The Impacts of Value-Added Tax Audit on Tax Revenue Performance: The Mediating Role of Electronics Tax System, Evidence from the Amhara Region, Ethiopia

Abstract

Governments worldwide cannot collect the required tax revenue for their planned activities. This study aims to assess how inefficient VAT audit function and related factors affect tax revenue performance in Amhara Region, Ethiopia. The study used primary data sources from 377 VAT registered taxpayers in Amhara Region. It also used the Ability to Pay theory of taxation, structural equation model, path diagram, and multiple regression with SPSS/AMOS software for data analysis to identify the relationship between VAT audit and tax revenue performance. Even though the Amhara Region has revenue potential to cover its expenditures, because of inefficient VAT audit functions, poor system of tax education, lack of tax resources, and long time served tax rate, the tax revenue performance is inefficient. The study assured that VAT audit and tax education significantly affect tax revenue performance. The scarcity of resources for the VAT audit function is a critical problem. Even if the existed technology networked up to woreda levels, tax auditors did not use this system appropriately. Long-time-served tax rates also greatly influence tax revenue performance. The study recommended that there should be a chain mentor relationship between experienced auditors to new and ineffective auditors. The government should supply appropriate technology that is simple to use and quickly detect tax evasion. The existed tax rate and the system of tax education should be revised. The above findings are essential for taxpayers, policymakers, and tax authorities to understand, analyze, and use the main causes of VAT audit problems on tax revenue performance.

Tax evasion, psychological egoism, and revenue collection performance: Evidence from Amhara region, Ethiopia

“…Tax evasion is negatively related to tax revenue performance, while tax education and invoicing are positively related to tax revenue performance ( Kemme et al, 2020 ; Ndubula and Matiku, 2021 ; Mu et al, 2022 ). In the same result, this research assured that there is a negative relationship between tax evasion and tax revenue collection performance, and tax evasion happens in reporting and financial statement preparation.…”

“…The researcher coded and entered the data into the SPSS software, administered it based on the appropriate software, and analyzed the result. This questionnaire was adapted based on previous studies ( Harelimana, 2018 ; Akintoye and Onuoha, 2019 ; Onuoha et al, 2019 ; Night and Bananuka, 2020 ; Le et al, 2021 ; Kaulu, 2022 ; Mu et al, 2022 ) to measure the impacts of tax evasion, taxpayers’ psychological egoism, and technology on tax revenue collection performance.…”

“…This research measured tax revenue collection performance based on the approved measuring tools of the above research. Three instruments were utilized to measure tax revenue collection performance ( Mu et al, 2022 ). See Appendix A .…”

“…The research result indicates taxpayer education is a powerful instrument for increasing people’s willingness to voluntarily pay taxes, which is essential for generating the urgently required tax revenues to support the achievement of the Sustainable Development Goals of the country it is provided through in-depth, frequently ongoing interactions with various audiences through social media campaigns, tax fairs, and television programs. Tax education significantly and positively influences revenue collection performance ( Mabonga et al, 2015 ; Mu et al, 2022 ). In addition, tax education creates awareness for taxpayers and the entire society, including students and other parts of the community.…”

Detection of tax evasion using tax audits in the Slovak Republic

“…Tax evasion is a negative phenomenon in Slovakia and throughout the world (Terzic & Berger, 2020;Li et al, 2021;Ermasova, Haumann & Burke, 2021;Alstadsaeter et al, 2022). It is not entirely possible to eliminate tax evasion, but it is possible to reduce the incidence of tax evasion (Ngah, Ismail & Abd Hamid, 2021;Hungerman, 2022;Rashid et al, 2022;Hola, Zidkova, & Arltova, 2022;Mu, Fentaw, & Zhang, 2022;Slemrod & Velayudhan 2022).…”