The general objective of the study is to identify the determinant causes of tax evasion in the Ministry of Revenue Large Taxpayers branch office. This study tries to address the following specific objectives: To identify the impact of tax rate and level of income on tax evasion. To indicate whether inflation affects tax evasion or not. To show effects of the complexity of the tax system such as penalty and probability of detection on tax evasion. To detect the relationship between the perceived role of government and tax evasion. To determine the effects of attitude and perception on tax evasion. To identify the effects of age, gender, education level of taxpayers and pear pressure on tax evasion.
Tax evasion is a global scenario irrespective of any attribute of a country and has been experienced in both developed as well as developing countries. Unless nations can mitigate and minimize the magnitude of tax evasion, it will be difficult to overcome illicit financial activities & cash flows and drain channels of corruption.
As per the above article, Yonas Sendaba and his group's tax evasion includes all unlawful activities by a taxpayer with the motive of minimizing tax liability. It occurs when taxpayers intentionally failed to execute their tax responsibility. It is an intentional violation of laws and it is evident in situations where tax liability is fraudulently reduced, or false claims are filled on the revenue tax form. Tax evasion does not only minimizes government revenue but also harms the current and future economic development of the country. Whether evaders understand or not, they share the problem of the society caused by tax evasion. Most public goods provided by the government are financed by revenue collected from the tax.
As the collection of revenue from tax and customs minimizes, the government is forced to minimize the provision of goods and services to the general public. As the result, related factors of development are affected. However, the factors of tax evasion are not well identified; there are indicators of the presence of tax evasion and its effects. Therefore, this research tries to investigate major factors of tax evasion and prioritize these factors for better recommendation to the concerned body and contribute to the improvement of the tax system.
Table of Contents
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Research questions
1.4 Objectives of the study
1.4.1 General objective of the study
1.4.2 Specific objective
1.5 Significance of the study
1.6 Scope of the study
1.7 Description of the Study Area
1.8 Limitation of the study
1.9 Organization of the Study
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Theoretical Literature Review
2.1.1 Ethiopian tax policy
2.1.2 Tax Evasion
2.1.3 Why Do Taxpayers evade tax?
2.1.4 Risk level of the taxpayer
2.1.5 Methods for estimating the extent of tax evasion
2.2 Why should we take care of tax evasion?
2.3 Empirical Literature Review
2.3.1 Tax
2.3.2 History of Taxation in Ethiopia
2.3.3 Tax Evasion
2.3.4 Causes of tax evasion
2.3.5 Determinants of tax evasion
2.4 Conceptual framework
2.5 Summary and Knowledge Gap
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction
3.2 Operational definition of variables
3.3 Research Design
3.4 Research approach
3.5 Population and Sample
3.6 Population, sample, and sampling techniques
3.6.1 Sample size
3.6.2 Sampling techniques
3.7 Research Approach
3.8 Type of data and data collection tools and method
3.9 Data analysis techniques
3.10 Ethical considerations in the study
CHAPTER FOUR: DATA ANALYSIS AND FINDINGS
4.1 Introduction
4.2 Demographic data
4.3 Analysis of data results concerning the variables
4.3.1 Effects of tax evasion on resource accumulation of individuals, public service, and government debt
4.3.2 Impacts of tax Rate on tax evasion
4.3.3 Impacts of income levels of taxpayers on tax evasion
4.3.4 Impacts of inflation rate on tax evasion
4.3.5 Impacts of the probability of detection and capacity of investigation
4.3.6 Effects of penalty on tax evasion
4.3.7 Impacts of the complexity of tax law and its administration system on tax evasion
4.3.8 Impact of perceived roll of Government on the use of tax revenue to public service on tax evasion
4.3.9 Impacts of taxpayer’s attitude to government programs on tax evasion
4.3.10 Impacts of Peer influence on tax evasion
4.3.11 Impacts of age, gender and education level of taxpayer of taxpayers on tax evasion
4.4 Interpretation and Discussion
4.4.1 Effects of tax evasion on accumulation of individuals wealth
4.4.2 Impacts of tax Rate on tax evasion
4.4.3 Impacts of income levels of taxpayers on tax evasion
4.4.4 Impacts of inflation on tax evasion
4.4.5 Impacts of the probability of detection and capacity of investigation
4.4.6 Effects of penalty on tax evasion
4.4.7 Impacts of the complexity of tax law and its administration system on tax evasion
4.4.8 Impact of perceived roll of Government on the use of tax revenue to public service on tax evasion
4.4.9 Impacts of taxpayer’s attitude to government programs on tax evasion
4.4.10 Impacts of Peer influence on tax evasion
4.4.11 Impacts of age, gender and education level of taxpayer on tax evasion
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of Major Findings
5.2 Conclusion
5.3 Recommendation
5.3.1 Recommendations for practice
5.3.2 Recommendations for further study
Research Goals and Themes
The primary goal of this thesis is to identify the determinant causes of tax evasion within the Large Taxpayers Branch Office of the Ethiopian Ministry of Revenue. The research addresses how various demographic, economic, and institutional factors influence the compliance behavior of taxpayers and seeks to provide recommendations for strengthening tax administration and increasing voluntary compliance.
