ADMAS UNIVERSITY

SCHOOL OF POSTGRADUATE STUDIES

Department: Accounting and Finance Program

A Project Proposal Submitted to Admas University College-In

Partial Fulfillment of the Requirements for the Master of
Accounting and Finance Program

Title: The Role of Revenue Authorities in Enhancing Tax Compliance in

the Case of Addis Ababa Revenue Bureau Mercato NO. 2 Office

Prepared By: Bezawit Fantahun

Advisor: Shewit K. (PhD)

Addis Ababa, Ethiopia

February, 2024
Table of Contents
Table of Contents.........................................................................................................................................i

List of table..................................................................................................................................................ii

Chapter One...................................................................................................Error! Bookmark not defined.

1.1. Background of the Study..................................................................................................................1

1.2. Statement of the Problem..................................................................................................................2

1.3. Research Objectives.........................................................................................................................3

1.3.1. General Objective......................................................................................................................3

1.3.2. Specific Objectives....................................................................................................................3

1.4. Research Questions/Hypotheses.......................................................................................................3

1.5. Significance of the Study..................................................................................................................4

1.6. Scope and Limitation of the Study....................................................................................................5

1.7. Definition of Terminologies and Measurement of Variables............................................................6

1.7.1. Definition of Terminologies......................................................................................................6

1.7.2. Measurement of Variables.........................................................................................................7

2.1. Brief of Major Concepts and Theories..............................................................................................8

2.2. Conceptual Framework the study.....................................................................................................9

Chapter 3: Research Methodology............................................................................................................10

3.1. Description of the Study Area.........................................................................................................10

3.2. Research Design.............................................................................................................................10

3.3. Research Approach.........................................................................................................................10

3.4. Population and sampling.................................................................................................................11

3.4.1. Study population......................................................................................................................11

3.4.2. Sample Size.............................................................................................................................11

3.4.3. Sampling Method.....................................................................................................................12

i
 3.5. Data Source and Collection Methods..............................................................................................13

3.6. Method of Data Analysis................................................................................................................13

3.7. Reliability and Validity Test...........................................................................................................13

3.8. Ethical Considerations....................................................................................................................14

3.9. Work Plan and budget breakdown..................................................................................................15

3.9.1. Work plan/Time frame.............................................................................................................15

3.9.2 Budget breakdown....................................................................................................................16

References.................................................................................................................................................17

Appendices................................................................................................................................................18

List of table
Table 1: population size.............................................................................................................................11

Table 2: Ethical Considerations..................................................................................................................14

Table 3: Time Frame..................................................................................................................................15

Table 4: Budget breakdown.......................................................................................................................16

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ChapterOne
1. Introduction
Tax compliance and effective tax administration are crucial components of a well-functioning
economy. Revenue authorities play a vital role in promoting compliance and administering tax
systems efficiently. This research proposal aims to investigate the role of revenue authorities in
enhancing tax compliance and administration, focusing specifically on the Addis Ababa Revenue
Bureau Mercato No. 2 Office in Ethiopia. By examining the strategies, practices, and challenges
faced by the revenue authorities in this particular office, the study aims to contribute to the
existing knowledge on tax compliance and administration in Ethiopia and provide valuable
insights for policymakers and revenue authorities.

1.1. Background of the Study

Taxation serves as a primary source of revenue for governments worldwide, enabling them to
fund public services and promote socio-economic development. In Ethiopia, tax revenues play a
crucial role in financing government programs and initiatives aimed at improving the country's
infrastructure, healthcare, education, and other essential services. However, despite the
government's efforts to enhance tax compliance and administration, there are still significant
gaps in achieving optimal tax revenue collection. The Addis Ababa Revenue Bureau Mercato
No. 2 Office is a key entity responsible for tax collection and administration in the capital city of
Ethiopia. Understanding the role of revenue authorities in this office is critical for identifying
effective strategies and practices that can be implemented to enhance tax compliance and
administration in the region.

