Taxpayers are expressing significant frustration over confusion regarding their tax obligations for the previous budget year. They believe the tax authority is unfairly requiring them to apply a newly enacted law retroactively, leading to a climate of uncertainty.
The amended income tax proclamation, which was highly anticipated, was ratified and took effect at the beginning of the current budget year on July 8, 2025. However, taxpayers—particularly those classified as medium and high-level “Category A” taxpayers—are deeply concerned about how this law is being implemented.
Although their initial claims were reported by Capital weeks ago, they now feel they have “nowhere to go” to resolve their specific cases. Their primary concern is not with the new law itself, but rather with the timing and procedure of its application.
The Ministry of Finance (MoF) oversees the implementation of Proclamation No. 1395/2025, which amended the 2016 law. “We had high hopes for a resolution to the confusion between the tax authority and the business community,” taxpayers told Capital this week, noting that there has been no constructive response from relevant government bodies. “No one is helping us find a solution.”
The central issue revolves around timing. The MoF confirmed that the amended law took effect on July 8, 2025. However, taxpayers report that authorities are insisting they file their profit tax declarations for the previous budget year, which ended on July 7, 2025, under the new rules.
Category A taxpayers, in the highest tax bracket, have reported that when they attempted to declare taxes for the year ending July 7, their submissions were rejected.
“They informed us that our tax liability must now be calculated under the new proclamation effective July 8. However, we believe this should only apply to the current budget year, not to the tax year that has already concluded,” expressed frustrated taxpayers.
A significant change in the amended proclamation is the introduction of a minimum tax, which requires businesses to pay income tax equivalent to at least 2.5% of their total annual turnover, regardless of their declared profit.
Taxpayers assert that authorities are pressuring them to revise their previous year’s declarations to align with this new rule. One businessman involved in large-scale import-export explained that despite high transaction volumes, his company operates on slim profit margins.
“For the current budget year, we will comply with the new law and prepare for the minimum tax requirement. However, our company cannot bear the additional tax burden imposed for transactions completed in the previous budget year—before the law even took effect,” he stated.
Another businessperson echoed this sentiment: “We understand that the new law applies moving forward, and we will adjust accordingly. However, applying it retroactively is unreasonable.”
The business community is urgently calling for the Ministry of Finance to intervene in this dispute. They argue that enforcing the new law on past transactions is unfair and creates significant operational challenges. They seek clearer guidance and open dialogue to resolve the issue without imposing undue financial strain on enterprises.
All taxpayers must settle their profit tax for the 2024/25 budget year between July 8 and November 9, 2025, adding urgency to their calls for clarity.
