FACTORS AFFECTING BUSINESS INCOME TAX EVASION AMONG CATEGORY ‘A’ TAXPAYERS: THE CASE OF GONDAR CITY, AMHARA REGIONAL STATE
Abstract
Tax evasion is a worldwide phenomenon and it is by nature an exceeding difficult phenomenon to observe and research. The problem is especially acute developing economies, like our country Ethiopia.Tax evasion undermines the ability of a government to raise revenue in an equitable and efficient manner. However, research on the tax evasions in Ethiopia is still scanty. Hence, this paper intends to by identifying the determinant factors of business income tax evasion by category ‘A’ taxpayers in Gondar city thereby bridging the literature gap and assisting policy makers in designing appropriate public policy by revealing the magnitude of the sector. The study adopted a mixed method research approach to test the hypotheses and answer research question. The questionnaires dispatched to the sample of 206 business income taxpayers of which 163 were responded self-administered questionnaires and the remaining 30 through in-depth-interview. The latest statistical package for social science software (SPSS Version 16.), chi-square test analyses were used to analyses the survey and thematic analysis was applied to in-depth interviews. According to the response of the respondents, certain factors were found to be the determinants of causes of business income tax evasion. These are, demographic variables(gender, age, education level), socio-economic variables ( working type, business activities and year of the business) ,tax fairness and equity, high tax rates, unreasonable estimation of tax liability, complexity of tax structure, organizational efficiency level of the tax authority, low awareness level of the taxpayers, social norms, and insufficient provision of social services by the government. Finally, based on the findings possible recommendations were given. These include, the tax authority should educate taxpayer and conducting extensive awareness creation programs, maintaining tax fairness and equity, estimate tax liability based on reasonable data, develop communication with tax payers and reduce tensions, building capacity of the tax authority, and providing social services to the general public and finally the government check the tax law or tax structure of the country.
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