  wholesalers and retailers

23
  Services providers
7. Legal form of the business.
 Sole proprietors ship Share company  Joint ventures  others
8. What is your average annual revenue?
 Below 50,000 thousand birr.  100,000 thousand birr. 500,000 thousand
birr  1 million and above
B. is there any challenges facing you when you go to pay your tax liability?
 Yes NO
Please rate your attitude on the following statement of (Over Estimation, Training, Tax Rate
Management, Transparency and Non participatory) using scale of rate in strongly agrees, agree,
neutral, disagree, and strongly disagree.
Summary of respondents’ response on service given by Woreda Revenue Authority (WRA)
No Statement Strongl Agree Neutral Disagree Strongly
y agree disagree
A. over Estimation
1 The Tax rate is unfair.
2 The business income tax does not
consider ability to pay.
3 The tax liability based on business
income tax is certain.
4 The business income tax is not
based on equity principle.
B. Transparency
5 You do not get notices about
taxation.
6 When you go to pay your tax
liability Inefficiency of Tax
Collectors, Discrimination and
unfair Treatment encountered.
7 You do not get clear and
understandable the notice.

24
8 You have given the time to pay
your tax liability if you have put in
bankruptcy is not enough.
9 There is lack of transparency and
consistency in imposing penalties.
C .Training
10 The education and awareness
creation program through media,
brochures and others means is not
sufficient to improve tax
compliance.
11 There is insufficient information to
improve tax compliance?
12 You accept estimation on certain
business operation is not proper.
13 If estimation on business operation
is improper and not logical
solution must be set to be desired.
D. Tax Rate management
14 Time it takes you to pay your tax
liability is unfair and not enough.
15 Tax payment period is not enough.
16 There is corruption during
estimation on business operations.
17 Discussing on problems exercised
may brought solution to business
operations and with the concerned
bodies.
E. Non participatory
18 Government does not involve
taxpayers in drafting tax policies.
19 Government not values feedback
about how the tax system is run.
20 Government does not consider
25
 taxpayers opinion when applying
tax policies.
21 Taxpayers have no representative
in the tax authority.
22 No needed to participate each
category of taxpayers during
estimation.

Harambee University
Kafaltoota galii gibiratiif gaffilee dhiyatan.
Kayyoon gafficha Aanaa Lodee Heexosa tti kafaltoota galii gibira sadarka “B’’ akkata galii
gibiraa ittii tilmamamuu, itttiin murta’uu fi ittin sassabamu hanqinnota qoa’annoo fi qorannoo
gageeffamu obbo Bashiiir kadiir Harambee University barata public Bisiness Adeministirashin
tti.
Qo’annoo fi qorannoo Kun kayyoon isaa akkata “galii gibiraa motummaa ittiin tilmamamu,
itttiin murta’uu fi ittiin sassabamuu rakkinnota mul’ataan’’ mataa dure jedhu irratti Kan
gaggeffamu yoo ta’u barnoota public Bissinees Adeeministereshin mastersittiin Kan guutamu
fudhatamu ta’a.
Qo’annoo fi qorannichi qamotaa seera basuuf, seera hikuu fi hawaasa kafaloota galii gibira ni
tajajila jedhame eegama.
Qo’annoo fi qorannoo Kun fedha irratti Kan hunada’e ta’a .Gafannoowaan deebiin kennamu
icittiin isaan eenyumma deebii deebisa Kan hin ibsine ta’a. Deebii hatanatama nafi kenitanniif
duran durse galani Koo isiin haa gahu.
Gaffilee kamuufu obbo Bashiir Kadiir odeffannoo armaan gadiittiin na argachu ni dandessuu.
Lakkofsa bilbila harka 09 13199259.
Lakkofsa email; beshirkedir2021@gamil.com
Galatooma.
Kuta 1ffaa kafaltoota galii gibirattiif gafilee dhiyataan.
A.Ragaa kafalaa galii gibirattin guutamu
Kafaltoota galii gibira iddoo  qophayyee irrattii mallatoo (X) yadaa kessaan ibsuu kayyaa.
1 .Salaa:  dhi dubra

