Abstract:
Tax is a monetary liability levied on individuals or group belongings. Tax is not a deliberate payment or contribution rather an enforced role. Tax levied based on legislative authority and in any tax directive imposed by the government. A well-functioning Tax system is necessary for raising revenue sources, powerful, sustained, and inclusive economic growth. However, in developing countries, especially sub-Saharan countries, the revenue system has fundamental weaknesses. The main aim of the paper is to analyze the factors that affect tax revenue collection in Ethiopia. Taxation is affected by various problems such as unemployment, Inflation, level of citizens' income, and foreign direct investment (FDI). The paper employs secondary data that reflects the collections of taxes in Ethiopia. The data contains the consecutive Ten years of the Ethiopian Ministry of Revenue's achievement from 2009 to 2018. The paper linear regression model. In the Ethiopian tax collection system, the shortage of FDI and other related problems are the system's main problems. Due to tax exemption and subsidy, more research concluded that FDI affects tax revenue, but this paper presents the ultimate benefits of FDI to tax collection.
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