CHAPTER – FIVE

5.1 CONCLUSIONS AND RECOMMENDATION

Conclusion
VAT is a transduction tax collected on goods and services at all stages of
production and distribution. This tax is collected on the value added at each
stage. Value added is the difference b/n the sales and the value of purchase
at the stage.

VAT was introduced in Ethiopia in 2002 under proclamation member 285

2002 in replacement of sales tax. CCARA (chiro city administration revenue
authority) is authorized to administer this tax Vat payers are person who are
registered for VAT and carry on taxable activity. The total values of
transduction birr 500,000,00 are obliged to pay VAT.

VAT is levied and paid at the rate of 15% of the value of every taxable
transaction by a registered person and every import of good, other, than
exempt import and an import of services. Analysis is made in the preceding
section of this study on the bases of this analysis therefore, I have
concluded the following.

 There is a scarcity of human resources in VAT department of CCAR. The

department is understaffed so that there is a burden of job to each
employee.
 Certain persons are cancelled from the VAT resister because of such
condition as their annual sales become less than the threshold (Br
500,000.00); they intended to obtain hiah profit by performing illegal
trade. This cancelled person shifted to other types of trade in order not
to be vat payers.
 Most of the tax collectors said that tax payers are registered both
voluntarily and forcedly. This is because the taxpayers assumed they
would be complied to be registered if they would not do that by
themselves.
 Tax evasion involved a fraudulent of deceitful effort by a tax payer.
Business enterprises and individual business persons are evading VAT
due to the fact that there is weakness in enforcement schemes from
CCARA
 5.2 RECOMMENDATION

As to the study conducted, there are certain problems related to collection of

VAT. Therefore, to minimize these problem. I have for warded the ff
recommendation.

 CCARA has to set affixed monthly timetable for vat payers to reduce the
burden of both tax collectors and tax payers, meaning certain huge
organization like Ethiopian Telecommunication Corporation, etc should
pay their vat liability according to a program set by CCARA so that the
burden can be reduced.

 CCARA has to prepare seminars, workshop, magazines or new papers do

disclose current issue and the revenue collected from VAT so that the tax
payers and the public become aware of VAT. Besides disclosing collected
amount and introducing current issues make the anther its transport.

 To make the society aware of vat and to prevent tax found mode by the
tax payers, education of tax should be given in schools as a subject. This
can be done communicating with the ministry of education, meaning
CCARA has to communicate with ministry of education for the purpose of
formulating curriculum that includes education of tax.

 CCARA has to be staffed with sufficient number of employees, so, as long

as the number of tax payers is increasing and facilitated service is
required, the number of employee of CCARA should grow so that service
can be given effectively. Therefore the staff of vat department should be
equipped with enough employees including auditors if the department has
enough auditors, tax evasion and avoidance can be controlled.