Capital Ethiopia Newspaper

MoFEC to revise garment taxes

The Ministry of Industry (MoI)  is presenting a document which requires  The Ministry of Finance and Economic Cooperation (MoFEC )  to  revise the  excise and  surtax  levied on  garments.

Under the Excise Tax Proclamation No 307/2002  10 percent  of an excise tax is levied on textiles of any type partly or wholly made from cotton which is gray, white, dyed or printed, in pieces of any length or width /except mosquito nets and “Abudgedi” including blankets, bed sheets, counterpanes, towels, table clothes and similar articles.

And the  MOI which  requested  that MoFEC asked to free all the excises taxes levied on garments.

The ministry also requested   the removal of the 10 percent surtax  which is  levied to encourage beginners in the textile industry.

Tadesse Haile State Minister of MOI said at the discussion with textile investors and stakeholders that the  removal of the tax is expected to be applicable  in the coming two months.

‘’We all are working for the same result, if a certain proclamation hinders our progress we can change it through discussions. We have seen that  excise and surtax levied on the textiles are hampering local investors from doing more work and we are requesting that MoFEC  remove it and I hope they will approve our request.’’

In addition  to that the  Ministry also requested the removal of the Second Schedules Tax Incentives (which the government set a low tax on the import of some special goods which highly discourages  local manufacturing   competitiveness and encourages traders and   importers.  And  MOI suggested MoFEC either increase the tax on imported goods or allow manufacturers to utilize the second schedule.

In the last fiscal year the government targeted to earn USD 78 million from the textile sector   but only 47.3 of the plan met the target. The actual amount was  USD 20 million lower than the previous year.

Problems in infrastructure, shortages of foreign currency, long bureaucracy in getting loans, poor coordination among the stakeholders, weak work quality are the major challenges that threaten the textile sector.

In the current fiscal year the government planned to earn 356 USD by bringing 23 projects which are expected to have 6.9 billion birr working capital.