Examining Value Added Tax Administration Practice in Ethiopia

Abstract

Tax is the major source for government. Previous empirical evidence was focused on assessment of other types of taxes from business taxpayers’ context only and ignored assessment of VAT administration practice from tax authority employees. But this study was addressed on VAT administration practice in Ethiopia. The objective of this study was to assess VAT administration practice in Ethiopian ministry of revenue Hawassa branch. A mixed research approach and descriptive research design was employed by researchers. Both primary and secondary data sources were used. The source for primary data was employees of revenue authority. The sources for secondary data analysis were annual reports from 2003 to 2012 E.C.  Descriptive statistics was employed to analysis the data. The VAT administration particle of the branch is poor.  The branch should examine the big potential it has in terms of skilled human resources and technology should also formulate effective strategy that helps them to explore and use such potential. To exhaustively collect all revenues generated by the economic activities of the country, the authority should identify possible opportunities and use its internal strength to combat external challenges. In this regard, more attention should be given to minimize internal inefficacies in VAT administration as such factors are controllable to the branch.  To avoid the implementation failure it faced, the branch needs to re-visit its revenue collection strategy and should come simple and easily implementable one.