TOT, VAT and excise taxes under review

The Ministry of Finance and Economic Cooperation in collaboration with Ethiopian Revenues and Customs Authority (ERCA) will study how to best adjust the Turn Over Tax (ToT), Value Added Tax (VAT) and Excise Tax.
The attempt will be made to come up with an efficient tax system after last year’s adjustment was applied on income and presumptive taxes.
Currently 10 percent for services and 2 percent for selling items TOT is applied on the market while 15 percent VAT and from 35 up to 100 percent excise tax are gathered from business people.
The new study is also expected to consider the global market.
Abaynesh Abate, Tax Assessment and Collection procedures Design and Development Director told Capital that study aims to make some improvement in line with recent income tax adjustment.
“Fourteen years have passed since we revised TOT, VAT and excise taxes though many changes have occurred in the market, there are procedures which have a negative impact on the our revenue and some others which have a similar impact on the business people and our study will look at that,” she said.
She says they also will address the low level of tax contribution to the Gross Domestic Product (GDP). It is currently 13 percent, among the lowest in the world.
Some tax payers who have complaints with the ERCA capacity and efficiency announced that an office should work on quality services.
She added that draft study soon will be discussed by federal and regional authorities later by gathering business people, media and other concerned bodies.
Zedamu Hige, Deputy General Manager of Belayab Motors said, “I am not against the study but we need the study to look at double standards because we currently pay tax on some of the products we import from abroad. Not only that the authority should upgrade its service to clear confusion on tax gathering.”

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