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Dissertation Chapters | Economics | India | Volume 5 Issue 4, April 2016

Tax Fairness Perceptions and Compliance Behavior: Evidence from the Metropolitan Cities of the Amhara Regional State of Ethiopia

Samuel Alemnew Belay ^[2] | P. Viswanadham ^[5]

Abstract: 1, 2Andhra University, Department of Commerce & Management Studies, Visakhapatnam, India The main objective of this study was to examine the tax fairness perceptions and compliance behavior of business income taxpayers in the metropolitan cities of the Amhara Regional State of Ethiopia. A cross-sectional survey research design and a qualitative research approach were adopted in this study. Purposive sampling technique was employed to select the study participants. The sample size for the purpose of this study was 24. The data was collected using semi-structured interviews. Data gathered from interviews were analyzed using thematic analysis, a method that identifies analyses and reports patterns within data. From the analysis, the results suggest that participants had mixed perceptions on the fairness of the income tax system. Specifically they had concerns on six aspects of fairness perceptions, namely general fairness, horizontal fairness vertical fairness, retributive fairness, personal fairness and administrative fairness. These concerns should at least provide a signal to the Revenue Authority on the aspects of income tax system that need improvements. Based on the findings above in this study it is possible to conclude that business income taxpayers have multidimensional perceptions on the fairness of the income tax system. Moreover, the impact of fairness perception on the decisions of taxpayers whether to comply or not to comply with the income tax system was found to be paramount. Therefore the recommendations out of this study were (1) The revenue Authority should consider the socio-psychological aspects of the taxpayer s in addition to the economic deterrence approaches while developing the tax policy in order to make the policy implementation easy and (2) To enhance the level of tax compliance the tax authority should take the perceived tax fairness issues with all its dimensions into account.

Keywords: Fairness perception, compliance behavior, income tax system

Edition: Volume 5 Issue 4, April 2016,

Pages: 1173 - 1183

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