BY HIZKEL HAILU
Owing to the fact that Ethiopia is under a rapid economic growth and reform activity, different public institutions are drafting their own development goal. Also the institutions are developing their public service satisfaction parallel with increasing their income.
Among these institutions the Ministry of Revenue is the one which is on the right track in serving its clients actively and increasing its revenue which is secured from its clients, particularly the taxpayers. Accordingly, the Ministry has collected 169.5 billion Birr over the past seven months of this fiscal year. Of which, 50 percent of the revenue was collected from high taxpayers.
Speaking at a forum organized by the ministry to discuss issues with senior taxpayers and other stakeholders, Minister Lake Ayalew stated that it was planned to collect 169.4 billion Birr during the past seven months. Compared to the same period last year, the performance showed an increase of 22.1 bln birr or 15 percent growth. Fifty percent of the revenue is collected from top taxpayers.
“I don’t think there is a country in the world that has done more than planned in this Covid Pandemic situation. It is a great achievement,” said Prime Minister Dr. Abiy Ahmed.
On the council of ministers’ bi-annual evaluation meeting explored each ministry’s key milestones over the past six months, the premier further stated that the ministry should automate its service and work exhaustively on auditing for further achievement.
Being thankful for tax paying communities who are paying their taxes on time, Lake called on those who are making fraud in the tax system to refrain from such fraudulent acts. He also elucidated the government’s readiness to serve legal tax payers priority adding that higher taxpayers should be role models through respecting the country’s tax laws.
Senior Taxpayer Branch Office Manager, Taressa Ensessu, on his part said that his office has collected 79.89 billion Birr during the last seven months mentioning among its plan to collect 120 billion Birr in the current fiscal year. He also said 20.6 billion Birr was collected from the deficit, adding that 45.23 billion Birr will be collected by the next five months.
Pointing out there is a growing trend of tax fraud in the country among the trade communities in different techniques of fraud; he explained that efforts are being made to well address such abusive moves.
As to him, the ministry is also applying e-tax payment in order to modernize the payment system. Therefore, of the 19,042 notifications submitted in the past 7 months, 16,895 (89%) were notified by e-tax and the remaining 2,147 (11%) were notified by manual. He also noted that out of a total of 630 taxpayers in the brunch, 85% were required to pay by e-payment. Among them, 441 (70%) have paid by e-payment.
Presenting his paper regarding the tax violation, Ministry’s Tax Violation Evaluation Director Sisay Gezu said that there “The twins devils” that are being a major challenge for the tax administration in Ethiopia. As to him, some illegal traders are violating the tax system either in tax avoidance or in tax evasion.
According to him, tax avoidance is a process of reducing tax liability within the framework of the law without explicitly violating the tax law. Traders perform such devil’s acts through using legal gaps.
Tax evasion on the other hand is omission of those who have deliberately violated the tax laws or Tax deductions for intentionally violating tax laws and reducing taxable income or exaggerating the expenses. It is also a crime which is performed through using fake receipts, he added.
Moreover, he illustrated that revenue collection is growing in number from time to time noting that the secured revenue was ETB 23.3 billion in 2008/9 and reached ETB 233 billion in 2019/20.
Understanding that invoices have a special consideration in maintaining books and accounts he suggested the trade community to give highest emphasis for having legal invoices.
Apart from the occurrence of economic transactions, purchase and sales of goods and services invoices are of paramount importance for identifying revenue earned or collected, output VAT collected and input VAT paid.
“People who evade taxes are not just cheating the government; they are also stealing from their neighbours who are following tax laws and regulations. And tax evasion is a crime against the nation,” he said.
Speaking to The Ethiopian Herald, Tax and Treasury Manager of Unilever manufacturing PLC, Ethiopia Letekat Lulseged avowed his office’s readiness to offer expert opinion in order to fill the audit gap by the ministry. He further asked the government for the preparation of guidelines regarding Inter Company expenses in order to reduce tax evasions.
Sharing Letikat’s idea, Ethiopian Association of Basic Metals and Engineering Industries General Manager Solomon Mulugeta stated that appreciating legal taxpayers should be strengthened as it is crucial for encouraging the traders coupled with developing the nation’s economy.
In addition to Letekat and Solomon many participants of the forum have raised their concerns regarding the under and over invoicing, foreign currency, transaction date and price identification, customs and policy improvement.
Responding to the questions raised from the participants, Lake Ayalew underscored that the ministry is ready to solve any kind of problems related with the tax and trade issue jointly with the Customs Commission, National Bank and other stakeholders.
Moreover, he accentuated that the ministry has prepared a framework that can highly appreciate legal taxpayers across the nation. As to him, the framework which is sent to the Council of Ministries for its ratification will help legal tax payers get priority on every public sector including the Ethiopian Air Lines and Hotels.
He said there are traders who are harming the country by printing fake receipts, demanding improper returns, preparing under and over invoice and embezzling the country’s wealth in the name of taxpayers. He urged taxpayers who were going astray to refrain from doing so.
National Bank of Ethiopia Governor, Dr. Yinager Dessie (Ph.D), on his part said traders who commit tax evasion and receipt fraud are making more damage to every legal taxpayer parallel with what they do against the country. He further said that the government should strengthen its efforts to get these illegal traders out of the market.
The government will work to alleviate the problems faced by the Commercial Banks and other legal financial institutions coupled with providing necessary assistance to taxpayers who want to increase their income through performing legal tax payment, he noted.
Meanwhile, State Minister of Law Enforcement Sector at the Ministery of Revenue Zemede Tefera said that stakeholders’ participation is crucial to reduce the impact of tax evasion and tax avoidance on the country.
Indicating that development and peace are not possible without revenue, he noted that the problems that hinder revenue collection should be identified and work in collaboration with stakeholders for better solutions.
All things considered, through calling some private and public tax consultants who are negotiating the traders top hide the currency in foreign countries; Lake called on the trade communities to work as hand in glove with the ministry in fighting illegal traders that are performing tax violence acts which can directly harm the nation’s economy.
The Ethiopian Herald March 5/2021
