Implementation practice of value added tax: in Case of hosanna town administration

Abstract

This study was conducted with the title implementation practice of value added tax in Hosanna town, which is found in SNNPR with the objective of the analyzing consistency of value added tax practice with its rules, proclamation and to identify the major hindrance problems in its implementation. To achieve all these the researcher used mixed, quantitative and qualitative type of data, descriptive research design and sample from target population by using stratified random sampling technique. After that the researcher used questionnaires, interviews for sampled respondents and reviewing related documents to collect the intended data and analyzed the obtained data by simple static model with frequency, Percentages and presented on tables. In finding the main challenges those encountering in effective implementation of VAT are: misunderstanding of the public in general and business community in particular regarding the VAT implementation objectives, resistance from registrations for VAT by some traders, administration inefficiency from tax office, non-issuance of receipt to customers by registered business enterprises. On the basis of these findings, the researcher recommended that the authority should train the taxpayers about the rules and regulations of VAT continuously, recruiting new skilled employees and give training for the existing one, it should also increase its follow-up and investigation to control noncompliance enterprises, as well as effectively and efficiently performing the tasks of identification of VAT payers, controlling collections, recognizing genuine taxpayers and local public should be sensitive for the revenue of country as well as town by contributing their effort on effective implementation.