Representatives of over twenty flower producing and exporting companies operating in the country expressed their complaints to the Ministry of Revenues (MoR) on Monday over an unsettled reimbursement of value-added tax (VAT) worth millions of birr.

The representatives said that their companies were unable to get paid VAT refunds in due time and full amount from the responsible government organ, the Federal Inland Revenue Authority (FIRA), in accordance with the binding regulation.

The regulation treats transactions destined for export at a zero rate VAT system, hence entitling exporters with a right to claim for a VAT refund upon presentation of the appropriate documents. Transactions for which exporters initially pay VAT and later claim for a refund should, however, be goods and services that directly serve as inputs for the goods or services to be exported, according to the regulation. In order to apply for a VAT refund, an exporter has to be registered for a VAT, present a document assuring the goods or services claimed for a VAT reimbursement are exported, submit a VAT invoice paid for different expenses, and declare their monthly performance, among others.

Exporters who met the preconditions to claim for a VAT refund and apply for a reimbursement will, according to the regulation, get response form FIRA within two months. However, most of the representatives of the flower producers and exporters said FIRA had failed to reimburse their claims even after two months the companies submitted application for a VAT refund.

The representatives of the flower companies also said that the amount of VAT reimbursement the companies were refunded after "unduly delay" was usually short of the sum their respective firms claimed for, lodging their complaints to the Minister of State for Revenues, Geremew Gerji, and other officials at a meeting held at the ministry's headquarters.

Geremew, who recognized some of the complaints raised by the flower exporting companies, said that he was able to observe delays related to the settlement of VAT refunds. The Minister of State said that the meeting was convened to seek a better solution to address the problems. He said the revenue collecting authorities under the ministry were working on a reform program that will enable them better serve customers.

Responding to the complaints, FIRA's deputy general manager, Getachew Eshete, said on his part some of the problems associated with VAT refund had to do with lack of awareness about the preconditions put in place for a VAT refund claim to be eligible. He said there were two major reasons exporters may not in due time be refunded, which were a registration for a VAT and a declaration of monthly performance, both prerequisites for eligibility of VAT refund claims.

The deputy manager said that there were exporters who apply for a VAT reimbursement while they were not registered for VAT. He also noted that there are exporters who submit the refund application without declaring their monthly performance. Getachew, however, did not deny that his authority may have some limitations in serving customers. He said the authority will see to the problems and try to address them.

So far, FIRA has paid about 85 million birr for VAT reimbursement claims, Getachew told The Reporter. He said that the number of VAT payers had currently reached over 26,000, the figure picking up by some five thousand in about a period of a year.

VAT was introduced in Ethiopia on January 1, 2003.