The effective administration and enforcement of tax laws play a crucial role in generating
revenue for governments and fostering economic development. Revenue authorities play a key
role in enhancing tax compliance and administration by implementing policies, enforcing tax
laws, and providing support to taxpayers. In Ethiopia, the Addis Ababa Revenue Bureau Mercato
No. 2 office is responsible for tax administration and compliance in its jurisdiction.
Understanding the role of revenue authorities, specifically the Addis Ababa Revenue Bureau
Mercato No. 2 office, in enhancing tax compliance and administration is essential for improving
revenue collection and promoting economic growth.

1
1.2. Statement of the Problem
Tax compliance and administration are crucial for the economic development of any country. In
Ethiopia, the role of revenue authorities in enhancing tax compliance and administration has
been a topic of discussion for many years. The Addis Ababa Revenue Bureau Mercato No. 2
Office is one of the revenue authorities in Ethiopia that is responsible for collecting taxes from
businesses and individuals in the city. Despite the efforts made by the revenue bureau to enhance
tax compliance and administration, there are still challenges that hinder the achievement of their
objectives.
One of the major challenges faced by the Addis Ababa Revenue Bureau Mercato No. 2 Office is
the low level of tax compliance among taxpayers. Many businesses and individuals in the city do
not comply with tax regulations, which leads to a significant loss of revenue for the government.
This problem is compounded by the lack of awareness among taxpayers about their tax
obligations and the consequences of non-compliance.
Another challenge faced by the revenue bureau is the limited capacity of its staff to effectively
enforce tax regulations. The bureau has a limited number of staff, and they are often
overwhelmed by the large number of taxpayers they are responsible for. This leads to a lack of
proper monitoring and enforcement of tax regulations, which further exacerbates the problem of
low tax compliance.
Furthermore, the revenue bureau faces challenges in terms of the use of technology in tax
administration. The bureau has limited resources to invest in modern technology, which makes it
difficult to effectively monitor and enforce tax regulations. This also leads to a lack of
transparency in the tax administration process, which can further erode taxpayers' trust in the
revenue bureau.
In light of these challenges, there is a need for research to investigate the role of revenue
authorities in enhancing tax compliance and administration in Ethiopia, with a focus on the
Addis Ababa Revenue Bureau Mercato No. 2 Office. The research will aim to identify the
factors that contribute to low tax compliance, assess the effectiveness of the revenue bureau's
strategies to enhance tax compliance, and recommend measures to improve tax administration in
the city. This research will be of great significance to policymakers, revenue authorities, and
taxpayers in Ethiopia, as it will provide insights into how tax compliance and administration can
be improved to support economic development.

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1.3. Research Objectives

1.3.1. General Objective

 The general objective of this research is to examine the role of the Addis Ababa Revenue
Bureau Mercato No. 2 office in enhancing tax compliance and administration in Ethiopia.

1.3.2. Specific Objectives

 To identify the factors influencing taxpayers' compliance with tax regulations at the Addis
Ababa Revenue Bureau Mercato No 2 office.
 To examine the strategies implemented by the Addis Ababa Revenue Bureau Mercato No 2
office to improve tax compliance among taxpayers.
 To assess the challenges faced by the Addis Ababa Revenue Bureau Mercato No 2 office in
detecting and addressing tax evasion.
 To analyze how the Addis Ababa Revenue Bureau Mercato No 2 office handles non-
compliant taxpayers and the challenges in enforcement.
 To investigate the collaborative strategies employed by the Addis Ababa Revenue Bureau
Mercato No 2 office with other government agencies to enhance tax compliance.

1.4. Research Questions/Hypotheses

1) What factors influence taxpayers' compliance with tax regulations at the Addis Ababa
Revenue Bureau Mercato No 2 office?

2) What strategies has the Addis Ababa Revenue Bureau Mercato No 2 office implemented to
improve tax compliance among taxpayers?

3) What are the challenges faced by the Addis Ababa Revenue Bureau Mercato No 2 office in
detecting and addressing tax evasion?

4) How does the Addis Ababa Revenue Bureau Mercato No 2 office handle non-compliant
taxpayers, and what are the challenges in enforcement?

