A Study on Challenges of Tax Revenue Assessment and Collection in Ethiopia with Reference to Custom and Revenue Authority

Abstract

Tax is a compulsory payment for the government without the expectation of direct benefit or return from tax payers. The world country’s tax revenue is characterizing by high tax rates and narrow tax base, complex and outdated tax law, unrevised and weak tax administration this leads to challenges on the assessment and collection of tax. Tax system complexity has been an issue of concern for stakeholders in developing and advanced countries (Misrak Tesfaye 2014). This paper focuses on to identify on challenges of tax revenue assessment and collection in Ethiopia with reference to custom and revenue authority. The study was employed by using both descriptive and explanatory research design with quantitative and qualitative methods. The quantitative aspect of the data focused on description of socio- economic variables, tax and business related variables and analysis of relationship among the dependent and explanatory variables of the authority. Explanatory research study is most appropriate because it is more efficient, economical and flexible enough to minimize bias and maximize reliability of the collected data. From this study it is found that the factors regarding the tax collector’s the major one, that faced is lack of experience, lack of motivation, unfairness, partiality, and corruption are some of them(Identified through questionnaire). Regarding tax payers were lack of motivation, lack of adequate knowledge, confidence, willingness, are the major ones. Also the model shows the relationship among the dependent and independent variables are significant.