DETERMINANTS OF TAX COMPLIANCE BEHAVIORS OF TAX PAYERS EVIDENCE FROM CATEGORY ‘A’ TAXPAYERS IN GURAGE ZONE

Abstract

This study sought to identify the determinant of tax compliance in Ethiopia, specifically focusing Behaviors of Taxpayers Evidence from category ‘A’ taxpayers in Gurage Zone. The researcher outlined a detailed literature review and identified the variables for this research to be tax rate, tax knowledge, tax compliance cost; attitude of category ‘A’ taxpayers in Gurage Zone. The research employed descriptive research design. A sample size of were used from a population of Behaviors of Taxpayers Evidence from category ‘A’ taxpayers in Gurage Zone. Data was collected using questionnaires and structured interview. The collected data was analyzed using Statistical Package for Social Scientist software (SPSS V.20) and the findings of the research presented using tables, various chart types and graphs. The Pearson correlation coefficient analyses results showed that the existence of positive and significant relationship between attitudes towards tax related issues; knowledge of taxand tax compliance behaviour of category ‘A’ taxpayers, whereas tax rate; tax compliance cost; and tax system complexity have negative and significant correlation with tax compliance behaviour. On the other hand, the regression analyses result revealed all the five determinants of tax compliance behaviour such as attitude, cost of tax compliance, knowledge of tax, tax rate and taxsystem complexity have significant effect on tax compliance behavioursof category ‘A’ taxpayers. Among these determinants, attitude towards tax related issues and knowledge of tax have significant and positive effect ontax compliance behaviour, whereas, cost of tax compliance, tax rate and tax system complexity have significant and negative effect on tax compliance behaviour. In general, 78.9% of the variance in the tax compliance behaviour of category ‘A’ taxpayers was explained by the five independent determinant factors in combination. Therefore, from this result it can be inferred that except attitude and knowledge of tax, Tax rate, tax system and compliance cost predominantly and negatively affected tax compliance behaviors and it can lead to the non-compliance behaviors of most of category ‘A’ taxpayers in the study area. Therefore, the study recommended that the taxation system in Ethiopia is in great need of improvement and the current tax law should be amended to incorporate provisions that grant special tax incentives in order to improve tax compliance behaviors of most of category ‘A’ taxpayers in Gurage Zone.