Effectiveness of a Tax Audit: A Study in Kembata Tembaro Zone, Southern Ethopia

Tax is a pecuniary burden levied upon individuals or property to support the government, and its payment exacted by legislative authority (Aronson, 1985). It is compulsory payment which is related with certain business activities. Revenues collected via taxation are used to buy the inputs essential to provide government supplied goods and services or to reallocate purchasing power among peoples (Hyman, 2011). According to Bird (2010), political willingness, a clear strategy and adequate resources are ingredients that are essential to effective tax administration. Unfair and unpredictable tax administration might bring tax system into disrupt and deteriorate legality of
government.

Registering for tax; filling tax returns on time; correctly reporting tax liabilities; and paying taxes on time are four universal classes of obligation likely exist for almost all taxpayers (OECD, 2014). An examination of whether a taxpayer has appropriately assessed and declared their tax liability and fulfilled other tax legislative responsibilities is referred as tax audit.