Arbaminch University College of Business and Economics Department of Accounting and Financ
Arbaminch University College of Business and Economics Department of Accounting and Financ
Arbaminch University College of Business and Economics Department of Accounting and Financ
ARBAMINCH, ETHIOPIA
FEB,2022
Table of Contents
1 INTRODUCTION....................................................................................................................................3
1.2 locations...........................................................................................................................................4
1.3 Objectives of the study..................................................................................................................4
1.3.1 General objective........................................................................................................................4
1.3.2 Specific objectives......................................................................................................................4
1.4 Problem of the study.........................................................................................................................5
1.5 Significance of the study................................................................................................................6
1.6 Scope of the study..........................................................................................................................6
1.7 Research Design and Methodology...................................................................................................6
1.7.1 Research design the research is description...................................................................................6
1.7.2 Population and sampling technique...........................................................................................7
. 1.7.3 Type of data collected...............................................................................................................7
1.7.4 Methods of data collection.........................................................................................................7
1.7.5 Data analysis method.................................................................................................................7
1.8 Limitation Of the study..................................................................................................................7
1.8. Organization of the paper.............................................................................................................7
REFERENCE..............................................................................................................................................8
1 INTRODUCTION
Taxes are important sources of public revenue. Public goods such as roads, power, municipal
services, and other public infrastructures are normally supplied by public agencies due to their
natures of non-rivalry and non-excludability (Joseph, 2008). Government intervention in the
supply of public goods is therefore inevitable and can only be done if the public pays taxes for
the production and supply of such goods (Fjeldstad, 2004). Taxation is one of the important
elements in managing national income, especially in developed countries and has played an
important role in civilized societies since their birth thousands years ago (Lymer and Oats,
2009: ). Tax is defined as „a compulsory levy, imposed by government or other tax raising body,
on income, expenditure, or capital assets, for which the taxpayer receives nothing specific in
return‟ (Lymer andOats, 2009).
As compared to the developing countries, the developed countries have been able to generate
substantial revenue through imposing of taxes one of reasons for this has been the efficient tax
system operating in the developing economies which are characterized by weak monetary and
low development of the formal sectors.
VAT is a tax not on the total value of the good being sold, but only on the value added to it by
the last seller who is liable to pay a tax not on its gross value, but not value, that is the gross
minus the value of inputs. (Bahitia, HL; 1998). VAT is an indirect tax that is charged whenever a
taxable person makes a taxable supply of goods and services in the course of his business
although it is finally born by the consumer. (Hancock; 1995).
Value added tax (VAT) is a new system introduced in Ethiopia. This tax system is not new to
other countries.
Beginning with the adoption of tax sur, lavaliere adopted by France in 1954, it was gradually
been adoption by other countries (purhot,2000). The development this tax system is so fast it has
now been employed by a large number of Latin American, Asian, African and pacific countries
value Added tax (VAT) has become a major tax instrument worldwide. The global trend to
introduced VAT in more countries is continuing (Goode,1993). Ethiopians tax reform program
has introduced VAT since January 2003.
sThe Ethiopian government has introduce, VAT as part of the overall tax reform program. The
tax reform program is preceded by establishment of a new ministry of revenue as a first step to
improve tax collections and to combat fiscal fraud.
1.2 locations
This research is conducted on Gidole Town and which is located in southern part of Ethiopia. the
town is around 323 KM away from Hawassa the capital city of SNNP.
4. To see the strength and weakness of VAT collection practice in Gidole town
Bearing in mind the above issues, this study largely focused on the accessing of VAT collection
practice of Gidole town Revenue Authority and recommending possible solutions for
sustainable utilization and management of the VAT collection practice and gives the awareness
of VAT practice.
.
Therefore this study tries to answer the following principal questions.
What are the possible reasons that may encourage business enterprise and individual
business persons to evading VAT practice?
What are the strengths and weaknesses of VAT collection in Gidole Town?
Is there any measures taken by Gidole town revenue authority to control VAT
evasion or avoidance?
What are the major problems of Vat collection practice?
To what extent is VAT payer developed awareness towards VAT?
REFERENCE
Bahita H.L --- 1998, Public finance, Vikas publishing 19th ed, 1998.
Gills Malcolm et al., 1990, value added tax in developing counties, A world bank
Hancock Dore, 1998, Taxation policy and practice. Hapman and Hall, 3 rd, 1998. Misrak Tesfaye
(msc), 2008 first edition.