Ethiopia: Collection by Tax Authority Reaches 11 Billion Mark

First quarter earnings increase by three million Birr, accumulate only 20pct of projected 54.2 billion Br
First quarter earnings increase by three million Birr, accumulate only 20pct of projected 54.2 billion Br


First quarter earnings increase by three million Birr, accumulate only  20pct of projected 54.2 billion Br
First quarter earnings increase by three million Birr, accumulate only 20pct of projected 54.2 billion Br

Addis Fortune , Eden Sahle

The Ethiopian Revenues and Customs Authority (ERCA) collected 11 billion Br from tax and nontax revenues during the first quarter; 20pc of the 54.2 billion Br it has projected to collect this year.

Although the amount is three million Birr more than its performance in the same period of the previous fiscal year, it was close to one billion Birr short of the 12 billion Br the authority had projected to collect.

This was due to the authority’s focus on employee evaluation and training, discussions with tax payers, and failure to implement new taxes levied on items which used to be free of duty tax, according to Melaku Fenta, director general of the ERCA.

“Following the evaluation of employees, the authority fired 49, including some in managerial positions, for alleged corruption,” Melaku said. “The authority is collecting the information it needs to press charges against these while the evaluation of the remaining employees continues.”

Despite allegations of corruption, the authority showed growth in all its areas of collection. Around 5.9 billion Br, almost half of the tax collected, was from tax and custom duties on imports and exports. This is a 1.9 billion Br increase from the same period during the previous year.

The remaining 5.2 billion Br and 15.7 million Br were collected from local tax and the national lottery, respectively. These showed respective increases of 1.8 billion Br and six million Birr over that of the previous year.

The ERCA has revamped its efforts to collect tax by mandating businesses install cash register machines, holding various training sessions for tax payers, and taking measures against those who do not comply with their tax duties. The authority has projected to collect 70pc of the 77.2 billion Br budget approved for the year and to increase the contribution of collected tax to the gross domestic product (GDP) to 11.2pc from 8.5pc.

The authority also collected 381.7 million Br in uncollected debts from tax payers.

The ERCA’s focus on the audits of customs and tax, investigation, and prosecution of tax evaders contributed to the increased collection of the past quarter, according to Melaku.

Desk audits conducted by the authority led to the discovery of 15.6 million Br owed while it discovered 737.5 million Br in a regular tax audits of 334 tax payers. However, the authority has collected 217.8 million Br out of the total the 845 million Br, to date.

Since the start of the 2009/10 fiscal year, the authority has filed 392 criminal cases for alleged contraband, illegal trade, fraud, and trade offences. It has won 139 of these, which saw the offenders fined and sentenced to jail for between five months and 25 years.

The ERCA also took 165 cases to the Cassation Bench of the Federal Supreme Court, out of which it has won 43. It obtained 38.9 million Br from 12 civil cases while it has lost a total of nine cases, four of which were civil suits in which it lost a claim for three million Br.

The remaining cases are still pending, including high profile cases of massive tax evasion and fraud against Ayele Debela, Gebrekidan Beyene, Kebede Tessera, and Ayalew Tessema.

Gathering information through informants and taking alleged evaders to court contributed to the ERCA’s collection of tax which was not collected during regular collection schedules, according to Melaku.