DECLARATION

I, aberaBeksisa, TigistJilcha, TeshaleLelisa, AsefaSanbaba, DerartuDesele, AyuDuda,

hereby declare that this research work entitled; “An Assessment Of Value Added Tax
Adiministration Practices: in case study of Sebeta town” submitted by we for the award of
the degree of Bachelor of Arts in Accounting and Finance, is our original work and that all
sources of materials used for the study have been duly acknowledged.We also confirm that
the thesis prepared, on the case of sebeta revenue office, by taking the revised standards of
value added taxadiministration and the code of ethics as a yard stick and on the same topic
earlier has not been submitted either in part or in full to any other higher learning
institution for the purpose of earning any degree.

AberaBeksisa------------------------- -------------------------------
TigistJilcha-------------------------- -------------------------------
TeshaleLelisa-------------------------- --------------------------------
AsefaSanbaba--------------------------- ---------------------------------
DerartuDesele----------------------------- ---------------------------------
AyuDuda----------------------------- ---------------------------------

Name Signature Date

Sebeta, Ethiopia, December 2021

I
Approval Sheet
The Thesis prepared by AberaBeksisa, TigistJilcha, TeshaleLelisa, AsefaSanbaba,
DerartuDesele, AyuDuda, entitled“An Assessment Of value added tax adiministration
Practices: in case study of Sebeta town”has been submitted for examination with my
approval as an advisor.

Abdisa (MBA)

---------------------------------------- ------------------------------ ---------------------

Advisor’s Name Signature Date

II
RIFT VALLEY UNIVERSITY
DEPARTMENT OF ACCOUNTING AND FINANCE

Examining Committee’s Approval

Signed by the examining committee:

Examiner-------------------- Signature------------- Date-------------

Examiner-------------------- Signature--------------Date---------------

Advisor-------------------------- Signature---------------------------

III
ABSTRACT
This research paper has been entitled the Assessment of value added tax Administration in
the case of sabbata town revenue office. The researchers designed were descriptive type of
research in order to describe the existing situation. To gather information about this
research the researchers used both primary and secondary data sources. In order to conduct
the research, the researchers have been use quantitative data type. Available data collected
by using closed questionnaires from employees and structured interview from the
merchants in order to achieve the study, and also as the secondary data collected by using
different documents. The data collected through questionnaires would be analyzed in
detail explanation in essay form. The researchers would be use tabulation and percentage
to analysis the data collected. Finally based on analyzed data appropriate conclusion and
recommendation have been suggested.

IV
ACKNOWLEDGEMENT

Above all we will like to thank the almighty God for helping in our duties had it not
been for assistance. It will have been impossible to overcome the challenges. Our special
thank goes to MrAbdisaBalcha who has provide his wise and intellectual advise,
guidance and directives to make the research effective In will also like to thank Sabbata
VAT administration office and other business sectors who province us necessary
information. We are thankful to our family who provide financially and moral support
while doing this research.
Finally, we also thanks to Rift Valley University College of Business and Economics for
giving this great chance in undertaking research last but not least, our special attitude to
our friends TerefeSefera for you helping us in type writing.

V
Contents
DECLARATION..........................................................................................................................I
CHAPTER ONE...............................................................................................................................1
1. INTRODUCTION.........................................................................................................................1
1.1. BACKGROUND OF THE STUDY................................................................................................1
1.2. Statement of the problem......................................................................................................2
1.3. RESEARCH QUESTION.............................................................................................................2
1.4. OBJECTIVES OF THE STUDY....................................................................................................3
1.4.1General objectives................................................................................................................3
1.4.2 Specific objectives................................................................................................................3
1.5 Significance of the study........................................................................................................3
1.6. SCOPE OF THE STUDY.............................................................................................................3
1.7. Limitation of the study...........................................................................................................3
1.8. Organization of the paper......................................................................................................4
CHAPTER TWO..........................................................................................................................5
2. LITERATURE REVIEW.................................................................................................................5
2.1 Introduction.............................................................................................................................5
2.1.1 Theoretical Review The introduction of value added tax (VAT)...........................................5
2.1.2 Value added tax (VAT)..........................................................................................................5
2.1.3 Nature of VAT.......................................................................................................................6
2.1.4 Register of VAT.....................................................................................................................6
2.1.5 Registration Procedure........................................................................................................6
2.1.6 Time of Application..............................................................................................................6
2.1.7 Time Registration.................................................................................................................7
Voluntary Registration..................................................................................................................7
2.1.8 Advantages and Disadvantages VAT....................................................................................7
Advantages of VAT......................................................................................................................7
2.2 Empirical view.........................................................................................................................8
2.3 Summary of Literature review...............................................................................................12
2.4 The Research Gap...............................................................................................................13

VI
CHAPTER THREE..........................................................................................................................14
3.RESEARCH METHODOLOGY......................................................................................................14
3.1 Introduction..........................................................................................................................14
3.2 Target area............................................................................................................................14
3.3Research Design and Approaches..........................................................................................14
3.4. Sample and Sampling Techniques........................................................................................14
3.5 Data Gathering Instruments..................................................................................................15
3.6 Validity and Reliability...........................................................................................................15
3.7 Data Gathering Procedures...................................................................................................16
3.8 Method of data analysis and interpretation.........................................................................16
3.9 Ethical Consideration............................................................................................................16
CHAPTER FOUR...........................................................................................................................18
4. Presentation, analysis and Interpretation of Data..................................................................18
CHAPTER FIVE.............................................................................................................................30
SUMMARY, CONCLUSION AND RECOMMENDATION..................................................................30
5.1 Summary and Conclusion......................................................................................................30
5.2 Recommendation..................................................................................................................31
6. REFERENCE..............................................................................................................................32
Appendix.....................................................................................................................................36

VII
List of tables

Table 1 Gender distribution respondents.....................................................................................18

Table 2 the Age of respondents..................................................................................................18
Table 3 Educational status of respondents................................................................................19
Table 4 year of service in the bureaus and year of experience of Employees..............................20
Table 5 shows a response of how you evaluate implementation of VAT administration.............21
Table 6 a problem related to VAT application that have experienced by employees...................21
Table 7 Feeling of VAT Registered Evaluated by Employees No...............................................22
Table 8 a response towards collection and assessment of VAT..................................................23
Table 9 Shows a problem exist while collecting VAT?...............................................................23
Table 10 How do you evaluate the system of VAT administration in Sabbata town...................24
Table 11 shows the awareness of tax payers about VAT.............................................................25
Table 12 shows the awareness of tax payers about VAT.............................................................25
Table 13 the response of advantageous one from VAT more......................................................26
Table 14 shows the benefit of VAT register is higher than other types of tax types?..................26
Table 15 Show number of tax payers registered with VAT.........................................................27
Table 16 Shows number of peoples who registered VAT voluntarily.........................................27
Table 17 show tax administration problems................................................................................28
Table 18 indicates what measurements under taken to the tax payers that are responsible for their
duties...........................................................................................................................................28
Table 19 the tax administration how to aware the tax payer to register for VAT........................29

