The Effect of Tax Administration OnTaxpayers voluntary Compliance Behavior in Mertule Maryam City Administration, Amhara Region, Ethiopia

The government of Ethiopia introduced a number of rules, systems and methods aiming at tax collection as a major source of public revenue. However, this all efforts couldn’t still bring the required result due to a number of reasons. Non-compliance may take the lion share on the poor revenue performance around Mertule Mryam city administration. From time to time tax compliance is growing international concerns for tax authority and public policy makers as tax evasion seriously threatens the capacity of government to raise public revenue. The most successful tax administrations around the world continuously encourage, attain, and maintain a high degree of voluntary compliance, but in reverse indicators of poor tax administration (i.e. low fair taxation, tax complexity, low tax service and low awareness creation harmed voluntary compliance behavior of tax payers. The effects of tax administration (fairness, tax complexity, tax payer’s awareness, service of the authority and tax audit) were examined in Mertule Mariam city administration. The aims of the study is to examine the effect of tax administration on tax payer compliance behavior. This study incorporates category A and category B tax payers. The researcher used both qualitative and quantitative research approach with primary and secondary data type and disseminated self-administered structured questionnaires which including both open and closed ended question to taxpayers. The study also used both descriptive and inferential analysis i.e. simple logit regression. The researcher also used reliability test and correlation when analyzed the collected data. The study found all the 5 variables were significant. Among these variables awareness of the respondents as well as their perception towards complexity of the tax system is negatively correlated with voluntary tax compliance behavior. But fairness, service delivery and tax audit were positively correlated with voluntary compliance. According to the study all these variables were found to be the important tax administration problems that affected voluntary compliance behavior. The study conclude that since the contribution of fairness, awareness, service quality, complexity of the tax system and tax audit on improving taxpayers’ voluntary compliance behavior are significant. Therefore, revenue authority of the country and other concerned parties should give more emphasis on the role of fairness, awareness, service quality, complexity of the tax system and tax audit by fulfilling the required staff and qualifications to improve taxpayers’ voluntary compliance.