To revive the staggering business confronted COVID 19, the government has taken various measures. Top among others could be mentioned providing loan, cancelling debt, reducing tax rate and freeing import duties and excises.
In line with these, to stimulate the economy, the government has promulgated tax debt amnesty as indicated in proclamation number 64/2012. Tax collecting institutions are responsible to implement it.
Gezahagne Tamiru is the manager of the Eastern Addis Ababa tax payer’s branch office.
According to him, there are 9 articles in the proclamation which stipulates relieving tax debt but his office is required to see to the implementation of only seven of them.
The rest two are implemented in states and urban administrations.
The first part stipulates giving amnesty to free tax payment including interest and punishment since 2007 EC.
In the branch office, the amnesty is given to 1031 tax payers and the amount in terms of money is worth of 3.5 million birr.
The second part comprises tax payers who are unable to pay because of high tax rate and appealed to court and required to pay the interest and punishment since 2008 to 2011.The relieve is implemented in two ways.
The first criteria is that, those who can pay 25 percent of the net tax within a year will be free from paying interest and punishment. The second one is that, if the tax payers manage to pay the net tax 100 percent within a month, 10 percent of the payment will be deducted.
In the eastern Addis Ababa 1213 tax payers can enjoy the opportunity. The amount of money that would have rolled into the government coffer is 209 billion Birr. Due to the 10 percent discount, the amount of money might increase in the future.
In addition to these, 32 tax payers who were prosecuted due to failure to pay their duty since 2007 have been freed from the prosecution. In the first week of the implementation of the amnesty total debt cancelation are allowed to 247 tax payers.
In terms of money the amount is 335 million birr. This comprises the indebted tax payers since 2007 EC and the signed agreement to enjoy the opportunity.
Till now 32tax payers who are indebted from 2008 to 2011EC had come to office and signed agreement. And 12 of them had paid 2 million Birr to benefit from the created chance. Others 65 tax payers have signed agreement with the office to pay the total required amount and 28 of them paid 49 million Birr by enjoying the 10 percent punishment deduction. The amnesty benefits more people and enable them to revive their business.
Minasie Kifle has his own company and he is one of the tax payers who benefit from the debt relief. He said that, the debt cancellation by the government enables people to stimulate their business which are on the verge of collapse. It also helps them to maintain their employees.
Daniel Wondoson is the E L Business owner and manager who enjoy the amnesty. As to him, the government action is timely and now he and his family feet at ease. Over the last few years, he was in hardship and forced to lay off some of his employees and was uncertain about his future. Now the proclamation has brought a glimpse of hope to reinvigorate his enterprise.
Getahun Hailu has his own company as to him, proclamation 64/2012 comes in a crucial time. Most tax payers were often complaining about the working procedures in the tax collecting office characterized by high bureaucratic hurdles. The proclamation addresses the problems and raises tax payers’ confidence and motivates them to pay on time.
It is an unprecedented measure which they ever had experienced and enables them to create smooth relation between tax payers and tax collecting institution.
According to Gezahagn, the government has allowed the amnesty prioritizing tax payers’ financial stability. To this effect it has outlayed billions of birr which could have been spent for the construction of infrastructures.
He further said that, unlike other countries, the government has pursued different options in cushioning the COVID 19 crises.
In other countries governments have allocated money to revive the economy and to avert the layoff of workers. But in Ethiopia priority is given for relieving tax payer’s debt which in turn motivates them to involve more in the economy. This can be said a paradigm shift.
When mutual trust between government and the public develops, a responsible business community, which delivers its duty, will be created. It can also attract those businessmen who indulge themselves in tax evasion to come to the formal tax paying channel. Most tax payers, who enjoy the amnesty, were legally liable due to failure to pay more than a million birr.
Obsolete accounting system prevailed in some firms weakening their business. The weak tax collecting system also created its own draw back on the firms. Imposing huge amount of tax
Without thoroughly studying the tax payers’ business level, working capital and profit are also among the factors that led them lapse into bankruptcy. It should be known that, there are numerous tax payers who properly discharge their duties and doing their business legally.
Nevertheless, due to the weakness witnessed by both sides that is to say, by tax collectors and payers left many were made to suffer from accumulated debt. Others totally engaged in illegal activities should be traced down and fined relentlessly.
According to Tamiru, the major objectives of the debt relief is to the tax payers to support the fragile business, challenged by COVID 19. from total collapse.
Hence, cognizant of this, tax payers should make their business responsibly and pay their tax duly.
The Ethiopian Herald August 2/2020
BY ABEBE WOLDE GIORGIS