VIII
LIST OF ABBRIVATION
ed-Edition
ERCA-Ethiopian revenue customs authority
FIRA-the Federal Inland Revenue Authority
.Proc-Proclamation
VAT-Value added tax

IX
 CHAPTER ONE

1. INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Value added tax is a tax Levied on consumption goods and service. It modified sale tax
base on the net value added at each stage rather than on gross receipts. It was originated in
France since 1954, (Bhatia, public finance 23th ed) .Tax administration is important
activity in tax collection because it is the source of revenue for government. The
development of this tax system was so fast that it has now seen employed by a large
number of Latin America, Asia, Africa and pacific countries. Ethiopian government has
introduced VAT as part the overall tax reform program the tax reform program was
preceded by establishment of new ministry of Revenue as first step to improve tax
collection and combat fiscal fraud. VAT is started in our country in 2002 by proclamation
of 285/2002.Most straight forward way of taxing only expenditure is through an indirect
tax such as VAT. The newly introduced VAT is one of the components designed by
foreign and local experts to improve the tax collection and administration. The VAT was
projected to be applicable on the Tax payers that meet the minimum threshold of 500,000
birr and above annual return over. The standard VAT rate in Ethiopia is 15% and
individuals whose annual sales were less than the threshold can also register for VAT
(Sisay, 2009). According to Yohanies (2009) explanation Tax administration is good way
as it is recent issue in our country. Value added tax (VAT) is started in our country in
2002 by proclamation 285/2002. Taxation can be redistributing society wealth by
imposing heavies’ tax burden on one group in order to found service for another. It can
also stabilize countries economy unpopular tax returns have caused public protests riots
and even revolution. All government requires payment at money taxes from people. The
government uses the tax revenue to build dams, to operative schools and hospitals to
provide food and medical care for the poor and hundreds of other purposes. Generally
VAT administration practice in Sabbata town is one activity from tax administration.

1
1.2. Statement of the problem
Value added tax was a new tax that levied on consumption Good and service. Value added
tax is based on the difference between the cost of material and other expense involved in
manufacturing of product and ultimate value of finished product. The tax was imposed at
various stages in the product process and this tends to be speared tax burden. Currently the tax
payers in global level claim on the tax administer and the tax administer also claims against them.
Business people assume that VAT increases the selling price of the product for that reason they
perform activity without register to VAT. Recently the federal government of Ethiopia adopted
VAT system at a national level. All VAT eligible will not registered due to different reasons,
failure to record file timely, failure to notify change in business address and business live
( Yohanies and Sisay ,2009). Problems at implementation arise from tax payers and tax
administration, lack of awareness of business enterprise to know about VAT .Therefore, the
problem is not only the global and country issue but it is a problem on the town of Sabbata. Unlike
the turn over tax which is applied to the full value of a product every time the item changes hands
in the process of production and distribution the VAT is assessed attach stage on only the
increment in value acquired by the product since the last taxable transaction. At the end of the
chain the total amount of tax paid on a given commodity is determined only by tax rate and final
price of the commodity regardless of the number stages through which it has passed what has been
collected in fractional payments is equivalent to a single stage tax on the value of the final product
(Gebrieworku 2008 P.186) The problem arise from point of view of tax administer on one
side and tax payer on the other side. The proposed study will attempt to seek answer for
the following question.I will assess the VAT administration in case of Sabbata town
(ERCA).The main research will depend on (answer) the following questions.

1.3. RESEARCH QUESTION

1. What is the problem of VAT implementation in Sabbata town (ERCA) ?

2. Do all tax payers have awareness regard to VAT?

3. What are the problems faced during collection of VAT?

4. What are the major weaknesses of tax administration?

2
1.4. OBJECTIVES OF THE STUDY

1.4.1General objectives
The general objective of the study is to assess the main problem related to the VAT administration
and VAT payers in case of Sabbata town.

1.4.2 Specific objectives

 To assess attitude of the tax payers towards the tax policy
 To identify the major problems related to VAT collection
 To assess VAT implementation problem in Sabbata town.
 To assess the major problem of Tax administration.

1.5 Significance of the study

The output of the study would useful for private and Government organization. The
purpose of the study or this research would significant because it was the major
problems and solution of VAT practice.clearly understanding the main problems of
VAT practice and to strength the relation with tax payers and tax administer and to
avoid the compliance.By doing this it initiates the VAT payers to pay the VAT timely
and properly. Value added tax will enhances saving and investment, as it is a
consumption.For the researcher it is an opportunity of relating academic knowledge with
that of what is practiced with the real world.For the administrator give a way it would
raise the employees awareness towards VAT and show them the role they have to pay.

1.6. SCOPE OF THE STUDY

Major and particular emphases were given to Sebbeta town revenue agency, which is
located in the West of Adds Ababa Oromiya Region state. Since the value added tax
implication were too vast and difficult to cover all of the area. We have done this proposal
with in three weeks. The scope of the study was covered on the assessment of value
Added tax administration.

1.7. Limitation of the study

In this research study the researcher will face some problem, some of these problems are:-
 There will be less cooperation and unwillingness to fill questionnaires

3
 A top level manager of the administration office will not available daily.
 It will be lack of awareness of some employees

1.8. Organization of the paper.

In general the research paper will contain Five chapters. The first chapter background of
the study, statement of the problem, objective of the study, significance of the study, scope
the study, limitation of the study and organizations of the study. The second chapter will
deals with literature review and the third chapter deals with the methodology of the study.
The fourth chapter will contains of data analysis. The last chapter will describe the
summary, conclusion, and recommendation.

4
 CHAPTER TWO

2. LITERATURE REVIEW

2.1 Introduction
The main objective of this chapter is assessing or finding other related researches and
documents. This chapter contains introduction, theoretical view, empirical view, and
summary of literature review.

