The practice of value added tax and its problems in jimma zone revenue authority

Abstract

This study was focused particularly on identifying and assessing the problems in association with the practice of VAT at Jimma Zone Revenue Authority. To achieve this objective, the researcher used primary and secondary data. The researcher used questionnaires, interviews and relevant documents to gather primary and secondary data from the data sources. Pie charts, graphs, table, Percentages were used in analyzing the collected data. VAT practice in Jimma Zone has faced different confronts. The main problems that encountered are: misunderstanding of the public in general and business community in particular regarding the VAT laws, resistance against registrations for VAT by some traders, administration inefficiency, and provisions of understated financial statements. All these constraints hinder the smooth practice of VAT and achieve the desired objectives as possible. On the basis of these findings, the researcher recommends that the authority should train the taxpayers about the rules and regulations of VAT continuously, recruiting new employees and give nonstop training for the existing once, it should also increase its follow-up and investigation to control refusal enterprises, as well as effectively and efficiently performing the tasks of identification of VAT taxpayers, processing of returns, controlling collections, auditing taxpayers, recognizing genuine taxpayers and levying penalties to tackle the problems it has encountered.