To this end, nation has planned to widen tax administration information system and utilize it exhaustively, enhance provision of awareness enhancing education to tax payers to facilitate tax payment, enforce tax-related laws and boost the institutional structure and capacity of Ethiopian Revenue and Customs Authority (ECRA).
A case in point, according to ECRA, the amount of tax collected from Addis Ababa city administration has reached 21 billion birr in the just concluded budget year. The Authority stated that this amount had grown by four billion birr when compared with the plan targeted to be generated in the previous fiscal year.
Authority's deputy director general Netsanet Abera said that the taxation office has collected fairly large amount of revenue in this fiscal year, though this amount of taxation collected is below par when compared with planned revenue envisaged to be collected.
According to her, various setbacks had hindered the office from generating bountiful amount of income in the just concluded budget year. As part of remedial effort, the authority has identified numerous problems that bogged down the system of collection of taxes including corruption of disloyal personnel, inconvenient and long overdue system of payment.
As a possible solution, she said, ERCA has implemented computerized system in close to 90 sites in the city. Currently, this system has enabled to easily gather information about tax collection.
This helps to close fissures in the tax collection system, prevail transparency and struck out embezzlement of private and public funds by immoral and illegal employees.
Netsanet said that the Authority has formulated an outstanding plan to smash illegal network of transactions. Accordingly, it is busily striving to encourage issuing of receipt and undertaking legal transactions. To this end, she said the authority has established eight taxation offices exclusively set to Mercato.
Mercato is a place of warm business activity where goods estimated at millions of birr are transacted every day. Hence, it has been a must to introduce new system designed to regulate the huge transaction.
However, it is a secret in public that, as witnessed by individuals, transactions without receipts are more common in many areas of the country including Mercato (the largest African open market compared to other petty businesses in every corner of the country).
Study conducted by the authority in three major customs stations namely, Dire Dawa, Mojo and Kaliti has revealed that under invoicing or underpricing the cost of goods and submitting receipts and invoices that do not accurately witness the value of imported or sold goods is rife in numerous transaction activities.
According to the study, 75 per cent of the receipt samples included for the study has indicated that receipts or invoices issued or the prices of goods listed in them are invalid when viewed from the proper enforcement of tax law (the study confirmed that transactions are being undertaken in a manner that undercut legal prices in an exaggerated manner, more than 100 per cent of the original value, even sometimes 'blatantly' rigging out and distorting receipts and invoices to undercut the price of goods as much as 2,000 per cent).
Seeing the difficulty of achieving the mission of tax collection to the desirable level in a single-handed effort, ERCA has got ingenious mechanism to work in collaboration with Addis Ababa city administration and it set up joint committee entrusted to tackle the problem of making transactions without issuing receipts.
Hence, currently a joint committee is supervising the daily activities of Mercato and they are keeping an eye on buyers and sellers if they are concluding transactions as per the taxation laws of the Authority.
In addition, according to the Deputy Director General, all law enforcement bodies are expected to provide support to the efforts of the authority and contribute their professional input to the successful implementation of the taxation system in market places and business areas.
In a bid to effect same, regional States are also expected to lend a hand to the system and keep watchful eyes on transactions of goods and check if it is being undertaken legally.
The authority is stating that the amount of tax being collected in Ethiopia is the least compared to other countries like neighbouring Kenya. For instance, it said the amount of tax collected every fiscal year is lower than the average that should have been collected in regions.
Nevertheless, tax payers are complaining of various problems that are obstructing easy flow of tax payment. They stressed that, let alone double and triple taxation on a single produce from buying an input up to production phase and value addition, the taxation system by itself is time consuming and tiresome until to date.
Besides, lengthy queue line that makes busy business men and women idle and sometimes lack of accurate records (that levy cumbersome amount from petty businesses and fetch a little from big businesses)and inability to charge proper amount of tax are among the problems.
Transit agents and various stakeholders working with revenue and custom offices have on their part criticized the CD valuation system that had been implemented by the Authority for lengthy years as unclear. They also said that the CD system is vague and does not clearly instruct what to do related to custom and duty tariffs for any imported goods.
In a response to these grievances and complaints, ERCA is stating that the CD system is currently superseded by latest application of Ethiopian Customs Valuation Systems(ECVS) which is being implemented by over 160 countries.
The Authority said the CD system was outdated and unsecured levy system (under this system tariffs were reviewed and inspected every few months and shared widely, allowing customs and transit agents to view tariffs for every imported goods and undertake their own manipulations to undercut prices and gain illegal benefit).
EVCS is a data base designed by the authority to organize and collect information about the price of imported goods. It is acceptable list of invoices compiled by the Customs Authority and prevents the previous distorting and tampering of evidence that was being practised during the application of CD system.
Unlike the CD system, anyone cannot predict the amount of levy to be imposed in the new system and it is advantageous to curtail distortion and corruption.
Even though importers and sellers submit their own invoices to ERCA, the authority has started to employ its own price estimation mechanism to imported goods.
It said this mechanism has become a must due to difficulty to accept invoices and receipts that undercut accurate prices and embezzle revenue that must have been channelled to the government.
EVCS is also said to be advantageous to provide speedy and sophisticated service to customers provided that they have supplied full list of information about the imported material.
Besides, it helps tackle corruption that may be committed by customs personnel and serve the merchant community and the greater public in a responsible and transparent manner.
Currently, nation is striving to boost tax revenue there by curbing any attempt of underpricing and issuing of undervalued receipts and declarations.
Be it in import activities or personal transactions in Mercato and elsewhere, any act of undercutting prices and submitting receipts and invoices that corrupt the revenue generation endeavour of the government is unacceptable. The Authority said it will strive to widen the horizon of taxation and generate sufficient money used to undertake national projects eyed at poverty alleviation.
ERCA does not achieve the desired result in the past few years due to insufficient follow up, lack of ample human power and deficient awareness on the part of buyers and sellers to issue and deliver receipts and documents that testify legal transaction.
ERCA said it will strive to the top of its capacity to enhance the awareness of citizens about the benefits of paying taxation in due time. Furthermore, same effort will be exerted in collaboration with citizens and law enforcement bodies to instruct tax evaders, help them join the taxation system and take corrective measures when all other alternatives become unsuccessful to the desired level.
Ahmed, a businessman, said he is advising his merchant friends about the benefit of paying taxes on time during every social gathering he joins his friends. Hence, he said most merchants he meets and make business with are well aware of the advantage of paying taxes before it is long overdue and encumbered with arrears.
Underpricing and tax evasions have been outlawed by most of Mercato merchant communities, he said. Wise men learn by other men's mistakes; fools by their own.
He witnessed individuals found dodging taxes and performing underpricing activities had been convicted for their wrong doing and sentenced by the lengthy arm of the law.
Hence, no one dares do that crime except a few that are undertaking their business in paranoia and anxiety for fear they might be nabbed by their collars one day and be thrown to jail.
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