DETERMINANTS OF BUSINESS INCOME TAXPAYER´S VOLUNTARY COMPLIANCE; THE CASE OF LIDETA SUB CITY

this study investigates the key determinants influencing voluntary tax compliance among business income taxpayers in Lideta Sub City, Ethiopia. Guided by the theories of fairness, institutional strength, taxpayer awareness, perceptions of government spending, and penalties, the research aims to identify which factors most significantly affect compliance behavior. Employing a mixed-methods approach, data were collected from 375 registered taxpayers through structured questionnaires and analyzed using regression models. The findings reveal that perceptions of tax system fairness (FETS), organizational strength of tax authorities (OSTA), taxpayer awareness levels (ALTP), and positive perceptions of government spending (PGS) are strong predictors of voluntary compliance, whereas penalty severity (PEN) shows minimal effect. The study confirms that taxpayers' perceptions of justice and awareness play crucial roles in fostering voluntary compliance, aligning with existing literature emphasizing social norms, institutional trust, and perceived fairness. Policy implications suggest that enhancing tax system equity, strengthening tax administration capacity, and increasing transparency in public expenditure can significantly improve voluntary compliance. The results contribute valuable insights for policymakers seeking sustainable revenue collection strategies and underscore the importance of behavioral and institutional factors in tax compliance dynamics in Ethiopia's urban context.