- Determinants of tax evasion (tax rate, income level, inflation).
- Impact of the tax administration system (complexity, audit probability, and penalties).
- The influence of demographic factors (age, gender, education level) on tax compliance.
- Social and institutional pressures (peer influence and perceived government role).
- Development of strategies to enhance voluntary tax compliance and government revenue.
Excerpt from the Book
1.1 Background of the study
Tax is one of the ways to finance government expenditures and it has been an important component of government revenues. The share of tax in total revenues and the amount of tax collected differs among countries and they depend on the structure of the economy in each country. (Tabandeh, 2012)
In developed and developing countries, business owners, government workers, service providers, and other organizations are forced by the government to pay a tax for a long period in human being history, and no one can escape from the tax system of the country.
The existence of collective consumption of goods and services necessitates putting some of our income into government hands. Such public goods like roads, power, municipal services, and other public infrastructures have favorable results for many families, business enterprises, industries, and the general public. Public goods are normally supplied by public agencies due to their natures of non-rivalry and non-excludability. (ECC. 2005)
Tax evasion affects the economy of the whole world. Internationally researchers have written different views, for example, James A. & Mathias K. (2020) Wrote that tax evasion is central to public economics. Its most obvious impact is reduced tax collections, thereby affecting the taxes that compliant taxpayers face and the public services that citizens receive. Beyond the revenue losses, evasion leads to resource misallocation when people alter their behavior to cheat on their taxes, such as their choice of hours to work, occupations to enter, and investments to undertake. Moreover, governments have to expend resources to detect, measure, and penalize non-compliance. Noncompliance alters the distribution of income in arbitrary, unpredictable, and unfair ways, and it affects the accuracy of macroeconomic statistics.
Summary of Chapters
CHAPTER ONE: INTRODUCTION: This chapter introduces the study's background, problem statement, research questions, and scope, focusing on the context of tax evasion in Ethiopia.
CHAPTER TWO: REVIEW OF RELATED LITERATURE: This chapter provides a theoretical and empirical overview of factors influencing tax evasion, including demographic, economic, social, and institutional variables.
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY: This section details the research approach, target population, sample selection (155 taxpayers), and data collection instruments used to analyze the factors of tax evasion.
CHAPTER FOUR: DATA ANALYSIS AND FINDINGS: This chapter presents the empirical results derived from statistical descriptive analysis of the survey responses and key informant interviews regarding the identified determinants of tax evasion.
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION: This chapter synthesizes the main findings, provides concluding remarks, and outlines actionable recommendations to improve tax administration and compliance at the Large Taxpayers Branch Office.
Keywords
Tax evasion, Ethiopian Ministry of Revenue, Taxpayers, Compliance, Tax rate, Audit, Inflation, Penalty, Demographic factors, Public revenue, Tax administration, Voluntary compliance, Government spending, Institutional factors, Economic variables.
Frequently Asked Questions
What is the core focus of this research?
The study primarily focuses on investigating and identifying the determinant factors of tax evasion among taxpayers registered at the Large Taxpayers Branch Office under the Ethiopian Ministry of Revenue.
Which thematic fields are central to this work?
The central themes include the impact of tax rates, income levels, inflation, the complexity of tax law, tax audit procedures, and demographic characteristics on tax evasion behavior.
What is the primary objective of this thesis?
The goal is to determine the specific factors causing tax evasion in order to develop strategies for better government tax revenue collection and improved tax administration.
What research methodology was employed?
The study utilizes both qualitative and quantitative research approaches, using a self-administered questionnaire for 155 representative taxpayers and interviews with branch office team leaders for triangulation.
What does the main body of the work cover?
The work covers a detailed literature review on tax evasion theories, a rigorous methodology section, and a comprehensive analysis of survey findings categorized by the determinants investigated.
How would one characterize this work using keywords?
The work is characterized by its focus on tax compliance, the Ethiopian tax environment, fiscal policy, systemic obstacles in tax collection, and taxpayer behavior.
How do tax audits specifically impact compliance in this context?
The research concludes that the probability of detection through regular, diligent audits serves as a deterrent, significantly increasing taxpayer compliance and reducing the tendency to view evasion as a habit.
What role do demographic factors like age and gender play in tax evasion?
The findings suggest that younger taxpayers are more prone to risk-taking and thus more likely to evade tax, while findings indicate female taxpayers are generally more compliant than their male counterparts in the studied branch.
- Quote paper
- Anonym (Author), Factors Affecting Tax Evasion in Ministry of Revenues. The Case of Large Taxpayers Branch Office, Munich, GRIN Verlag, https://www.grin.com/document/1294318