5) What collaborative strategies has the Addis Ababa Revenue Bureau Mercato No 2 office
utilized with other government agencies to enhance tax compliance?
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1.5. Significance of the Study
This research will contribute to the existing body of knowledge on tax compliance and
administration in Ethiopia, specifically in the context of the Addis Ababa Revenue Bureau
Mercato No. 2 office. The findings will provide insights into the challenges faced by revenue
authorities and help develop effective strategies to enhance tax compliance. The study's
outcomes will be beneficial to policymakers, tax administrators, and researchers in the field of
taxation and public finance. The study on the role of revenue authorities in enhancing tax
compliance and administration in Ethiopia, with a focus on the Addis Ababa Revenue Bureau
Mercato No. 2 Office, is of great significance for several reasons.
Firstly, the study will contribute to the existing literature on tax compliance and administration in
Ethiopia. While there have been some studies on this topic, there is still a need for more research
to identify the factors that contribute to low tax compliance and to assess the effectiveness of
strategies to enhance tax compliance. The study will provide insights into these issues, which
will be useful for policymakers, revenue authorities, and researchers.
Secondly, the study will provide insights into the challenges faced by revenue authorities in
Ethiopia in enhancing tax compliance and administration. This will be useful for revenue
authorities in Ethiopia, as it will help them to identify areas where they need to improve their
strategies and operations. The study will also provide insights into the challenges faced by
revenue authorities in other developing countries, which will be useful for policymakers and
researchers in those countries.
Thirdly, the study will provide recommendations for improving tax compliance and
administration in Ethiopia. These recommendations will be based on the findings of the study
and will be useful for revenue authorities, policymakers, and taxpayers in Ethiopia. The
recommendations will also be useful for revenue authorities in other developing countries, as
they will provide insights into effective strategies for enhancing tax compliance and
administration.
Finally, the study will contribute to the economic development of Ethiopia. Tax revenue is an
important source of revenue for the government, and improving tax compliance and
administration will lead to increased revenue for the government. This, in turn, will enable the
government to invest in infrastructure, education, and healthcare, which will contribute to the
economic development of the country.

4
In conclusion, the study on the role of revenue authorities in enhancing tax compliance sand
administration in Ethiopia, with a focus on the Addis Ababa Revenue Bureau Mercato No. 2
Office, is of great significance for policymakers, revenue authorities, researchers, and taxpayers
in Ethiopia. The study will provide insights into the challenges faced by revenue authorities in
enhancing tax compliance and administration, and will provide recommendations for improving
tax compliance and administration in the country.

1.6. Scope and Limitation of the Study

This research will focus on the role of the Addis Ababa Revenue Bureau Mercato No. 2 office in
tax compliance and administration within its jurisdiction. The study will primarily rely on data
collected from taxpayers and officials of the revenue bureau. However, the research will not
extensively cover the broader tax system in Ethiopia or other revenue offices outside the study
area. The proposed research aims to investigate the role of revenue authorities in enhancing tax
compliance and administration in Ethiopia, with a specific focus on the Addis Ababa Revenue
Bureau Mercato No. 2 Office. The scope of this study will involve examining the strategies and
practices employed by the revenue authorities in Ethiopia, particularly within the Addis Ababa
region, to promote tax compliance among individuals and businesses. This will include an
analysis of the legal framework, enforcement mechanisms, and taxpayer education initiatives
implemented by the revenue authorities to improve tax compliance rates.

Furthermore, the study will explore the challenges and barriers faced by revenue authorities in
Ethiopia, specifically within the Addis Ababa Revenue Bureau Mercato No. 2 Office, in their
efforts to enhance tax compliance and administration. This will involve an examination of factors
such as limited resources, capacity constraints, corruption, and taxpayer resistance that may
hinder the effectiveness of revenue collection efforts.

However, it is important to note that this study has certain limitations. Firstly, the research will
be limited to the Addis Ababa Revenue Bureau Mercato No. 2 Office and may not capture the
full range of experiences and practices in other regions of Ethiopia. Additionally, the study will
rely primarily on secondary data sources such as official reports, academic literature, and
government publications, which may limit the depth of analysis. Furthermore, due to time

5
constraints and resource limitations, the research may not be able to conduct extensive fieldwork
or interviews with key stakeholders in the tax administration system.

