The Role of Tax Audit on Tax Compliance Behavior of Tax Payers at Ministry Of Revenue Jimma Branch

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.