20 January 2013

Ethiopia: Tax Authority to Speed Up Service

Kayidaki Gezahegn, left, Operation program design deputy director at the ERCA and Seyoum Dagne, director of reform implementation led the meeting that was attended by taxpayers, business leaders and representatives of government offices.

The Ethiopian Revenues and Customs Authority (ERCA) is producing a draft charter that could reduce the time taken to provide tax clearance, from 48 hours down to 30 minutes.

Taxpayers, business leaders from the Ethiopian and Addis Abeba Chambers of Commerce & Sectoral Associations (AACCSA), as well as representatives from relevant Ministerial offices were present at the discussion, which took place at Ghion Hotel on Thursday, January 18, 2013.

The ERCA used the charters of the Ethiopian Commodity Exchange (ECX), the Ministry of Civil Service (M0CS) and the Ethiopian Standards Agency (ESA) as templates, when developing its draft. The MoCS charter was produced in the last quarter of the 2011/12 fiscal year, whilst the others are just six months old.

The ERCA lists 28 services, including; tax clearance, auditing and licencing, as areas that are to include a time limit for completion.

For tax clearance, the charter requires businesses to fulfill at least eight criteria, including a certificate showing that taxes have been paid, and that the company has undergone auditing, if it is to merge with another company or dissolve.

However, the ERCA is not making any institutional arrangements to deliver the services within the indicated time limit.

"The time that we provided in the charter is the average time that it currently takes us to provide the services," Fekadu Weldesenbet says.

But one participant, a spare parts importer for construction machines and a tax payer for the past 27 years, has his doubts.

"Looking at the situation on the ground, it seems to me that this charter will not become effective; it will always remain a draft," said Endale, declining to give his father's name. "For this to become practical, it would take another 50 years."

Three containers he recently imported are still at theDjiboutiPort, after two months, because he was unable to get tax clearance.

"We called the participants not for ceremony, but rather to collect input and corrections," Kayidaki Gezahegn, deputy director of operation programs for design & development at the ERCA, reassured the attendants.

Participants suggested that the ERCA should take a look at the difference between the time it actually takes to deliver a service and the time suggested in the charter.

Ayelech Tumdolo, officer of the change and modernisation department at the ERCA, told Fortune that the suggestions of the participants would be considered and changes made, based on the ERCA's own research, which has been on-going since September 2012.

The research is looking into the amendment of tax laws, the structure of the ERCA and the national tax system, as well as other supporting activities.

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