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Backgrounds: In Ethiopia, taxpayers are categorized as small, medium or large depending on their business turnover or levels of income. Irrespective of one's category, taxpayers in Ethiopia, particularly Wolaita Sodo town are required to comply with VAT, TOT, Income Tax, Withholding Taxes and Customs duties in equal measure. Taxpayers will readily accept any new system introduced if they have ample knowledge to understand the system. Thus, education programs organized by custom and duty authority or public education institutions are required to enhance taxpayers' ability to understand the importance of tax on country's economic development and to increase their confidence in fulfilling their responsibilities as taxpayers. By considering the above issues, the researcher interested to investigate the influence of tax education on tax compliance attitude of taxpayers by conducting an experiment on the taxpayer in Wolaita Sodo town. The general objective of the study was to investigate the influence of tax education on tax compliance in Wolaita Sodo town.
Methods: The target population for the survey study was actual taxpayers who are subject for business income tax. Only unincorporated business taxpayers in Wolaiata Sodo town are used as participants in the survey study. The target total population is 11,278 business income taxpayers as of July 2017 which is categorized under A, B and C. Only 160 taxpayers were selected by using simple random sampling from Wolaiata Sodo town. Questions regarding employment income, business income, turn over tax, and excise and value-added taxes are asked. Respondents are also asked to state whether the direct cost of producing the income, such as the direct cost of manufacturing, purchasing and selling costs shall be deductible from gross income in calculating taxable business income. Before and after the experiment (tax education) respondents were asked to check whether they know basic taxation rules. And their marks scored for the 7 basic questions after and before tax education out of 50 marks are recorded.
Results: Majority of the respondents after attending the tax course scored high value regarding the tax knowledge. There is a great difference between the tax compliance attitude of these respondents before and after attending the tax course. Before attending the tax course, majority of respondents showed the plan of not complying with tax laws. But after attending the tax course, the majority of the respondents proves the identification of taxable and non-taxable income types. Generally, it resulted that the tax knowledge of respondents is improved after attending the tax course.
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