2.1.1 Theoretical Review The introduction of value added tax

(VAT)
is probability the most important tax development in the world VAT had been introducing
for the first time almost 50 years ago, and Its application remained confined to a wand full
countries will the lake 1900’s, (Bhatian, 1996)

2.1.2 Value added tax (VAT)

is a tax which is imposed on value which Traders add to their purchase of raw materials,
good and service. It is perhaps best described as the taxation of value added purchase of
raw material, good service that are made by trader for the purpose of the his business are
known as “input,” with the ultimate sales to the third party customer made by the trader
described As output VAT liability is calculated on the difference between a traders input
tax (VAT that it pays on the acquisition of the raw material, goods and service required for
the purpose of its business). And the output tax that it charges on making supplies of good
and service to its own customer, (Jona than Ivansion, 2002)

According to World banks explanation (world Book, 2001) ” VAT is imposed by the
government at each stage in the production in goods and services”. The tax is paid by
every company that handles a product during its transformation from raw materials to
finished goods. The amount of the tax is determined by the amount of the value that a
company adds to the materials and services its buys from other firms (Gebrie,2008).

5
2.1.3 Nature of VAT
The World bank states that (World book, 2001), In 1954, France become the first notion
of adopt the value added tax today, this tax is growing in popularity, Canada and about 40
Nations use it is not used by united states on the federal level. But most of the other large
industrial nations use it.

2.1.4 Register of VAT

Depending on the tax base on which the value added tax is computed, value added tax can
be classified in three. These are:- Sump lion type VAT, gross domestic product VAT and
income Style VAT under the consumption. A gross domestic product VAT is a goods and
service included in gross domestic product, which includes personal consumption capital
goods, government purchases and net export under the income style VAT, the tax bases is
determined as the net national income. Despite of their type of VAT, consumption type
VAT is used in most nations, (Hyman, 2002)

2.1.5 Registration Procedure

To determine the VAT liability of a tax payer one of the three alternative methods can be
used under addition method, a tax payer calculates the value added by summing the value
of the factors of production that uses in the production of taxable goods and services.
Under the credit method (and also called invoice method however, the tax payers
computers his/her tax liability from the VAT show in the invoice he/she receives on
his/her issues on his/her

2.1.6 Time of Application

taxable sale. invoice keep track of which credit firms are allowed. Firms subtract the VAT
paid on the purchases (the credit) since it represents the tax liability in the previous stage
of the production. The tax is therefore collected only on values added at each stages of
production (Hyman, 2002).According to Bhatian statement (2002) theoretically the tax
liability in the case of VAT and in the case of sales tax at the retail level shaulturn out to
be the same. This is because the total retialgrice is nothing but the value added to be the

6
raw material at different stages of production and trade. In case of VAT, the same value of
created value is taxed in stages.

2.1.7 Time Registration

Obligatory RegistrationA person who carries on taxable activity and is not registered is
required to file an application for VAT registration with the Authority if at the end of any
period of 12 calendar months the person made, during that period, taxable transactions the
total value of which exceeded 500,000 Birr; orat the beginning of any period of 12
calendar months there are reasonable grounds to expect that the total value of taxable
transactions to be made by the person during that period will exceed 500,000 Birr.

Voluntary Registration
A person, who carries on taxable activity and is not required to be registered for VAT,
may voluntarily apply to the Authority for such registration, if he regularly is supplying or
rendering at least 75% of his goods and services to registered persons. VAT
RegistrationObligatoryRegistrationA person who carries on taxable activity and is not
registered is required to file an application for VAT registration with the Authority ifat the
end of any period of 12 calendar months the person made, during that period, taxable
transactions the total value of which exceeded 500,000 Birr; orat the beginning of any
period of 12 calendar months there are reasonable grounds to expect that the total value of
taxable transactions to be made by the person during that period will exceed 500,000
Birr.A person, who carries on taxable activity and is not required to be registered for
VAT, may voluntarily apply to the Authority for such registration, if he regularly is
supplying or rendering at least 75% of his goods and services to registered persons.

2.1.8 Advantages and Disadvantages VAT

Advantages of VAT
As VAT is a consumption tax the revenue generated will be constant.
Compared to other indirect tax VAT is easy to manage.
Due to catch-up effect of VAT, it minimizes avoidance.

7
Huge amount of revenue is generated on a low tax rate through VAT.As the VAT is
collected in small installments so the consumers has minimum burden.VAT is a neutral tax
so it can be imposed on all types of business

Disadvantages of VAT

As the VAT is based on full billing system, VAT implementation is expensive.It is not a
simple task to calculate value added in every stage is not an easy task. Thus VAT is
difficult to understand.VAT is regressive in nature. Thus it will affect the poor people
more than the rich because they spend more proportion of their income.All purchase and
sales records should be maintained which will cause increased in compliancecost.The
consumers need to be cognizant for successful implementation of VAT otherwise tax
negligence will be extensive through fake invoices.

2.2 Empirical view

Ethiopian government has introduced VAT as part the overall tax reform program the tax
reform program was preceded by establishment of new ministry of Revenue as first step to
improve tax collection and combat fiscal fraud. Most straight forward way of taxing only
expenditure is through an indirect tax such as VAT. The newly introduced VAT is one of
the components designed by foreign and local experts to improve the tax collection and
administration. The VAT was projected to be applicable on the tax payers that meet the
minimum threshold of 500,000 birr and above annual return over. The standard VAT rate
in Ethiopia is 15% and individuals whose annual sales were less than the threshold can
also register for VAT, if There 75% of sales transaction was with registered companies
(NegaritGazeta, 2002). This research (paragraph) taken from Alemus research done in
Adama on 2008 E.C with the title problem of value add tax his objective is to assess VAT
practice and problem in Adama by using primary and secondary data. He concludes that as
per the study result most of eligible and potential business the town should have not
registered for VAT which affects the legitimate business in the competitive markets.