In conclusion, while this study will provide valuable insights into the role of revenue authorities
in enhancing tax compliance and administration in Ethiopia, particularly within the Addis Ababa
region, it is important to acknowledge its limitations in terms of scope and methodology. Further
research may be needed to provide a more comprehensive understanding of this complex issue.

1.7. Definition of Terminologies and Measurement of Variables

1.7.1.DefinitionofTerminologies
In the context of tax compliance and administration in Ethiopia, particularly within the Addis
Ababa Revenue Bureau Mercato No. 2 Office, several key terminologies and variables need to
be defined and measured to facilitate a comprehensive research study. Firstly, tax compliance
refers to the extent to which individuals and businesses adhere to tax laws and regulations by
accurately reporting their income, paying the correct amount of taxes, and submitting required
documentation to the revenue authorities. Tax compliance can be measured through various
indicators, including the tax gap (the difference between the amount of taxes owed and the
amount actually collected), the voluntary compliance rate (the percentage of taxpayers who
willingly comply with tax laws), and the level of tax evasion (the intentional non-payment or
underpayment of taxes). On the other hand, tax administration encompasses the processes,
procedures, and systems implemented by revenue authorities to enforce tax laws, collect taxes,
and provide taxpayer services. Key components of tax administration include taxpayer
registration, tax assessment, audit and enforcement activities, taxpayer education and outreach
programs, and the use of technology for efficient revenue collection. Measurement of tax
administration effectiveness can be done through indicators such as the tax collection rate (the
percentage of taxes collected compared to the total amount owed), the audit coverage rate (the
proportion of taxpayers audited each year), and the taxpayer satisfaction rate (feedback from
taxpayers on the quality of services provided by revenue authorities).

Furthermore, in the context of the Addis Ababa Revenue Bureau Mercato No. 2 Office, specific
variables such as the number of registered taxpayers, the amount of tax revenue collected, the
rate of tax compliance, the level of taxpayer satisfaction, and the frequency of tax audits can be
6
used to assess the performance and impact of revenue authorities in enhancing tax compliance.
These variables can be quantitatively measured through data analysis, surveys, interviews, and
observation methods to provide a comprehensive understanding of the challenges and
opportunities for improving tax administration in Addis Ababa.

1.7.2. Measurement of Variables

To measure the variables related to tax compliance and administration in this study, a
combination of quantitative and qualitative methods will be employed. Quantitative data will be
collected through surveys and structured questionnaires to assess the level of tax compliance,
administrative efficiency, and effectiveness of strategies employed by revenue authorities.
Qualitative data will be gathered through interviews and focus group discussions to gain in-depth
insights into the challenges faced by revenue authorities and the experiences of taxpayers in the
Addis Ababa Revenue Bureau Mercato No. 2 Office.

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Chapter 2: Review of Literature
In this chapter, the review of literature will explore key concepts and theories related to tax
compliance and administration. It will include an analysis of relevant studies, scholarly articles,
and publications that provide insights into the factors influencing tax compliance and effective
tax administration. The review will cover topics such as taxpayer behavior, enforcement
strategies, taxpayer education, and the role of revenue authorities in promoting compliance. Tax
compliance and administration are crucial for the economic development of any country. In
Ethiopia, the role of revenue authorities in enhancing tax compliance and administration is of
utmost importance. The Addis Ababa Revenue Bureau Mercato No. 2 Office is one of the key
revenue authorities in Ethiopia, responsible for collecting taxes from businesses and individuals
operating in the area. The office plays a significant role in ensuring that taxpayers comply with
tax laws and regulations, and that tax revenues are collected efficiently and effectively.
The literature on tax compliance and administration in Ethiopia is limited, but there are several
studies that have been conducted on the topic. These studies have identified various factors that
influence tax compliance and administration in Ethiopia, including the level of tax awareness
among taxpayers, the effectiveness of tax collection systems, and the role of revenue authorities
in enforcing tax laws and regulations.

2.1. Brief of Major Concepts and Theories

The major concepts and theories that will be used in this research proposal include tax
compliance, tax administration, revenue authorities, tax awareness, tax collection systems, and
tax laws and regulations. Tax compliance refers to the extent to which taxpayers comply with tax
laws and regulations. Tax administration refers to the process of collecting taxes and enforcing
tax laws and regulations. Revenue authorities are government agencies responsible for collecting
taxes. Tax awareness refers to the level of knowledge and understanding that taxpayers have
about tax laws and regulations. Tax collection systems refer to the methods and procedures used
to collect taxes. Tax laws and regulations refer to the legal framework governing the collection
of taxes.

