Abstract:
The study was conducted with the aim of identifying the determinant variables of tax compliance
evidence from Debark and Gondar city Administration’s business income tax payers with
category “A” and “B” taxpayers. The study is conducted on the seven determinant of voluntary
tax compliance from existing literature and previous studies which include fairness of tax system,
penalty, organizational strength of tax authority, perception of government spending,
compliance cost, awareness level of tax payers and effect of referrals. The study used
quantitative research approach with descriptive and explanatory research design to test
hypothesis and answer the research questions. The study employed Probability sampling
techniques especially stratified random sampling to select the participants. The data has been
collected from 355 business income taxpayer’s. The researcher collects primary data through
questionnaires from business income tax payers. The questionnaire items measures based on 5-
point likert scale and the questioner was tested for validity and reliably of the items, cronbanch’s
alpha was used to measure reliability, Correlations analyses used to find answers for specific
objectives. Regression result show that fairness of tax system, penalty, organizational strength of
tax authority, perception of government spending and compliance cost have positive and
significance influence on voluntary tax compliance. On the other hand awareness level of tax
payers and effect of referrals positive and insignificant influence on voluntary tax compliance of
business income tax payers.
