CHAPTER – FOUR

4. DATA PRESENTATION AND ANALYSIS

In this chapter the data collected using questionnaires offered to the

employees of (CCSRA) concerning problems of VAT collection are presented
and analyzed is employees have filled the questionnaires and properly
returned. The data presentation involves table.

This section presents data presentation and analysis that is gathered from
questioners distributed to the employee of CCARA, 33 employee have filled
the questionnaires and properly returned. First, there are organizations of
private sectors which are running businesses and registered for VAT. These
are of course which have an annual sales income or birr 1,000,000 and
above so the problem which can be mentioned as a big a factor is in
identifying those organization or private sectors that should pay VAT. This is
due to the fact that there is no willingness among the sellers to expose
themselves of earning an annual income of the mentioned amount. On the
other hand, it is raised that some sellers are not issuing Vat invoice to the
buyers, that is under invoicing in which they provide only a limited amount
of VAT to the VAT collectors some organizations are not declaring their Vat
on monthly basis (being non – declaring) or stop declaring totally (non –
fillers) so most of them are always credit declaring rather than payment
declaring.
 4.1 CUSTOMER RESPONSE TO QUESTIONER

In this chapter, the data collected using questionnaires afford to the

employees of Chiro city administrative revenues authority (CRCA)
concerning problems of VAT collection are presented and analyzed 33
employees have filed the questionnaire and properly returned 5 employee
did not. The data presentation involves tables.

Table 3.1 Characteristics of the respondents

1 Gender No respondent Percentage (%)

Male 17 51.52
Female 16 48.48
Total 33% 100%
2 Age No respondent Percentage (%)
Alternative
( 18 -30) 0 0
31-40 20 60.60
41-56 10 36.37
>56 3 9.09
Total 33 100%
3 Marital status
Single 12 36.36
Marred 21 63.64
Total 33 100%
4 Education level No respondent Percentage (%)
12 completed 0 0
Certificate 0 0
Diploma 2 6.06
Degree 26 78.79
 2nd degree and above 5 15.15
Total 33 100
5 Service in year No respondent Percentage (%)
0 -5 2 6.06
6 - 10 18 54.55
11 - 15 5 15.15
Above 15 8 26.24
Total 33 100%
6 1. Income level (salary) No respondents Percentage (%)

450 – 750 0 0
751 - 1000 0 0
1001 - 1500 0 0
1501 – 2000 0 0
1801-2000 0 0
2001-3000 0 0
Above 3000 33 100
Total 33 100%

According to the above table out of the total 33 respondents (0%) were the
age between 18-30 and (60.60%) were the age between 31-40 and the
(36.37) were the age 41-56 above the age of 56. Regarding the gender of
respondents 17(51.52%) were males while the remaining 16(48.48%) was
female. The educations status of respondents as shown by the above table
0(0%) were certificate holds 0(0%) were degree holder 26(78.79%) diploma
hold and the other 2(6.06%) was were 2 nd degree and above. The service in
the year of respondents as shown by the above table 2(6.06%) was, were
between the (0 – 5) year, 48(54.55%) was, were between 6 -10 year,
5(15.15%) was were between 11-15 year the other are 8(56.24%) were above
15 year. The income level respondent as shown by the above table 0(0%) was
between the 450-750 birr. 0(0%) was between the 751-1000 birr. 0(0%) was
between 1001-1500 birr. 0(0%) was between the 1501-2000birr. 0(0%) was
above 3000 birr of income level.

Table 3.2 Factors which may affect VAT collection

No Item Respondent
Number %
1 Absence of tax payers 3 9.09
2 Inefficiency of tax payers 11 33.33
3 Both absence and inefficiency of tax 17 51.52
4 payers 0 0
5 3rd treatment 2 6.06
No reply
Total 33 100%

Sours of primary data

According to above table 3.2, 9.09% of the respondents filled abbess of tax
pares is among the first problem during VAT collection. On the other hand
33.33% of respondent lose that there is inefficiency claimed by the tax
payers and usually they return bare hand and, also 51.52% of the
respondent said there are both absence of tax payers and inefficiency of tax
payer. No one among the respondents replied to 3 rd treatment towards VAT
among the pavers they ting that vat is a new type of tax collection system
and it is more complex.

Table 3.3 How do you see the preset vat collection system
Respondent
No Item Number %
1 Good 16 48.48
2 Bad 2 6.06
 3 Moderate 15 45.45
Total 33 100%

Source primary date

Considering the above table 3.3 described situation of the VAT collection
system in present time as to the respondent 48.48% or the respondent is .
good and the 6.06% or the respondent said bad and 45.45% respondent is
moderate
Some of the VAT payers are mentioned task for improper VAT refund while
the other uses the money for private purposes.

Table 3.4 Sufficiency of employees to collect VAT department of

CCARA

No Item Respondent
Number %
1 Yes 15 45.45
2 No 18 54.55
Total 33 100%

Source Primary data

In table 3.4 above it is tried to present the sufficiency or employee or the

VAT from the organizations and private sectors that are obliged to par VAT
in Addis Ababa city.
According to the response from the employee to the question there is
shortage of human resource in the department (54.55% believe that there is
scarcity of human resource any 45.45% think that it is sufficient.
3.2 Action taken by ERCA to control the problem
ERCA has taken several actions to control the problems described above.
Firstly ERCA has created awareness to the VAT payer using different
mechanism. These include discussion on meetings, through communication
media (Video, television), distribution of published paper, etc.