2.2. Conceptual Framework the study

The conceptual framework for this research proposal will be structured around the key variables
that influence tax compliance and administration in Ethiopia, with a specific focus on the Addis
8
Ababa Revenue Bureau Mercato No. 2 office. If applicable, a conceptual framework will be
developed to illustrate the relationships between variables and factors influencing tax compliance
and administration. The framework will provide a visual representation of the key concepts and
their interconnections, facilitating a better understanding of the research topic. The framework
will include the following components.
The conceptual framework for this study on the role of revenue authorities in enhancing tax
compliance in the case of the Addis Ababa Revenue Bureau (AARB) Mercato No. 2 office will
include both dependent and independent variables. The dependent variable in this study is tax
compliance, which refers to the extent to which taxpayers in the Mercato No. 2 office area
comply with their tax obligations. The independent variables are the factors, strategies, and
challenges that influence tax compliance.

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Chapter 3: Research Methodology

3.1. Description of the Study Area

The study area is Addis Ababa, the capital city of Ethiopia, specifically focusing on the
operations of the Mercato No. 2 Office of the Addis Ababa Revenue Bureau. This office was
selected because it is one of the busiest revenue collection centers in the city, and it is expected
to provide valuable insights into the role of revenue authorities in enhancing tax compliance and
administration. This office plays a crucial role in tax collection and administration within the
city. This section will provide a detailed description of the Addis Ababa Revenue Bureau
Mercato No. 2 office, its jurisdiction, and the tax system in place. It will outline the specific
characteristics of the study area relevant to the research objectives.

3.2. Research Design

This study will utilize a quantitative research design to analyze the effectiveness of revenue
authorities in improving tax compliance. The research design will involve collecting numerical
data to measure the impact of various factors on tax compliance levels.
The research design will be descriptive and analytical in nature. It will involve the collection of
primary data through surveys, interviews, and observations. Secondary data from relevant
sources such as tax reports and publications will also be utilized.

3.3. Research Approach

The research approach will be a combination of qualitative and quantitative methods, starting
with the general concept of revenue authorities' role in tax compliance and then testing specific
hypotheses related to the Addis Ababa Revenue Bureau Mercato No. 2 Office. Qualitative data
will be collected through interviews and observations to gain insights into the perceptions and
experiences of taxpayers and officials. Quantitative data will be collected through surveys to
gather numerical data on tax compliance levels and other relevant variables.

10
3.4. Population and sampling
3.4.1.Studypopulation
the study population for this research on the role of revenue authorities in enhancing tax
compliance in the case of the Addis Ababa Revenue Bureau (AARB) Mercato No. 2 office is the
taxpayers registered with the AARB in the Mercato No. 2 office area including; Small and
Medium Enterprises (SMEs), Retail and Wholesale Businesses, Service Industries (e.g.,
hospitality, healthcare, professional services) Manufacturing and Industrial Sectors, Construction
Companies, Financial Services (e.g., banks, insurance companies), Agricultural and Farming
Businesses, Import and Export Companies and Educational Institutions. In this study the total
target population is 5000

Table 1: population size

Sectors Location Population size

Small and Medium AARB Mercato No. 2 office 200
Enterprises
Retail and Wholesale AARB Mercato No. 2 office 400
Businesses
Service Industries AARB Mercato No. 2 office 300
Manufacturing and Industrial AARB Mercato No. 2 office 600
sector
Construction Companies AARB Mercato No. 2 office 500
Financial Services AARB Mercato No. 2 office 800
Educational Institutions AARB Mercato No. 2 office 1200
Total 5000

3.4.2. Sample Size

The sample size for this study will depend on various factors, such as the available resources,
time constraints, and the desired level of precision. To determine an appropriate sample size,
statistical techniques like sample size calculation formula (Yamane’s formula) can be employed.
These formulas take into account factors such as the population size, desired level of confidence,
margin of error, and estimated variability. By using these calculations, a suitable sample size can
11
be determined to ensure the study's results are statistically significant and representative of the
target population.
To calculate the sample size using Yamane's formula, we'll need to follow these steps:

