Examining Factors Affecting Presumptive Tax Voluntary Compliance (A Case Study in Gedeo Zone)

Abstract

This research study aimed to analyze the factors influencing presumptive tax voluntary compliance in Gedeo Zone. The dependent variable, presumptive tax voluntary compliance, was examined in relation to various independent variables including collection enforcement, tax evasion, taxpayers' awareness, existence of corruption, tax incentives, transparency and fairness, and a supportive tax environment. A positivism research philosophy was adopted, utilizing a quantitative research approach and a cross-sectional research design. Primary data was collected through a Likert scale questionnaire from 318 targeted category "C" taxpayers. The findings of the ordered logistic regression indicated that collection enforcement, taxpayers' awareness, tax incentives, transparency and fairness, and a supportive tax environment have a statistically significant and positive influence on presumptive tax voluntary compliance in Gedeo Zone. Conversely, tax evasion and the existence of corruption were found to have a negative and statistically significant impact on taxpayers' compliance with presumptive tax. In conclusion, this study highlights the importance of implementing effective collection enforcement mechanisms, enhancing taxpayers' awareness programs, tax incentives, promoting transparency and fairness, and creating a supportive tax environment to enhance presumptive tax voluntary compliance. Furthermore, efforts should be made to tackle tax evasion and address issues related to corruption in order to improve compliance rates. The results of this study will aid policymakers and tax administrators in formulating strategies to enhance presumptive tax compliance in Gedeo Zone and potentially inform similar tax systems in other regions.