26
 2. Umrii:  waggaa 20 gadii  waggaa 20_30  waggaa 31_40  waggaa 41
ol.
3. Sadarka barnoota:
 Sadarka 1ffaafi Sana gadii  sadarka 2ffaa  Diploma
 Degree jalqaba  Degree 2ffaa fi ol
4. Dhabatichi bara kami hundeffame?
 Waggaa 3 gadii  Waggaa 4_6  Waggaa 6_8  Waggaa 9 ol
5. Hallii maatii ilalichise.
 Kan fudhe/herumte  Kan hinfudhin/hinherumin  Kan ga’ela dige/digide
 du’aa addaa bahan  Kan biro
6. Walgalaa dhabatichi tajajila malirraa boba’ee?
 Tajajila kenna  Jimilaa ykn qinxaaboo  Omishaa  Kan biro
7. Qama seerummaa dhabaticha.
 Kan dhufa Shirkina  Waldaan Kan biro
8. Galiin keessan Kan waggaa meeqa ta’a?
 Qarshii kuma 50,000gadii  Qarshii kuma 100,000 gadii
Qarshii kuma 500,000 Qarshii miliyona 1 fi ol.
Kuta 2ffaa.
B. Yeroo galii gibira kafaluuf gara abbaa tayitaa galiwwan deemtan mudannoon isiin mudate
jira?
 Eeyyee  Lakkii
Kabajamtoota kafaltoota galii gibiraa gafilee itti-anan jiran irrattii yadaa qabdan (Tilmama humna
ol, Iftoomina ilaalchise , Leenjii kafaltoota galii gibiraa, yeroo kafalttii galii gibiraa fi
hirmachisummaa dhabuu ilaalchise) kennaa tajajila Abbaa tayitaa galiwaan Aanaa Lodee
Heexosa mallatoota (X) yaada keessaan ibsuu kayyaa .
Lak
kofs Qabxilee yadiin irraa kennamuu. Eyyee Eyyee Yadaa Lakkii Bay’ee
a Bay’ee hin sirrii miti
sirrii dha qabu

A. Tilmama humna ol ilalichise

27
1 Tilmamiin galii gibiraa
gageeffamuu sirrii miti.
2 Tilmamiin galii gibira kafalamuu
dandettii kafalaa gibira gidduu
galessaa kan godhate miti.
3 Kafalittii galii gibira kafalamu
shakii irraa bilisa kan ta’e dha.
4 Kafalittiin galii gibira
gageeffamuu kan kafalaa gibiraa
wal-qixummaan ilaluu miti.
B. Iftoomina ilaalchise
5 Isiin waa’ee galii gibiraa irratti
hubannoo gaha hin arganne.
6 Yeroo galii gibira kafaluuf gara
Abba tayita galiiwwan deemtan
rakkolee gahumsa dhabuu
hojatoota, ilaalicha addaa
qooddinsa fi hanqinna wal-
qixummaan simatu mamiltoota ni
jira.
7 Isiin kara ifaa ta’ee fi hubannoo
gaha qabun waa’ee galii gibiraa
hin hubanne.
8 Tilmama galii gibiraa tilmamame
jiruf yoo kisaran isiin muddate
rakkoon isiin qunnamef yeroon
kafaltti galii gibiraaf kenname
gaha miti.

9 Yeroo tilmama galii gibiraa

gageeffamu iftoomiina kara ittii
fufinsa qabun hin mul’atu.

28
 C. Leenjii kafaltoota galii
gibiraa ilalichise
10
Hubannoo galii gibira irraatti isiin
argatan kalattii media,
barreeffamota fi tooftalee adda
addaan odeffannoo gaha kafalttii
galii gibira sera hoji irraa jiru
foyyessa adema hin jiru.

11 Yeroo kafalittiin galii gibiraa

gageeffamu odeffannoo gaha
ademsaa galii gibira foyyessuu hin
jiru.
12 Isiin tilmamin kafalttii galii gibira
si’aa gageffamuu akkumma jirutti
hin fudhatan.
13 Isiinf yeroo tilmamin kafaltti galii
gibiraa dandii sirrii fi qabatama
hintanen rawwatame furmaan ni
kennama.

D. Yeroo kafalttii galii gibiraa

ilalichise.
14 Yeroon kafalttii galii gibiraaf
ta’ee haqaaqbessa fi gaha miti.

15 Yeroon kafalitti galii gibira

kenname gaha miti.
16 Yeroo tilmamiin galii gibira
gageeffamuu maxantummaan ni
calqisaa.

29
17 Rakkoolee mula’ulataan marii fi
kallatti furmataa ta’uun qamoota
dhimmii ilaluun sirreeffama
adeema jira.

E. Hirmachisummaa dhabuu
ilaalchise.
18 Motummaan kafaltoota galii gibira
yeroo wixinnee kafalootaa galii
gibiraa qophesuu dhimmamtoota
irrattii hin hirmachisuu.

19 Motummaan dubii-deebii gaha

ta’ee akkata galii gibiraa ittii-
sasabamuu irrattii xiyyeffannoo
hin kennine.
20 Motummaan yeroo qajeelffama
galii gibiraa hojii irraa olchu
yadoota kafalaa galii gibira irra
ka’aniif xiyyeefannoo hin kennu.
21 Kafaltoon galii gibiraa bakka
bu’aa isaa caasaa
Abbaa tayitaa galiiwwan kessaa
hin qaban.
22 Tilmamiin galii gibiraa yeroo
gageeffamu kafaltoota galii
gibiraa gulantaa hundaa irraa
hirmachisuun hin barbachisuu.

30
31