Finally he recommended that Adama town revenue authority advised to great awareness
among the business organizations and society about the benefit of value added tax (VAT)

8
so as to bring potential business in to the value added tax (VAT). The weakness of the
study is uses ambiguous words and expressions. VAT administration pertains to how tax
authorities discharge the responsibilities entrusted to them. According to Jantscher (1990)
these responsibilities include a range of related activities such as taxpayer identification
and registration, invoicing, filing and payment requirements,1 control of filing and
payments, refunds, audits and penalties.2 Perhaps peripherally, VAT administration is also
concerned with issues of who should administer the tax, what organisational setup to use
and what resources are available. There may be weaknesses in how VAT administrators
perform their duties. Weaknesses in VAT administration, in turn, may adversely impact on
the salient features of the tax and government’s policy objectives as a whole. In this
regard, Tanzi and Pellechio (1995) (cited in Mikesell (2007)) noted that poor tax
administration would change the manner in which taxation affects government’s policy
objectives, namely economic stabilisation, resource allocation and redistribution

of income. In developing countries the poor performance of taxes is likely to be due to

weak tax administration (i.e., the incapacity of the administration to implement the tax in
practice). This is perhaps caused by such factors as resource constraint and designing the
tax separately from the administration. Concerning the latter, Bird and Gendron (2005)
noted that developing and transitional countries, unlike developed countries, appear to
have fragmented economies, large informal sectors, low tax morale, rampant evasion, and
total distrust between tax administrators and taxpayers. In these countries, thus, simply
adopting a successful VAT’s design attributes of developed countries would not make the
tax successful (Bird and Gendron 2005). The design ought to consider the tax
administration dimension and the socio-economic realities of the developing country in
question. In discussing the importance of tax administration in general, Bird (1989 and
2004) noted that tax administration dimension ought to be placed at the centre, not
periphery, of tax reform. Jantscher (1990: 179) also stated that “…in developing countries
tax administration is tax policy.” Considering the significance of tax administration, many
studies have been conducted in some developing and transitional countries with respect to
the main VAT administration tasks. These studies include Jantscher (1990), Edmiston and
Bird (2004), Bird and Gendron (2005), Grandcolas (2005) and Bird (2005). These papers
assessed how VAT administrators in developing and transitional countries perform their

9
duties and how the effective taxpayer requirements differ from the legislation. More
specifically, the analyses focused on practices of different developing countries with
respect to taxpayer identification, invoicing, filing and payment process, control

As invoicing, filing and payment requirements are taxpayers’ activities, the discussion
here focuses on whether the actual procedures by tax authorities, with respect to these
requirements, are in line with the VAT legislation. 2 Bird and Gendron (2005) and
Grandcolas (2005) also noted the following key VAT administration activities:
registration, collection, audit and enforcement.eJournal of Tax Research Value Added Tax
Administration in Ethiopia: A Reflection of Problems147of filing and payments, refunds,
audits and penalties. In addition, the costs of VAT administration were briefly examined
in the case of Jantscher’s (1990) study. The main conclusion of these studies is that VATs
prevailing in developing countries were quite different from the broad based tax discussed
in public finance literature and that administrative problems have a major contribution to
this divergence.3 Administrative problems, in turn, may be partly caused by
administrative resources constraint. VAT administrative costs can include costs incurred
by tax authorities in performing the tasks entrusted to them. In developing countries,
estimates of VAT administrative costs are scant. In fact, as a measure of efficiency some
governments attempted to develop percentages of administrative costs to the revenues
generated by taxes. In the case of VAT, Jantscher (1990) indicated that fragmentary data,
supplemented by the impressions of administrators, suggest that administrative costs
usually range between one and two per cent of the VAT revenues collected. In addition to
the administrative activities and the availability of administrative resources, VAT
administration deals with issues such as administrative organs (who should administer the
tax) and their mode of organisation. Of particular importance for this paper is the VAT
administrative organ. It suffices, however, to note that for a successful VAT the
significance of appropriate institutional setup with proper human and material deployment
must not be underestimated. In respect of the VAT administrative organs, as Martinez-
Vazquez and Timofeev (2005) noted the assignment of responsibilities ought to be seen as
an element that must interact and be compatible with the rest of the design of a
decentralised financial system. The decision (who should administer VAT) should be
made within the framework of the overall fiscal system, particularly the assignment of

10
VAT. In this context, examination of the theory of fiscal federalism shows the guidelines
for the assignment of functions and fiscal instruments to different levels of government.
According to this theory, the central government should have the basic responsibility for
macroeconomic stabilisation, income redistribution and resource allocation (Musgrave
1959 and Oates 1972 cited in Oates 1999)In view of this conventional theory and the
practical difficulties of implementing the tax, sub-national VATs were considered to be
unfeasible. In this regard, Bird and Gendron (1998) quoted that the usual understanding
was not to assign the VAT to sub-national governments (McLure 1993) and that the
simplest practical way to run a federal state sales tax system including VAT was to adopt a
revenue sharing scheme similar to the federal republic of Germany (Tait 1988). As a
result, in most countries that have already introduced VAT, the tax has been assigned to
central (federal) governments. However, against the above supposition that sub-national
VATs are unworkable, recently, tax experts including Bird and Gendron (1998), Bird
(2001), McLure (2000), and Keen and Smith (1996 and 1999) argued that sub-national
VATs are feasible. Their arguments used the Canadian dual VATs and the VATs in the
European Union 3 Gray (1987) noted that in developing countries there is a big gap
between what the tax system appears to be on the surface and what it is in reality (cited in
Bird 1989). Typically in low income countries there is usually a gap between the effective
tax system and what is legislated in the relevant tax law (IMF 1989). eJournal of Tax
Research Value Added Tax Administration in Ethiopia: A Reflection of Problems 148
member states as evidence.4 They suggested different structures of sub-national VATs
including dual and compensating VATs, which require a good administration5 and
information exchange among tax authorities. More specifically, Bird (2001) suggested that
compensating VAT would be fairly feasible and potentially attractive in developing
countries – at least in large countries in which states have major expenditure roles, the
VAT is the major source of actual and potential revenue, and tax administration is not up
to developed countries’ standards. In general, however, according to Bird and Gendron
(2005) in the context of developing and transitional countries a centralised VAT with
some of the revenues shared with regional governments on a formula basis is the best
approach to finance regional governments. Following the assignment of VAT revenue, the
question would be who should administer VAT? On this issue there are different
possibilities, the extreme ones being central government only (centralised) or regional
11
governments only (fully decentralised). Between these two extremes there may be
different arrangements. There are arguments, at least conceptually, on the advantages and
disadvantages of centralised and decentralised tax administration in terms of economies of
scale and cost efficiency.Mikesell (2007) noted that innovation of new approaches and
techniques are cited as advantages of decentralised administration while economies of
scale and expertise are for a centralised administration. Martinez-Vazquez and Timofeev
(2005) also indicated that the final decision may depend on how the objectives of the tax
administration and the constraints involved are weighted and also on the nature of the
trade-off among them. In general, it can be concluded that although there have been
studies on VAT administration in some developing countries, in Ethiopia there are no
comprehensive studies that examine the administrative practices.6 It is, hence, not known
whether the administration of VAT in Ethiopia is as per the legislation, and which features
of VAT are being affected due to administrative weaknesses. Furthermore, in Ethiopia,
administrative practices that are compromising the VAT’s operation are not known. In
this context, the objectives of this paper are to examine the administration of VAT in
Ethiopia and identify the main administrative problems that deserve the government’s due
attention, and briefly examine the decentralisation of VAT revenue and administration as a
way forward for future research

2.3 Summary of Literature review

VAT is implemented and collected in many developed as well as developing countries. In
the current trend Ethiopia has also implementing this tax primarily to raise more revenue,
modernize its tax administration and to encourage investment and trade. However, after its
implementation, VAT has faced different problems. Thus this paper tried to assess VAT
administration and collection problem in Sabbata town especially emphasizing in Sabbata
town Revenue agency and to identify problems encountered during the collection process.
It also identifies some initiative factors as well as the alternative solution problem
encountered by the town revenue agency.

