The European Chamber in Ethiopia (EuroCham) has unveiled its policy paper for the fourth time, aimed at improving tax administration in the country. One notable provision in the policy is the requirement for companies to deposit 50 percent of the tax amount in dispute when filing an appeal with the Federal Appeals Commission.
Under the current system, taxpayers must submit a deposit equal to half of the original tax amount to appeal to the Commission. However, EuroCham’s policy proposes that companies must deposit 50 percent of their tax liabilities to lodge complaints with the Ethiopian Federal Appeals Commission, seeking resolution for their tax concerns.
Expressing concern, the document suggests that this requirement may jeopardize the sustainability of businesses. Survey results indicate that the business community advocates for reducing the deposit amount to 20 percent.
Bahru Temeseng, Director of EuroCham in Ethiopia, warned that failure to meet deposit obligations could lead to business closures, especially when claims exceed available cash and capital reserves.
Moreover, the policy highlights discrepancies in tax audit outcomes, with cases approved in one round often rejected in subsequent rounds within the same tax office. Temeseng emphasized the challenges faced by both taxpayers and auditors in preparing tax reports and conducting audits.
The policy document proposes recommendations to enhance Ethiopia’s tax administration system, emphasizing the need for fair and transparent tax management processes. Among the top recommendations is the reduction of the required deposit amount for tax complaints.
Established in 2012, EuroCham represents the European business community in Ethiopia. With 180 members, it operates as an independent association holding an investment license in Ethiopia.