Table 3.5 Availability of persons cancelled from VAT register and

shifted to other

No Item Respondent
Number %
1 Yes 26 78.79
2 No 7 21.21
Total 33 100%

Source primary data

Considering the above table 3.5 described situations in to account the result
from the questionnaire showed that there are persons cancelled from the
VAT register and shifted to other types of tax payers. As to the respondent
78.79% they answered that they have the knowledge of shortage of resource
in their department while the rest 21.21%consider that it is sufficient.

3.3 VAT collection and payment

3.3.1 VAT collection
VAT is being implemented in Ethiopia with the aim of increasing revenue of
the government compared to the sales tax consequently. VAT shown a better
contribution to the growth to revenue. Before January 2021 i.e. before the
introduction of VAT the average monthly sales tax collection was about birr
180.5 million (birr 70.1 million on domestic goods) during the period 2020
and January 2020. But birr 3.93 billion was collected within 14 month after
the introduction of vat according to equation presented to the VAT
department of ERCA. The advantage of changing the previous tax (sales tax)
in to VAT is that there is no cascading of the tax (tax to tax), unlike the
current sales tax system were by relief is granted for tax paid on capital
good. Distribution and administrations in puts.

 Sales of exported good are not subject to Vat removing the tax content
(on inputs) from exported goods makes the goods more competitive in
international market.
 Domestically produced goods will more competitive with imported
good
 Relief from tax on capital goods will encourage investments.

Responsibility for VAT collection.

Table 3.6 preference of VAT To sales tax

Respondent
No Item Number %
1 VAT preference 33 100
2 Sales tax preference 0 0
Total 33 100%
Source primary data

So as to compare the previous, sales tax with the value added tax the tax
collector have been asked to show their preference over the other. All of the
respondent have answered that they prefer vat to sale tax.
3.3.1 VAT payment
According to article 26/1, of proclamation number 285/2002, every
registered person is required to file a vat return with ERCA For each
accounting period, whether or not tax is payable in respect of the period by
the dead line for filling the VAT return According to article 26/2, the VAT
return for every accounting period shall be filed no later than the last day of
the colander month following the accounting period.

Table 3.7 Adequacy of time given for payment of VAT liability

No Item Respondent
Number %
1 Adequate 25 75.76
2 Not-adequate 8 24.24
Total 33 100%

Source primary data

As present in table 3.6 above the tax collector are asked relation to the
adequacy of the time for payment of VAT liability responded that the time is
adequate.

2. Table 3.8 Evaluation of the extent of willingness of tax payers

to pay their VAT liability on time?

No Item Respondent
Number %
1 High 0 0
2 Middle 28 84.85
3 Low 5 15.15
 Total 33% 100

Source primary data

In addition the employees are asked to evaluate the extent of willingness to

pay the VAT liability in a given period of payment among the tax payer.
15.15% of the respondents believe that there is low willingness among the
tax payers well 84.85% of respondent that there is an middle willingness.
According to their answer there is no high willingness from the tax payers.

Tax evasion
Tax evasion involves a fraudulent or deceitful effort by a tax payer to escape
a legal tax obligation this is a direct violation of tax law. Tax avoidance in
contrast does not violet the law. It occur when tax payer arranges his/her
economic behavior in such a manner as to maximize his/her post tax
economic passion that is to minimize the amount if tax awed this may be
accomplished in the short run by the advantageous use of existing tax law
provision and in the long run. By influencing tax legislation though the
support of lobbies and pressure groups which represents the special interest
of tax payers tax avoidance is lawful tax evasion in not (p. Herber. In 1999)

Business enterprise and individual business persons have evading VAT. The
possible reasons that encourage them to evading VAT are discussed bellow.

Lack of awareness among the VAT payers can be taken as a reason to

evading VAT. But those who have the awareness are also evading vat due to
the fact that there is weakness in enforcement schemes from ERCA in
addition, there are low enforcement measures by the tax office and the No of
enforcement offices that supervise those illegal tax payers is less.

The tax office is not implementing each and every aspect of the tax
administration function especially the penalty part.

As for the tax payer, the lack of frustration of law and taxpaying cultural
value and among the reasons for evading VAT, in addition, by seeing other
VAT evaders, and out of having the desire to be rich illegally with in short
time, they act similarly.

Table 3.9 Involvement of executive bodies in prevention of VAT

evasion /avoidance

No Item Respondent
Number %
1 High cooperative 2 6.06
2 Fairly cooperative 14 42.42
3 Less cooperative 17 51.52
Total 33 100%

The employ of the VAT department at ERCA are asked whether the executive
bodies are cooperating in preventing vat evasion and VAT avoidance among
the tax payers. Therefore, the analysis shows that 6.06% and 42.42% of the
respondents thing that the executive bodies are highly and fairly involved in
cooperating prevention of VAT evasion and avoidance respectively while
51.52% mentioned that less cooperative.
 Measure against VAT evasion / avoidance
Although not satisfactory, a number of measures have taken against tax
evaders by CCARA. These include supervision penalizing of those illegal tax
payers by imprisonment and random checking at the premise of the tax
payer.

In addition test purchase have been conducted in order to check the attitude
of the tax payer towards VAT currently, a strong intelligent department has
been established the role of which is supervise those illegal tax payers.