Step 1: Determine the study population (N)

In this case, the study population is 5000.
Step 2: Determine the desired level of precision (e)
The desired level of precision depends the research objectives and the acceptable margin of
error. Let's assume a 5% precision level (e = 0.05).
Step 3: Apply Yamane's formula
Yamane's formula is given by:
n = N / (1 + N (e^2))
n = N / (1 + N (0.5^2))

Where
n = Sample size
N = Study population
e = Level of precision or error

- Small and Medium Enterprise: n = 200 / (1 + 200(0.05^2)) ≈ 178.57 (rounded up to 179)

- Retail and Wholesale Sector: n = 400 / (1 + 400(0.05^2)) ≈ 269.84 (rounded up to 270)
- Service Industry Sector: n = 300 / (1 + 300(0.05^2)) ≈ 232.14 (rounded up to 233)
- Manufacturing Sector: n = 600 / (1 + 600(0.05^2)) ≈ 402.68 (rounded up to 403)
- Construction Company: n = 500 / (1 + 500(0.05^2)) ≈ 344.83 (rounded up to 345)
- Finance Service: n = 800 / (1 + 800(0.05^2)) ≈ 497.51 (rounded up to 498)
- Educational Sector: n = 1200 / (1 + 1200(0.05^2)) ≈ 674.15 (rounded up to 675)

3.4.3. Sampling Method

The sampling method for this study can be a combination of stratified and random sampling.
Stratified sampling involves dividing the study population into homogeneous groups or strata
based on relevant characteristics. In this case, the strata could be based on factors such as
12
business size, industry type, or tax compliance history. From each stratum, a random sample of
taxpayers can be selected to ensure representation from all relevant segments of the population .

3.5. Data Source and Collection Methods

The data sources for this study will be primary and secondary sources. Primary data will be
collected through structured questionnaires administered to taxpayers and semi-structured
interviews conducted with officials of the revenue bureau. Secondary data will be obtained from
reports, publications, and other relevant documents. The data collection methods will be
designed to gather information on tax compliance levels, factors influencing compliance, and the
effectiveness of strategies implemented by the revenue bureau. The data collection instruments
will be interview guides and observation checklists.

3.6. Method of Data Analysis

The collected data will be analyzed using appropriate statistical techniques. Descriptive statistics
will be used to summarize and present the data. Inferential statistics, such as correlation analysis
and regression analysis, may be employed to examine the relationships between variables and
test hypotheses. Qualitative data will be analyzed through thematic analysis to identify patterns
and themes emerging from the interviews and observations.

3.7. Reliability and Validity Test

Reliability refers to the consistency and stability of the measurement instrument. To establish
reliability, the questionnaire will undergo a pilot test with a small sample of employees. The pilot
test will assess the internal consistency of the questionnaire items using Cronbach's alpha
coefficient. A high Cronbach's alpha value indicates a high level of reliability, suggesting that the
items are measuring the constructs consistently. Test-retest reliability will also be assessed by
administering the questionnaire to a subset of participants on two different occasions. The
questionnaires and interview guides will be pre-tested with a small sample of respondents to
assess their clarity, relevance, and reliability. Any necessary modifications will be made based
on the results of the pilot test.

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3.8. Ethical Considerations
Ethical considerations will be given due attention throughout the research process. The study will
adhere to ethical guidelines and principles, including informed consent, confidentiality, and
voluntary participation. Participants will be provided with information about the study, its
purpose, and their rights as participants. They will have the freedom to decline participation or
withdraw from the study at any time without facing any consequences. To ensure confidentiality,
all data collected will be anonymized and stored securely. Only the research team will have
access to the data, and any identifying information will be removed during the analysis and
reporting stages. The research will comply with ethical guidelines and regulations regarding data
collection, storage, and dissemination. Generally Ethical Considerations are summarized as
follows in the table below.
Table 2: Ethical Considerations

