10 December 2012

Ethiopia: ERCA Reduces Cash Register Service Fee, Pleasing No One

After a meeting where most taxpayers were complaining about steep maintenance and annual service fees for cash register machines,some tax payers stayed behind to make small talk with Eshetu, deputy director general on December 4, 2012 at Addis Abeba meeting hall, located at Saint George Street.

The Ethiopia Revenues & Customs Authority (ERCA) pegged the fee for the annual cash register machine servicing at 575 Br, excluding VAT, with an additional 300 Br credit to be charged to the machine's SIM card, beginning December 10, 2012.

The decision which has pleased neither the tax payers nor the companies that service the machine arose from complaints made by tax payers during meetings with the ERCA over the past two months.

The companies that are responsible for supplying the machine and hence committed to carrying out annual servicing, which is compulsory under the law, are 14, including, Petram Plc, Omedad Plc, Jupiter Trading, Haron Computer Plc, I-POS International Trading Plc, Bedfam International Plc, Addis Home Depot Plc and Merchandise Wholesale & Import Trade Enterprise (MWITE).

The ERCA says that the first five of these companies charge 1,500 Br on average, while the rest demand 1,000Br.However, both these fees include VAT and the 300 Br credit charged to the SIM cards. However, even the ERCA's rate comes to a total of 961 Br when VAT and the 300 Br SIM card credit are included.

The ERCA has been negotiating with companies, who complained that the rate proposed by the ERCA did not take their expenses into account. The companies say that their expenses included washing chemicals, batteries, and transportation and labour costs.

The supplier's technicians are the only ones allowed by law to install and remove the machines for annual service or maintenance after notifying the Authority and hence the companies will incur transportation costs.

The service providers also argue that they only charged a one-time, annual maintenance fee which was inclusive of additional services that may have been requested by businesses. Whereas their clients claimed that they were charged an annual fee as well as an additional fee per visit.

"We are obliged to go wherever the taxpayers' business premises are, even in the regions in order to provide maintenance service," remarked Sisay Shekur, managing director of Haron Computers.

If the machines need to be maintained at the office of the service provider, the transport cost will be doubled, according to Sisay.

In negotiating with businesses, therefore, the ERCA has made an exception and made the taxpayers transport the machine to the service companies for maintenance purposes only. The companies thus agreed with the fixed price.

"We finally agreed with the price not because its profitability but thinking that we might be compensated from an increased amount of work," Sisay said

However, the taxpayers did not seem to buy into such an argument.

"They only clean cockroaches if they find any; I don't understand why I should be charged in thousands," a taxpayer, who complained about the fee to the officials of the Authority in a meeting held on Wednesday December 4, 2012, told Fortune.

In order to cut such expenses, the ERCA has made an exception and allowed taxpayers to disconnect the machine for annual maintenance purpose only.

However, some taxpayers that Fortune talked to, claim that the current amount is still expensive like Zenet Jamie, general manager of Passion Consultancy Plc who is a customer of the supplier Haron. She claims that her firm has paid close to 2,000 Br in the last fiscal year for servicing.

Although Zenet is happy that she will service her machine at a reduced amount this year, she claims that it is still too much for servicing.

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