Abstract:
The primary economic goal of developing countries is to increase the rate of economic growth.
In Ethiopia, taxes are considered as a source for growth and development; however the tax
system is fraught with evasion. This study was aimed to examine tax audit practice in Ethiopian
Revenue and Custom Authority and investigates key tax audit operation regarding the
appropriateness of audit type used, audit rate, audit examination techniques used, and the
experience and capability of audit staff resources in North-shewa zone. The study employed
mixed method approach in order to achieve the research objectives and to answer research
questions. A survey of 30 tax auditors and team leaders was taken and an in-depth interview was
done with the selected head of tax audit. The results of the study reveal that tax audit program
remains moderate. The tax audit program is a toddler tool in improving voluntary compliance
and increasing future revenue performance through educating and helping taxpayers to
understand their tax obligations. The study also showed low audit coverage, scarcity of audit
resources, tax auditors in particular, and absence of proficient and experienced tax auditors. In
the end, the study forwards the possible measures to be taken by the Ethiopian Revenue and
Customs Authority of the zone. It need adopt a wide range of audit methodologies in addition to
full comprehensive audit
