Principles of good tax administration practice note. What factors cause differences in accounting rules for gaap and the tax code. In the words of hendrickson, 1992, accounting theory was defined as logical reasoning in the form of a set of broad principles that 1 provide a general frame of reference by which accounting practice can be evaluated, and 2 guide the development of new practices and procedures. Thus, the application of accounting in the business sector has become an indispensable factor. The theory and practice in the assignment of taxation. The impact of tax reform on private sector development 1 introduction 1. Accounting is mainly governed by conventional concepts and principles. May 12, 2015 intoduction to public finance and taxation theory. In this type of tax system all incomes are taxed at a single uniform rate, irrespective of whether tax payers income is high or low.
Pdf on jan 1, 2019, anatolii kholkin and others published tax accounting. For example, it violates the principle of horizontal equity if one person buys an item in a local store and must pay sales tax, while another person buys. Read, highlight, and take notes, across web, tablet, and phone. It is an important and most significant source of revenue of the government. Income tax proclamation 782002 income tax regulation no. Chapter 16, taxation of income from business and investment 4 income and expenses. Assessment on the implementation of valueadded tax vat in. Vat part of their tax system, where ethiopias standard. Accordingly, the material deals with the following. Introduction to federal government of ethiopia accounting and financial management. For example, it violates the principle of horizontal equity if one person buys an item in a local store and must pay sales tax, while another person buys the same item over the internet, and does not pay sales tax. The impact of electronic tax register on value added tax. The areas of accounting and finance study are financial accounting, cost and managerial accounting, tax accounting, accounting information systems, government and nonprofit.
These types of minimum taxes, along with the general concept of minimum. Read the development of internal auditing in ethiopia. It also provides directives on subjects like accounting year, tax declaration. Value added tax administration in ethiopia unsw business school. The ethiopian tax system also public finance revenue and spending activities. The impact of tax reform on private sector development. The email address is not made public and will only be used if you wish to receive a new password or wish to receive certain news or notifications by email. The recorded income and outgoings are then adjusted as necessary to reflect the differences between tax and commercial accounting rules. Ethiopian ethiopian business chamber of commerce development services network taxation. Finally, the chapter discusses the accounting practice and profile of. In a moment of dismissive hubris, the ethiopian tax system may be described as a loose. These conceptual backgrounds are very important to study the structure and operations in accounting system. Similarly, while the balancesheet method explicitly commences with commercial accounting records, these must be. Part i of the article will address the constitutional and administrative issues surrounding the ethiopian tax system.
Designmethodologyapproach based upon a case study of a large public sector. Addis ababa university school of business and public. Added tax administration regarding the value added tax assessment, collection and implementation of value added tax and to assess the main problems related to the value added tax administration activities performance tax office, service delivery of tax office and voluntary compliance of tax payers in the case of east wollega zone. It is part of the educational kit and takes the students step by step through each phase of preparation stressing key concepts, pointers and procedures. Amharic also known as abyssinian, amarinya, amarigna, and ethiopian is the national language of ethiopia. The new income tax proclamation of 2016 requires taxpayers to use ifrs to keep records and prepare financial. Introduction to ethiopian government accounting and financial. Vat is the principal source of revenue for the ethiopian government. Purpose the purpose of the study is to identify factors impacting the effectiveness of internal audit services. Accordingly, this teaching material tries to address, even though briefly, the basic component of tax law, especially in ethiopia.
International journal of accounting research ijar vol. See david elkins, horizontal equity as principle of tax theory, 24 yale l. Deferring accounting for vat on imported capital goods. The report also draws on international experience and good practice in accounting and auditing, particularly in latin america and the caribbean. In line with this change, a series of tariff and tax reform measures have been taken. Country financial accountability assessment ethiopia. Chapter one introduces students to the basic concepts, principles and underlying assumptions of the many tax laws of ethiopia at present. The aim of this proposal is mainly to reveal that assessment of accounting system on ethiopian electric power corporation a case study at jimma district. A tax can either be proportional, progressive or regressive. Though there is no constitutional distinction between bills subject to parliamentary legislation and those subject to executive declaration, parliamentary ratification has been, and continues to be.
Really this is greatest risk for ethiopian tax administration. Due to the paucity of information on regional tax practice, the article will not deal. Chapter 1 introduction to tax accounting individual steps that are to be taken to come to correct financial statements. Item type current location collection call number copy number status date due barcode. Principles of good tax administration practice note introduction 1. Ethiopian tax accounting theory and practice 1 st ed. Dont want to miss our interesting news and updates.