12
 2.4 The Research Gap
In general, the literature review indicates that value a dded tax role is wide. Within the
context of improving tax. VAT is a tax which is imposed on value which Traders add to
their purchase of raw materials, good and service. It is perhaps best described as the
taxation of value added purchase of raw material, good service that are made by trader for
the purpose of the his business are known as “input,” with the ultimate sales to the third
party customer made by the trader described As output VAT liability is calculated on the
difference between a traders input tax (VAT that it pays on the acquisition of the raw
material, goods and service required for the purpose of its business). And the output tax
that it charges on making supplies of good and service to its own customer, (Jona than
Ivansion, 2002).According to World banks explanation (world Book, 2001) ” VAT is
imposed by the government at each stage in the production in goods and services”. The
tax is paid by every company that handles a product during its transformation from raw
materials to finished goods.Ethiopian government has introduced VAT as part the overall
tax reform program the tax reform program was preceded by establishment of new
ministry of Revenue as first step to improve tax collection and combat fiscal fraud. Most
straight forward way of taxing only expenditure is through an indirect tax such as VAT.
The newly introduced VAT is one of the components designed by foreign and local
experts to improve the tax collection and administration.

13
 CHAPTER THREE

3.RESEARCH METHODOLOGY

3.1 Introduction
The main objective of this chapter is identifying general methods of data gathering
techniques. This chapter contains introduction, target area, research design, types of data,
sources of data, method of data collection, population and sample design, method of data
analysis budget cost and time schedule.

3.2 Target area

Major and particular emphases were given to Sebbeta town revenue agency, which is
located in the West of Adds Ababa Oromiya Region state. Since the value added tax
implication were too vast and difficult to cover all of the area.

3.3Research Design and Approaches

This research paper was designed in such way that enables the researcher to study problem
more easily and clearly using quantitative and qualitative methods. It is structured to
provide relevantinformation, both quantitative and qualitative, to sufficient level that
would be essentialfor further processing. Quantitative data is expected to provide current
stands and trends while qualitative one willbeuseful to understand people’s feelings and
expectations which have linkage to the researchquestions raised at the beginning.

3.4. Sample and Sampling Techniques

The researcher used judgmental sampling techniques because the sample selection is
based on researcher judgments as will provide the relevant information for the study.
There are many employees working in the administration office. Since most employees
involved relate to Tax administration and implementation have been taken to collect data.
Questionnaires distributed for 20 employees and prepared oral questions or interviews for
business sectors around Sebbata town mainly related to VAT administration and
implementation practice in the Sabbata town tax administration office to collect primary
data.

14
3.5
Data Gathering Instruments
As mentioned earlier, the research methods used in doing this study has both qualitative
and quantitative nature hence is a mixed approach. From the quantitative method, the
researcher used surveying descriptive of data, whereas, on the qualitative approach, in-
depth interview is to be applied. The study begins with a broad survey in order to
generalize results to a population and then focuses, in a second phase, on detailed
qualitative, open-ended interviews collected from detailed views of participants. A
mixed methods design is useful to capture the best of bothquantitative and qualitative
approaches. In these situations the advantages of collecting both closed-ended
quantitative data and open-ended qualitative data prove advantageous to best understand
a research problem. Therefore, a mixed methods design is useful to capture the best of
both quantitative and qualitative approaches. This is so because both methods
generalize the findings to a population and develop a detailed view of the meaning of a
phenomenon or concept for individuals.Qualitative research is much more subjective
than quantitative research and uses very different methods of collecting information,
mainly in-depth interviews and focus groups. This study used in-depth interview with
the tax officers of oromia Customs and Revenue Authority sabetetown branch office
employees to secure in-depth and detailed information, which in fact increases the
quality of the information. The targeted respondents in the sabete town included three
officers from each work process. Each tax officers were interviewed in-depth to get
depth and detailed primary data. Participants were asked general questions, and the
researcher explored their responses to identify and define tax officers’ perceptions,
opinions and feelings about the tax assessment and collection and identified the
problems and challenges regarding the tax administering process. The interview
questions and questioners used are annexed to this paper.

3.6 Validity and Reliability

Questionnaire is one of the most widely used tools to collect data in especially social
science research. The main objective of questionnaire in research is to obtain relevant
information in most reliable and valid manner. Thus the accuracy and consistency of
survey/questionnaire forms a significant aspect of research methodology which are known
as validity and reliability. Often new researchers are confused with selection and
conducting of proper validity type to test our research instrument (questionnaire/survey).
This review article explores and describes the validity and reliability of a

15
questionnaire/survey and also discusses various forms of validity and reliability
testsinsabete town value tax administration.

3.7 Data Gathering Procedures

While collecting the primary data, semi structured self administeredquestionnaires were
distributed to the fifty Categories “A” taxpayers and forty five officers in the sabete tow
Value added tax administration which have been selected as a sample through stratified
sampling and simple random sampling techniques.
For selecting the sample, data sampling requires to first, there was a need to stratify the
total population in to two groups as tax payers and tax officers’. Then using simple
random sampling selected sample of category “A” taxpayers in the town. Tax officers
are categorized into FIVE work process as Tax Assessment and Collection Work
Process, Tax Assessment and Audit Process, Law Accomplisher and Control Work
Process, Taxpayers’ Registration and Information Work Process, Customer services and
support work process .From the respective group based on the list of work process Semi
structured sel administered Questionnaires were distributed to nine officers from each
work process, which have been selected as a sample through simple random sampling
techniques.

