Contraband trade continues to vex ERCA

Members of parliament are insisting that officials from the Ethiopian Revenue and Customs Authority (ERCA) make the list of people involved in the contraband business public. However, no response to the request was given. On Tuesday January 30 during the regular session the Authority appeared with its representatives to deliver their first half year performance report. Moges Balcha, Director General of ERCA, talked about what they have been doing to collect more taxes and clamp down on tax cheats.
He pointed to the National Contraband Trade Controlling Command Post formed to battle contraband.He said that in the first six months of the budget year 331.6 million birr of smuggled goods were seized. However, this is a 10.5 percent reduction from the preceding year.They also confiscated 105 million birr worth of goods that people were trying to smuggle out of Ethiopia illegally, an increase of 121 percent from the same period last year.
A week ago in its report the Ministry of Trade announcedthat even though the national Command Post stretching from the federal to the Kebele level was established, illegal border trade still continues to be a major challenge and hinders the country’s hard currency earnings.
Many members of parliament remained concerned about contraband trade.
“We have heard several times about contraband at the sessions at the parliament we want to know how these people are engaged in the business and what actions you took to stop them,” one of the parliament members asked the executives of ERCA.
Meanwhile the people’s representatives were eager to know about those that they called contrabandists but the executives of ERCA retreated. “It will be disclosed when the time comes,” ERCA officials said.
Moges reported that in the last fiscal year there were 19,557 corporate business income tax payers. However, only 65.4 percent ended up paying taxes. The rest either reported a loss or no income.
In the first six months of this fiscal year there were 18,178 VAT registered businesses. Of those only 32 percent ended up paying taxes, while 42.8 percent reported they were owed a refund and 25 percent said they owed no taxes or qualified for a refund.
“The customs area is also the same based on a random study, only 80 percent of the imported items came under invoice,” he said.
Moges said that the culture poses a very big problem because paying tax is not valued. Ethiopia is one of the countries with the lowest tax collection compared with its GDP.
Currently, ERCA has a system to review those who reported nil or a refund on their monthly vat report and has identified that most made false statements, according to the director’s report.
During the first half of the budget year ERCA had the goal of collecting 109.4 billion birr but it collected 83 percent of that amount, or 91 billion birr. The achievement is an increase of over 12 percent compared with the same period last year.