The Effect of Electronic Tax Filing System on Tax Compliance in Ethiopia: Perception of Large Taxpayers’

Abstract

This study examined the effect of electronic tax filing system on tax compliance in the case of large taxpayers found in Addis Ababa City. By taking the research objectives and questions into considerations, explanatory research design with quantitative research approach was used. The quantitative data were collected using a structured questionnaire which has been developed and distributed to a sample of 296 large taxpayers found in Addis Ababa City. With a response rate of 93.2%, 276 questionnaires have been returned and were valid for data analysis. The quantitative data were analyzed by using descriptive and inferential analysis. The findings of descriptive statistics have shown that the mean score of E-Tax filing system variables i.e. network connectivity, technical skills, and perceived benefits inclined to agreement level. All independent variables had significant correlation with the dependent variable „tax compliance‟. In this case, relatively technical skill had a higher strong relationship with tax compliance (0.686). Likewise, the empirical findings of the multiple regression indicated that, all of the predictor variables have a positive and significant effect on the tax compliance of large taxpayers. The results also revealed that these independent variables were significant joint predictors of tax compliance. The independent variables jointly explained 56.8% of the variance in the dependent variable, tax compliance performance. Finally, it was recommended that ERCA has to enhance the network infrastructure and skill of staff among others.