3.8 Method of data analysis and interpretation

After data have been collected the process of analysis would began. Data processing to
make the raw data suitable for further analysis. Editing, coding and class it action would
be mode the descriptive analysis methods of data analyzing technique of both tabulation
and percentage would be sued. Finally the responsible explanation of the relation would
be identified and the final tax of interpretation would accomplish after considering the
entire relevant factor.

3.9 Ethical Consideration

Ethical considerations in research are a set of principles that guide your research designs
and practices. Scientists and researchers must always adhere to a certain code of conduct
when collecting data from people.The goals of human research often include

16
understanding real-life phenomena, studying effective treatments, investigating behaviors,
and improving lives in other ways. What you decide to research and how you conduct that
research involve key ethical considerations when we study the value added tax in sabeta
town.

17
 CHAPTER FOUR

4. Presentation, analysis and Interpretation of Data

Presentation, analysis and Interpretation of Data This section focuses on interpretation and
analysis of data collected from primary sources of data. The primary data were collected
through the use of questionnaires for 20 respondents that work in Sabbata town revenue
bureau and interview for the merchants around Sabbata town. The questionnaires are
distributed based on sampling technique. The collected data has been edited and complied
and the results are presented using both qualitative and quantitative data analysis method.
First the data are collected through questionnaires and interview and then analyzed by
using tables. Therefore, these analyses are interpreted based on 20 respondents of the
survey as follows:
Table 1 Gender distribution respondents
NO

Description (Sex) No respondent Percentage %

1 Male 13 65
Female 7 35
Total 20 100
Source, survey Result, 2021
As indicated in the above table, 13(65%) of the respondents are males and the remaining
7(35%) are females. From this, the greater numbers of our respondents in the organization
are males as compare with females.
Table 2 the Age of respondents

Description (age of respondents) No of Respondents Percentage %

18-24 3 15
2
25-30 8 40

31-35 6 30

Above 35 3 15

Total 20 100

Source, survey Result, 2021

18
As we try to see from the above table 3(15%) of the respondents age found between18-24,
8(40%) of respondents are between 25-30, 6(30%) of them are found between 31-35, and
the remaining 3(15%) are greater than 35 age. Most of our respondents are between 25-35
age groups. So, our respondents are well matured and they can give reasonable answer for
our questionnaires.

Table 3 Educational status of respondents

Description (Education status) No of Respondent Percentage %

NO
Diploma 3 15
3
First Degree 13 65

Above Degree 4 20

Total 20 100

Source, survey Result, 2021

Table 4.3 shows the educational levels of the revenue bureau employees. As shown
above 3(15%) of the respondents are Diploma, 13(65%) of the respondents are first
degree holders and the remaining 4(20%) are above degree. This shows that, the focus
division has first degree and above degree holder’s employees. Based on this data,
Sabbata town of revenue office workers are well educated and also employees under this
office should be hold diploma, degree and above degree education status

19
Table 4 year of service in the bureaus and year of experience of Employees
NO No of respondent Percentage %
Description
4
Work experience

Less than a year

2 10
One year
8 40
1-2 year
10 50
Above 2 year
20 100
Total
5
How long you have been with the
town revenue bureau

2 10
1 year
2-4 year 8 40

4 year 4 20

Above 4 year 6 30

20 100
Total
Source, survey Result, 2021
As indicated in the above table the employees years of service on their profession and their
year of service in the bureau, 2(10%) of employees has a one year experience, 10(50%) of
employees have above two year and the remaining 8(40%) of the employees have one up to
two year of The experience. The above results show that the bureau has experienced
workers. As their experience increases, their performance to give services is also increases.
This may have a positive impact on the bureau. When come to the second question, 2(10%)
of the employees give service in the bureau for one years, 8(40%) of them for a 2-4 years,
4(20%) for 4year, and the remaining 6(30%) are above four year service in the bureau.
These show a period of most employee stay with town revenue bureau is 2-4 year. From
the above fact, to enhance modern assessment of vat administration, well experienced and
well trained human powers are important.

20
Table 5 shows a response of how you evaluate implementation of VAT administration.

NO Description No of respondents Percentage %

6 How do you evaluate implementation

of VAT in your administration?

Bad
3 10
Fair
13 65
Good
4 25
Very good
20 100
Total
Source, survey Result, 2021
From the above table, 4(25%) of the respondents said the implementation of VAT in our
administration is very good, 13(65%) of them said good and the remaining 2(10%) of
them are said fair. Most of the responder responses the implementation of VAT practice in
the administration are good. Although the implementation of VAT practice in the town is
good but the Administration should better to improve the implementation processes.
Table 6 a problem related to VAT application that have experienced by employees

NO Description No of percentage %
Respondents

NO
77 What arethe major
Problems you have e
perienced related toVATap l
Application
Unwillingness of tax payers 4 4 20
Fraud of tax collectors 3 3 1 15
Lack of awareness about VAT1 12 60
Other 1 1 5

21
 Total 20 100
The above table indicates that 4(20%) of the respondents that response the major problem
related to VAT application are unwillingness of tax payers 3(15%) are fraud of tax
collectors, 12(60%) of them said lack of awareness about VAT and the remaining 1(5%)
are advised for these question. These show that the major problem of VAT application
practice is the lack of awareness of tax payers. As well as readiness to pay tax on time and
others related problems.
Table 7 Feeling of VAT Registered Evaluated by Employees No

NO Description No of respondents Percentage %

8
How do
youEvaluateVATadministration
parties
feeling while they registered for
VAT?
VAT is an obligation 15 75
VAT is debt 1 5
VAT is useful 3 15
VAT is bad
Other 1 5
Total 20 100
Source, survey Result, 2021
As shown above 15(75%) of the employees responded for the question raised VAT is an
obligation, 1(5%) of them are VAT is debt, 3(15%) of them said VAT is useful, and the
remaining 1(5%) are advised for these question. Therefore most of the feeling of VAT
registered towards VAT is an obligation and useful respectively.

22
Table 8 a response towards collection and assessment of VAT

NO Description No of respondent Percentage %

9 Who is more responsibleforVAT

collection and assessment?

Tax payers 2 10
Customers 1 5
Any government body 2 10
Tax office 13 65
Others 2 10
Total 20 100
Source, survey Result, 2021
Table 4.8 above shows that respondents of the given question indicate, more responsible
for VAT collection and assessment as follows. 2(10) are tax payers, 1(5%) are customers,
2 (10%) are any government body, 13(65%) are tax office, and the remaining 2(10%) have
said revenue authority. As it summarized most of a responsible for collection and
Assessments of VAT are tax office. So, the Sabbata town revenue office should properly
perform their duties behalf of people to promote the habit of VAT payers to participating
on VAT related issue
Table 9 Shows a problem exist while collecting VAT?

