E-tax System Adoption and Tax Compliance in Ethiopia: Large and Medium Taxpayers’ Experience
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Working Paper 180
In the last decade, tax administrations in developing countries have been introducing technological innovations such as e-filing and e-payment platforms. The main aim of introducing these technologies is to improve tax compliance and boost revenue collection by increasing convenience and flexibility for taxpayers and reducing their compliance costs. E-filing and e-payment could save taxpayers time preparing and returning taxes and reduce errors and opportunities for corruption. However, the adoption of these technologies and their effectiveness in improving tax compliance could be undermined by several factors. Using tax administrative records, we examined the adoption rate trend of the e-filing system and the correlation between e-filing adoption and tax compliance of large and medium taxpayers in Ethiopia. The timeliness of value-added tax (VAT) and corporate income tax (CIT) return filing and the amount of tax declared are the two main compliance indicators used in this study. Furthermore, we explored the existing challenges and the way forward to improve the adoption of the e-tax system using focus group discussions (FGDs).
Seid Yimam is based at the Institute of Development Studies, working as a Research Associate focusing on tax administration, gender and tax compliance, informal tax, and environmental taxes. He is also a PhD student in Economics at the University of Sussex on a scholarship funded by ICTD. Outside of the field of taxation, his main research areas are in contemporary development focusing on Agriculture and Food Systems Transformation. He holds an MSc in Economics (Policy Analysis) from Addis Ababa University and an MSc in Economics from the University of Copenhagen. He worked as a Research Officer at the International Food Policy Institute (IFPRI) and the Policy Study Institute (PSI), and he was also a lecturer of Economics at Debre Berehan University in Ethiopia prior to joining ICTD.
Kebede Lidetu Shai is currently an independent consultant working as a risk and compliance advisor for the Malawi Revenue Authority as part of a project funded by the World Bank. He served the Ethiopian Ministry of Revenue for 18 years as Director of Risk and Compliance Strategy and at various levels. He also worked as an external technical expert for the International Monetary Fund (IMF) in 7 different countries in Africa and the Caribbean since 2012. He worked as Manager of Compliance at Amhara Bank S.C. for one year. He has been also providing training and consulting services to government organizations in the areas of risk management, policy and strategy development, enterprise risk management and information technology consulting since 2012.
Tihtina Belete is an instructor at the Ethiopian Civil Service University in the Tax and Customs department. Previously, she worked in the Ethiopian Ministry of Revenues as a Tax Compliance Team Leader and within the Tax Transformation Office as Tax Debt Priority Area Coordinator. She also worked with the Ethiopian Customs Authority in several positions over 12 years, namely Customs Intelligence, Risk Management Officer, and Risk Management Senior Officer.
Citation: Yimam, S,; Lidetu, K. and Belete, T. (2024) E-tax System Adoption and Tax Compliance in Ethiopia: Large and Medium Taxpayers’ Experience, ICTD Working Paper 180, Brighton: Institute of Development Studies, DOI: 10.19088/ICTD.2024.003
