Abstract:
Understanding the factors affecting tax compliance has become an important topic for
increasing public levies, especially since Tax is a compulsory contribution (levy) by an economic
unit to a government without expectation of direct and equivalent return (quid pro quo) from the
government for the contribution made (Bhatia, 1976). Government needs financial resources to
act as a government and play a role that is expected from it by the public. According to the
Federal Income Tax Proclamation No. 978/2008 taxpayers are categorized into three categories,
namely category “A”, “B”, and “C” based on their volume of sales. Consequently, this thesis
studies “Factors Affecting Category “C” Taxpayer’s Compliance with Taxation a Case of
Mizan-Aman Twon, SNNPRE”. The aim of this paper is therefore identifying factors affecting
Category “C” Taxpayer’s Compliance with Taxation a Case of Mizan-Aman Town, SNNPRE.
Based on the objectives of the paper and the availability of relevant information, this research
paper was employed explanatory research approach so as the researcher has used it to identify
factors affecting category “C” tax payers’ compliance with taxation in Mizan-Aman Town,
SNNPRE. The main sources of data for the study are found from primary source; and this data
was analyzed using explanatory qualitative method research approach, correlation and
regression analysis. Seven independent variables that affect tax payer’s compliance with tax law
were selected and analyzed. The study results from the survey conducted in Mizan- Aman Town
using 54 respondents, indicate that Category “C” Taxpayer’s compliance was statistically
influenced by six independent variables such as Fairness or Equity, Organizational strength of
tax authority, Cultural factors such as Peer reporting and Ethical values, Social factors such as
Social norms, Personal norms, Self-interest and Peer groups, Attitude of tax payers towards the
government and Economic deterrence. Indeed focusing and exploring factors that determines
and motivates citizens’ tax compliance to pay taxes in general and category C tax payers in
particular could essential to raise domestic revenues from consenting citizens.