No Description No of respondent Percentage %

9 What are problem you
have faced while
collecting VAT?
Most of tax payers not pay a 13 65
required
Amount on time
All of tax payers not pay a 2 10
required
Amount on time

23
 Some of tax payers not pay a 5 25
Required amount on time
Total 20 100
Source, survey Result, 2021
This table indicates that the employees responded for a problem in they have faced while
collecting VAT are as follows 13(65%) are most of the tax payers are not pay a required
amount on time, 2(10%) are all of the tax payers are not pay a required amount on time and
the remaining 5(25%) are response some of tax payers not pay a required amount on time,
so the results are a highest problem faced while collecting VAT is most of tax payers not
pay a required amount and at the required time.

Table 10 How do you evaluate the system of VAT administration in Sabbata town

Description No of Respondent Percentage %

No
How do you evaluate the system of VAT
10 administration in Sabbata town?

Very high
2 10
High
13 65
Low
5 25
Very low
20 100
Total
Source, survey Result, 2021
According to the above table (Table 4.10) the attitude of respondent to evaluate system of
VAT Administration in sabbata Town like the following 2(20%) of the respondents are
said high , 13(65%) of them are low and the remaining 5(25%) are responded a very low.
Therefore, according to respondents attitude the system of vat administration in sabbata
town is low.

24
Table 11 shows the awareness of tax payers about VAT

No Description No of Respondents Percentage %

11 How do you judge the

awareness of tax
payers about VAT?
Have good awareness 4 20
Have very good awareness 1 5
Have less awareness 12 60
Have poor awareness 5 25
Total 20 100
Source, survey Result, 2021
According to the Respondents attitude the awareness of tax payers about VAT analyzed in
the following manner, 5(25%) have poor awareness, 12(60%) have less awareness, 1(5%)
have very good awareness, and the remaining 4(20%) of them have good awareness. The
results shows that the awareness of tax payers about VAT are low because there are no
more aware people about tax and also most of tax payers are unskilled persons. In addition
to this the most percent of tax payers have less awareness due to they think that VAT
affect their competition in the market they do not willing to pay a tax, and they do not
understand the advantage of VAT as compare to other types of tax.
Table 12 shows the awareness of tax payers about VAT

NO Description No of Respondents Percentage %

12 What is the attitude of
tax payers about VAT?
Very good
Good 2 10
Fair 15 75
Bad 3 15

25
 Total 20 100
Source, survey Result, 2021
Depends on the respondents answer the attitude of tax payers about VAT answered as
follows, 2(10%) are good, 15(75%)) are said fair, and the remaining 3(15%) of them are
bad. The results shows that the awareness of tax payers about VAT are fair because there
are no more aware people about tax due to the most number of tax payers are unskilled
persons and they have miss understanding about VAT.
Table 13 the response of advantageous one from VAT more

NO Description No of respondents Percentage %

13 Who benefit from VAT more?
Tax payers 2 10
Government 3 15
Citizen of the country 15 75
Total 20 100
Source, survey Result, 2021
As indicated in the above table 2(10%) of the respondents said the more benefited from
VAT are tax payers, 3(15%) of the employees said a government, and the remaining
15(75%) of them said citizen of the country more beneficiary. These result shows that the
more benefited from VAT are citizens of the country. Since the VAT is collected from who
gets much revenue it brings a good methodology and contribution of economy and it
enhances the economic development of the country.
Table 14 shows the benefit of VAT register is higher than other types of tax types?
No Description No of respondents Percentage %

14 The benefit of VAT register is higher than

other types of tax types?

Yes 13 65
No 7 35
Total 20 100

As indicated in the above table, 13 (65%) of the respondents said yes the benefit of VAT
register is higher than other types of tax types while 7(35%) of the respondents said no the
benefit of VAT register is not higher than other tax types. Therefore, the benefit of VAT

26
register is higher as compare to other types of tax due to the following factor they are not
paid. Turn over tax; they paid on final consumer with the price of product so it is not
difficult to pay as compare to others. Since they pay the value added only and they collect
more from a person who generate a higher revenue and it is easy to control our business
and risk averse due to they Prepared financial statements based on it, and supported by
document, unless count it identifies a sold goods from unsold goods.
Table 15 Show number of tax payers registered with VAT

No Description No of respondents Percentage %

15 How many tax payers
register withVat
Limited Number 15 75
Un limited Number 5 25
Un known
Total 20 100
As we try to indicate from the above table, 15(75%) of the respondents said number of tax
payers register with VAT is limited whereas 5(25%) of respondents said tax registered with
VAT is unlimited. The result shows the number of peoples that registered for VAT can be
expressed in limited number. According to the respondents explanation around 2491 tax
payers registered for VAT around Sabbata town.
Table 16 Shows number of peoples who registered VAT voluntarily

No Description No of respondents Percentage %

16 Tax payers registered
for VAT
\Voluntarily 12 60
Forcefully 8 40
Total 20 100
Source, survey Result, 2021
we try to indicate from the above table, 12(60%) of the respondents said number of tax
payers register As for VAT voluntarily whereas 8(40%) of respondents said number of tax
payers who registered for VAT forcefully. The result show that the number of peoples that
registered for VAT both forcefully and voluntarily in the town of Sabbata. But from the

27
above table we can understand most of the tax payers that registered for VAT is voluntarily
or depends on their interest.
Table 17 show tax administration problems

No Description No of respondent Percentage %

17 Whatare major weaknesses tax
Of administration?
Poor technology 2 10
Poor awareness 8 40
Implementation problem 5 25
Lack of information 2 10
Don,t work in equal effort 3 15
Total 20 100
Source, survey Result, 2021
As we try to indicate from the above table, 2(10%) of the respondents said the main
weakness of tax administration is poor technology. 8(40%) of respondents said weakness of
taxadministration is poor awareness. 5(25%) of the respondents said the main weakness of
tax administration is implementation problem. 2(10%) of the respondents said the main
weakness of tax administration is lack of information. And the remaining 3(15%) of the
respondents said the weakness of tax administration is don’t work in equal effort. Depends
on the respondents explanation that the main weakness of VAT administration in the town
of Sabbata is related to awareness problem.
Table 18 indicates what measurements under taken to the tax payers that are responsible
for their duties

No Description No of respondents Percentage %

18 What measurements under
taken to the tax payers
those are responsible for
their duties?
Encourage them by prize 4 6
Encourage them by reducing Tax rate
Announcement

28
 Not applicable 16 94
Total 20 100
Source, survey Result, 2021
According to the Respondents attitude the tax administration under taken the following
measurements to the tax payers that are responsible for their duties. 1(6%) encouraging
them by prize and 16(94%) of them said it is not applicable. From the respondents response
the tax administration did not apply further encouragement practice to the tax payers that
are responsible for their duties.

