Abstract:
The aim of this study was to identify Factors Affecting the Performance of Vat In The Case Of
Haramaya and Awaday Town Inland Revenue Authority. The specific objective the study was to
evaluate the performance of VAT Revenue collection, to identify the main factors those affect
the performance of VAT revenue collection and to examine the Moderating effects of Law
enforcement and penalty on the relationship between Tax Evasion, Application of Cash register
machine and VAT Performance. The study used quantitative research methods to collect and
analyze both primary and secondary data. Secondary data were collected from reports and
published articles. Regarding to primary data, it obtained from structured questionnaire that were
collected from 124 VAT registrants samples and 44 were collected from revenues authority
employees generated by using Yemane formula. Descriptive statistics and econometric models
through multiple linear regression models were used with the help of SPSS version 20 and
PROCESS MACRO statistical software. The Results of the study showed that Awareness
creation and Cash register machine have positive and significance influence on VAT
performance, where as Tax evasion has negative significant effect with VAT performance. On
the other hand, moderating variable Tax law enforcement and penalty improves the relationship
between Tax Evasion and Application of Cash register machine with VAT Performance. this
study recommends that, the authority should conduct a consistent awareness creation programs
to update the business community and the society at large about the concepts, rules and
regulations, advantages and uses of the Value Added Tax, Revenue authority should
continuously follow up the existing business organizations and make to be registered those who did not registered organization for VAT and to use Electronic tax register machines. It is
recommendable that, the revenue office should be maintained effective tax enforcement strategy
and VAT auditing to control VAT. Hence, the government authority/tax office has to focus on
factors, which negatively affect VAT, and needs to take a corrective action
