The Impact of Tax Awareness on Tax Compliance: An Empirical Evidence of Tax Payers in South Ethiopia Regional State

Tax is an important source of government revenue yet it has never been easy for the tax authorities to ensure that most taxpayers are complying with the set laws and regulations of taxation. Taxpayers’ awareness is among the factors that influence tax compliance. As a result enhancing taxpayers’ compliance has been a major concern of tax authorities. The study investigates the impacts of tax awareness on tax compliance in South Ethiopia region. This study applies a descriptive and explanatory research design and quantitative analysis with a research sample of 222 category “A” taxpayers of selected towns of South Ethiopia region. The collected data are then processed and analyzed using SPSS v.26. The findings indicated that taxpayers tax awareness has a positive and significant effect on the tax compliance (β2 = 0.734). Based on the research findings, this study recommends enhanced training and sensitization to create awareness and reduce compliance cost and simplify online technology for the overall positive impact on compliance among tax payers; developing targeted programs for different groups of taxpayers based on those results; transforming tax educational methods to improve taxpayers’ accessibility and engagement, catering to different learning preferences and technological abilities; integrating tax topics into high school, university programs or in training programs for new employees and promoting a culture of tax compliance through organizing tax awareness competitions and introducing rewards for taxpayers with high compliance levels.