Table 19 the tax administration how to aware the tax payer to register for VAT

No Description No of respondents Percentage %

19 How to aware the tax
payer to register for VAT?
By seminar and meetings 7 35
Enforce them
By 10 50
promotion and encouragement
Not applicable 3 15
Total 20 100
Source, survey Result, 2021
As we try to indicate from the above table, 7(35%) of the respondents said aware the tax
payers registered for VAT by seminars and meetings. 10(50%) of respondents said aware
the tax payers registered for VAT by promotion and encouragement. And the remaining
3(15%) of the respondents said it is not applicable in our country context.

29
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary and Conclusion

VAT is implemented and collected in many developed as well as developing countries. In
the current trend Ethiopia has also implementing this tax primarily to raise more revenue,
modernize its tax administration and to encourage investment and trade. However, after its
implementation, VAT has faced different problems. Thus this paper tried to assess VAT
administration and implementation problem in the town of Sabbata VAT administration
Revenue agency and to identify problems encountered during the collection process. It also
identifies some initiative factors as well as the alternative solution problem encountered by
the town revenue agency.
The general Objective of this study is assessment of VAT administration practice and
Collection problem in Sabbata town VAT administration office. Based on the analysis and
interpretation the researcher based on this general Objective the following points are
concluded As per the study result most of the employers in Sabbata town revenue office
have been by young persons who are experienced. VAT implementation practice in
Sabbata town revenue office is good but not such a perfect. The major problems
encountered by VAT administration in Sabbata town revenue office are lack of awareness
of tax payers and employees. Most of VAT registered businesses in the town should have
not collected and paid VAT to the tax authority on time and with proper figure. Most of
VAT registered business sectors in Sabbata town their attitude towards VAT are fair. Most
of VAT registered businesses in Sabbata town have a feeling towards VAT as an
obligation. The tax administration of Sabbata town revenue office aware the tax payer to
register for VAT mostly by promotion and encouragement but it is not in the desire
context. The tax administration did not apply further encouragement practice to the tax
payers that are responsible for their duties.

30
 5.2 Recommendation
As indicated from the research there is certain VAT administration problems from the town
of Sabbata. Based on the research findings the following points can be for warded as
recommendation.
 To increase the implementation practice in Sabbata town the higher tax authority
office follow up and control the employees of revenue office by giving a training,
seminars and looking their performance time to time.
 To improve the awareness, attitude, and feeling of tax payers the government
should arrange seminars, workshop, and meetings
 To avoided a problem exist during a collection VAT, and not paid on time with
proper figure government should control a bill or invoice they use, order them use
a cash registered machine, follow- up, support in preparation of VAT return,
initiate potential unregistered business for VAT registered so as to avoid unfair
price competition.
 To minimize or avoid the VAT registered business not understand a benefit of
VAT, and look VAT is as an obligation the Sabbata town revenue office should
arrange a seminars, meeting to bring a challenge towards VAT and understand a
benefit of VAT like not pay a turn over tax, the preparation of financial statements
made them not afraid to incur loss and it is used for to control their business since
it is supported by document, and it increase the investment opportunity.
 The tax administration should try to encourage the tax payers that are responsible
for their duties and registered for VAT voluntarily.

31
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35
 6. Appendix
6.1 APPENDIX QUESTIONNAIRE FOR EMPLOYEES RIFT VALLEY UNIVERSITY
FACULTY OF BUSINESS AND ECONOMICS DEPARTMENT OF ACCOUNTING
AND FINANCE
Dear respondents this is a questionnaire intended to obtain relevant information on VAT
administration in Sabbata town for the sake of academic purpose. The finding of the study
greatly depend on your cooperation for which we are grateful in advance to achieve this you are
kindly requested to corporate giving response for following question , please tick () on the box
your choice and fill the blank space. 1. Sex: - male,female ,
2. Age: 18-24 25-30 30-35 >35
3. Education status: - Diploma 1st degree above degree

4. Work experience: - less than a year 1 year 1-2 year above 2 year
5. How long you have been with Sabbata town revenue bureau? 1 year 2-4 year
4 year above 4 year

6. How do you evaluate implementation of VAT in your administration? Very good

goodfairBadOthers, please specify _______________________________________

7. What are the major problems you have experienced related to VAT application? Unwillingness
of tax payer’s Fraud of tax collectors lack of awareness about VAT If others, specify
___________________________________________

8. How do you evaluate VAT administration parties feeling while they Registered for VAT? VAT is
an obligation VAT is debt VAT is useful VAT is bad Other, please specify
________________________________________

9. Who is more responsible for VAT collection and assessment? Tax payer’s customer any
government body, tax office, other specify
________________________________________________
10. What are the problems you have faced while administering VAT? Beside tax payers not pay a
required amount on time All of tax payers not pay a required amount of tax on time Most of tax
payers not pay a required amount of tax on time, Least of tax payers not pay arequired amount on
time,Others, specify __________________________________________

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11. How do you evaluate the system of vat administration in Sabbata town? Very high,
high,low, very low,If your answer low specify_____________________________________

12 How do you judge the awareness of tax payers in your town? They have good awareness
They have very good awareness, They have less awareness,They have poor awareness If out
these, specify _______________________________________

13 What are the attitudes of tax payers to Vat? Very good, good, fair, bad

14. Who benefited from VAT more? Tax payer’s government citizens of the country

If say tax payers, specify ___________________________________

15. The benefit of VAT register is higher than other tax types? Yes NoIf you answer is yes
specify______________________________________

16. How many tax payers have registered for? Limited,unlimited, unknown

17. How many of VAT registered companies are registered voluntarily or forcefully?
Voluntarily Forcefully

18. What are the major weaknesses of tax administration (ERCA) in Sabbata town?

Poor technology Poor awareness Implementation problem Inaccurate taxation Don’t

work in equal effort

19. How to aware the tax payers to register for VAT?

By seminars and meetings by enforcement

By promotion and encouragement not applicable

20. What measurements under taken to the tax payers those are responsible for their duties?
Encourage them by prize,Encourage them by reducing Tax rate, Giving them announcement
(recognition) Not applicable

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