Corporate businesses are required to pay 30% flat rate of business income tax. If the tax on income from employment, instead of being deducted from the salary or wage of the employee, is paid by the employer in whole or in part, the amount so paid shall be added to the. The tax liability increases in absolute terms, but the proportion of income tax remained the same. This paper consolidates the views of the oecd cfa forum on strategic management on the principles of good tax administration. The focus in this chapter is the use of a presumption to supplant the entire tax base, or an entire category of taxable income. Surveys of taxpayers and tax practitioners mainly accountants in the private practice. Public finance is the term, which has traditionally been used or applied to the packages of those policy problems, which involve the use of tax. Chapter 12, presumptive taxation 1 12 presumptive taxation victor thuronyi. The relationship between accounting and taxation paper number 0209 simon james university of exeter abstract although accounting principles and practice normally form the basis for tax assessment, there are reasons why there should be variations between the figures used for commercial accounting and tax assessment. In the determination of business income subject to tax in ethiopia, deductions would be allowed for expenses incurred for the purpose of earning, securing, and maintaining that business income to the extent. Ba in accounting and finance college of business and.
Tax accounting system for geotechnical construction. The language of amharic is spoken in the ethiopian government, court system, and on all official documents. The dynamic relationship of tax and ifrs in ethiopia is, however, a subject of debate. Tax accounting theory and practice are disclosed in books and papers of the.
Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. The principal taxes currently in place are company profit tax, turn over tax valueadded tax vat, excise tax, customs duty, income tax from employment and income tax from business. The general objective of this study is to assess the tax collection practice in the ethiopian revenue and customs authority and provide worthwhile recommendations to the existing problems. Ba in accounting and finance college of business and economics.
For this purpose this paper classified into contents and sub contents. This study investigates the challenges of value added tax vat collection performance in case of hawassa city revenue authority. The principal taxes currently in place are company profit tax, turn over taxvalueadded tax vat, excise tax, customs duty, income tax. The ethiopian economy is still largely on subsistence level, and in spite of some progress made, ethiopia has only taken the very first steps towards economic and social development. Elkins, horizontal equity as principle of tax theory, 24 yale l. These views do not necessarily reflect the current policy or direction. All emails from the system will be sent to this address. Oclcs webjunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus. However, formatting rules can vary widely between applications and fields of interest or study. Part i of the article will address the constitutional and administrative issues surrounding the. Jitfi federal negaritgazeta ofthefederaldemocratic republicofethiopia liqad. Introduction to ethiopian government accounting and.
Direct and indirect taxes categories of tax payers declaration of income and assessment of taxes tax incentives addis ababa 12005. This program is designed to prepare students for careers in accounting and finance in all economic sectors such as business, notforprofit, and government organizations. Misrak, 2008, ethiopian tax accounting theory and practice,pp 49. Different countries having a different sections of the income tax law practice and which mention about the deduction amount for the tax payers. Executive programme tax laws and practice this study material has been published to aid the students in preparing for the tax laws and practice paper of the cs executive programme. The theory and practice of tax reform in developing countries 276 1991. Rs sd b seligman a tax is a compulsory contribution from the person to the government to defray expenses incurred in the common interest of all with out. Negarit gazcta of the federal democratic republic of ethiopia 8th year, proclamation no. The study adopted a mixed research method approach to answer the. Understand the differences between tax accounting and. Since the th century is has been the language of the court and dominant population in highland ethiopia. By the tax authority, we mean the ethiopian revenues and customs authority erca head office or any of its branch offices established in any part of ethiopia and the tax authorities of the regional state. The tax system of ethiopia by peter schwab in 1966 emperor haile selassie i of ethiopia promulgated by executive decree a new tax law. This irrespective of whether one is a preparer or auditor of the income.
Since 199293, the government of ethiopia has made a major economic policy shift from central planning to market oriented economic system. Cost and management accounting finance and accounting have assumed much importance in todays competitive world of business wherein corporate organisations have to show the true and fair view of their financial position. Oct 19, 2012 read the development of internal auditing in ethiopia. A country financial accountability assessment cfaa is a diagnostic tool designed to enhance knowledge of financial accountability arrangements in the public and private sectors in client countries, to be used by the govemment of the country concerned, and other donors. Finally, the chapter discusses the accounting practice and profile of printing industry in ethiopia. Tax rate and tariff reductions, overhauling the tax system and improving tax admin. Numerous and frequentlyupdated resource results are available from this search. A proportional tax is a tax whose burden is the same rate regardless of the income earned by the household. The 10step methodology is generally applicable to all international finan cial reporting standards, and although this book is based upon the ifrs and the respective standard on income taxes i. This evolution of the accounting practice ranges from the ancient civilization periods of the babylonians and egyptians when payments for daily workers were used to be calculated on clay, as todays practice where computerized accounting information systems are used for generation of financial information.
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