Ethical Considerations Description

Informed Consent Obtain informed consent from all participants, explaining the purpose,
procedures, and potential risks or benefits of the research. Participants
should have the freedom to withdraw from the study at any time.
Confidentiality Ensure the confidentiality of participant information by assigning
unique identifiers, storing data securely, and anonym zing data during
analysis and reporting.
Anonymity Protect the identity of participants by using anonymous identifiers,
ensuring that their names or other identifying information are not
disclosed in research findings or publications.
Data Protection Follow data protection guidelines and regulations to safeguard
participant data throughout the research process, including data
collection, storage, analysis, and dissemination. Data should be stored
securely and accessed only by authorized researchers.
Avoiding Harm Minimize any potential harm or distress to participants by ensuring
that the research activities do not cause physical, psychological, or
emotional harm.
Conflict of Interest Disclose any potential conflicts of interest that may influence the
research findings or bias the interpretation of the results. Maintain
14
 objectivity and integrity in the research process.
Respect for Participants Treat participants with respect, dignity, and fairness. Consider their
cultural, social, and personal backgrounds when designing the
research and interacting with participants.
Compliance with Laws Adhere to all relevant laws, regulations, and ethical guidelines
governing research with human participants.
Transparency Maintain transparency in the research process by providing clear and
accurate information about the research objectives, procedures, and
outcomes to participants, stakeholders, and the wider research
community.

3.9. Work Plan and budget breakdown

3.9.1.Workplan/Timeframe
a detailed work plan will be developed to outline the timeline and activities involved in the
research process. It will include tasks such as literature review, data collection, data analysis, and
report writing. The research will be conducted over a period of five months, starting from
February, 2024, to June 30th, 2024. The following table provides a breakdown of the activities.
Table 3: Time Frame

Activities/tasks Estimated Timeframe/ Completion Date

Research Proposal Development 2 weeks
Literature Review 3 weeks
Data Collection 3 weeks
Data Analysis 5 weeks
Report Writing 4 weeks
Finalizing the Research 3 weeks
Total 20 weeks (approximately 5 months)

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3.9.2 Budget breakdown
A budget will be prepared, taking into account the costs associated with data collection, data
analysis software, research materials, and any other necessary expenses. The following table
provides a breakdown of the budget required to complete the research;
Table 4: Budget breakdown

Item Cost (Ethiopian birr)

Research Materials (stationery, etc.) 1500
Data Collection (Transport & communication 2000
expense)
Data Analysis Software 500
Research Assistance 1000
Miscellaneous 1500
Printing and binding of final report 500

16
References
1. Ethiopian Revenue and Customs Authority. (2019). Annual Report 2018/19. Addis
Ababa, Ethiopia.
2. Addis Ababa Revenue Bureau. (2020). Annual Report 2019/20. Addis Ababa, Ethiopia.
3. Tadesse, T. (2018). Tax Compliance in Ethiopia: Challenges and Prospects. Journal of
Accounting and Taxation, 10(2), 13-23.
4. Tadesse, A., & Gebremedhin, G. (2018). Tax Administration Challenges in Ethiopia: The
Case of Amhara Region Revenue Bureau. Journal of Finance and Economics, 6(2), 64-
75.
5. 2. Tesfaye, A. (2017). Tax Compliance and Revenue Collection Performance: The Case
of Ethiopian Revenue Authority. International Journal of Economics, Commerce and
Management, 5(3), 48-64.
6. 3. Assefa, T., & Abebe, B. (2016). Factors Influencing Tax Compliance Behavior:
Evidence from Small and Medium Enterprises in Ethiopia. Journal of Accounting and
Taxation, 8(3), 45-57.
7. Berhanu, G., & Mulugeta, A. (2019). Enhancing Tax Compliance through Improved
Taxpayer Education: Evidence from Addis Ababa Revenue Bureau. African Journal of
Economic Review, 7(1), 23-37.
8. Ayalew, T., & Mulatu, A. (2015). The Role of Revenue Authorities in Promoting Tax
Compliance: Lessons from Developing Countries. International Journal of Business and
Management, 3(4), 112-125.

