Abstract:
The main issue faced by all tax authorities is that it has never been easy to persuade all
taxpayers to comply with the regulations of a tax system. Business sector is one of the fastest
growing sectors of the economy in Ethiopia. Based on this, the study examined the role of tax
audit on compliance behavior tax payers at MOR, Jimma branch office. The study objective was
to assess the role of tax audit on compliance behavior of taxpayers at Ethiopian Ministry of
Revenue Jimma branch, It specifically investigated the effect of tax audit, the role of tax audit on
compliance behavior of tax payers and the resource allocation for tax audit effects on tax
compliance in MOR, Jimma Branch office. Causal research methodology was used for the study
and a close-ended questionnaire was used to gather the needed data and an analysis was
carried out through correlation matrix and multiple regressions. The study discovered that the
effect of tax audit, the role of tax audit on compliance behavior of tax payers and the resource
allocation for tax audit had a positive significant effect on tax compliance in MOR, Jimma
Branch office. The role of tax audit on compliance behavior of taxpayer was the most significant
predictor out of all the predictor variables. The study was concluded that tax audit could
engender tax compliance in Jimma branch office. Therefore the study recommended that Jimma
Branch office should intensify tax audit through the employment of more competent staffs and
intermittent training in order to increase tax compliance level in the branch office, s Jimma
branch office should give priority to unaudited tax payers when selecting tax payers for audit.
Additionally the branch office should allocate good and suitable office, sufficient qualified
human resources, internet services and technology needed for tax audit.
