FACTORS AFFECTING THE PERFORMANCE OF VALUE ADDED TAX IN THE CASE OF HARAMAYA AND AWADAY TOWN INLAND REVENUE AUTHORITY

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