17
Appendices
Appendix A: Questionnaire

Factors:
1. Awareness and Understanding of Tax Obligations
- Are you aware of your tax obligations as a taxpayer in the Mercato No. 2 office area?
- Do you understand the different types of taxes you are required to pay?
2. Perceptions of Fairness and Equity in the Tax System
- Do you believe that the tax system treats all taxpayers fairly and equally?
- Do you think the tax rates are reasonable and proportionate to your income/business size?
3. Trust in the Revenue Authority
- How much trust do you have in the Addis Ababa Revenue Bureau (AARB)?
- Do you believe that the AARB effectively enforces tax laws and regulations?
4. Availability and Accessibility of Tax Compliance Resources and Services
- Are you aware of the tax compliance resources and services provided by the AARB?
- Do you find it easy to access the necessary information and support for tax compliance?
5. Level of Taxpayer Education and Financial Literacy
- Have you received any formal education or training regarding tax compliance?
- How confident do you feel in managing your tax-related financial matters?
Strategies:
6. Improving Taxpayer Education and Awareness Programs
- Have you participated in any taxpayer education programs conducted by the AARB?
- Do you find these programs helpful in improving your understanding of tax compliance?
7. Simplifying Tax Processes and Procedures
- Do you find the tax processes and procedures in the Mercato No. 2 office area easy to
understand and follow?
- Have you encountered any difficulties or challenges in complying with the tax requirements?
8. Strengthening Enforcement and Audit Capabilities
- Have you ever been audited by the AARB or any tax authority?
- Do you believe that the AARB effectively detects and addresses tax evasion and non-
compliance?

18
9. Enhancing Taxpayer Services and Support
- Are you satisfied with the level of customer service provided by the AARB?
- Have you received adequate support and assistance when seeking clarification on tax-related
matters?
10. Implementing Technology-Driven Solutions for Tax Administration
- Have you used any online platforms or digital tools provided by the AARB for tax
compliance?
- Do you believe that the use of technology has improved the efficiency of tax administration
processes?
Challenges:
11. Limited Resources and Capacity of the Revenue Authority
- Have you noticed any limitations or constraints in the AARB's ability to effectively
administer tax compliance?
- Do you think the AARB has sufficient resources to carry out its tax enforcement activities?
12. High Prevalence of the Informal Economy and Tax Evasion
- Do you believe that there is a significant informal economy in the Mercato No. 2 office area?
- Have you witnessed or heard about instances of tax evasion among businesses in this area?

13. Lack of Trust and Perceived Corruption in the Revenue Authority

- Do you perceive any corruption or unethical behavior within the AARB?
- How does the level of trust in the AARB affect your willingness to comply with tax
obligations?
14. Complex Tax Laws and Regulations
- Do you find the tax laws and regulations in Ethiopia difficult to understand and interpret?
- Have you faced any challenges in complying with the complex tax requirements?
15. Resistance and Non-Cooperation from Non-Compliant Taxpayers
- In your opinion, how prevalent is non-compliance among taxpayers in the Mercato No. 2
office area?
- Have you observed any instances of non-cooperation from non-compliant taxpayers?
16. Limited Cooperation between Different Government Agencies
- Do you think there is sufficient collaboration and coordination among different government
agencies involved in tax administration?
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 - Have you faced any difficulties due to lack of cooperation between government agencies
regarding tax compliance?
17. Insufficient Data and Information for Effective Tax Administration and Enforcement
- Do you believe that the AARB has access to accurate and comprehensive taxpayer data?
- Have you experienced any issues related to data accuracy or availability in your tax
compliance interactions with the AARB?
Demographic Information:
18. Demographic Information
-What is your age?
-What is your gender?
-What is your occupation?
-What type of business do you operate?
These questionnaires can serve as a starting point for further development and customization
based on the specific objectives of your study and the context of the Addis Ababa Revenue
Bureau (AARB) Mercato No. 2 office.

Appendix B: Data Collection Procedures

1. Surveys: Surveys will be distributed to taxpayers and officials at the Mercato
No. 2 Office to gather quantitative data on tax compliance perceptions and
experiences.
2. Interviews: In-depth interviews will be conducted with selected officials to gain
a deeper understanding of the role of revenue authorities in tax compliance.
3. Observations: Observations will be made at the Mercato No. 2 Office to assess
the operational procedures and interactions related to tax compliance.

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