FACTOR AFFECTING TAX COMPLIANCE ON BUSINESS INCOME TAX PAYERS IN WOLKITE TOWN

Abstract

Taxation is one of the important elements in managing national income of developed& developing country like Ethoopia.The main objective of this paper is to understanding the influence of some possible factors that affect tax the compliance of Wolkite town income tax payers in Wolkite. The significance of this study helps to improve tax compliance and reduce tax compliance costs of the taxpayers & administrative costs of Ethiopian Revenues and Customers Authority. The data required for this research was collected from primary sources which were collected directly from taxpayers through researcher-administered questionnaire. In addition, the research employed quantitative research design. A sample size of 123 was drawn from the population of Wolkite town taxpayer’s branch office. Both purposive and convenience sampling method employed for collecting data from tax payers. A research design was a plan, structure and strategy considered in order to obtain answers to research questions and control variables. The research implies that the study selected factors; Tax Audit ,Tax payers service, strength of organization ,perceived fairness of tax system, tax knowledge and education, fine and penalty and power and trust of the tax authority the taxpayers are have factors affecting on the tax compliance level. Conclude that the tax authority should suppose provide continuous education for the taxpayers for creating clear awareness the use tax for the citizens. Besides, there should be rigid enforcement of fines and penalties to deter tax evasion. The tax authority has not provided sufficient awareness with its directives and laws. The tax system, tax policy and tax proclamations should extract by considering the taxpayers’ knowledge level, income level and perception.