Ethiopian authorities are resorting to more taxation to boost the country’s revenue, new report by the African Development Bank says. AfDB says in its findings that revenue collection in Ethiopia has increased significantly after the government implemented tax reforms.
Key Findings From The Report
- The study found that the introduction of electronic cash registers in Ethiopia increased value added tax (VAT) collections and payments by about 32%. This increase can be considered large, the bank said.
- However, given the lack of capacity by many Ethiopians to pay tax, government is looking beyond the current reforms to third-party information on taxpayers, promoting electronic tax filing and payment systems, and enhancing analytical capacity using comprehensive national databases.
- Another study however revealed that the threat of companies and businesses being audited by the government of Ethiopia could increase tax payments by 38%, while moral persuasion could increase collections by 32%.
- The findings are merely presenting alternative ways to increase taxation on businesses in Ethiopia.
The Role of The African Development Bank In This Regard
- In this regard, the Bank conducted original research to evaluate the impact of major tax policy reforms in Ethiopia, in collaboration with the Ethiopian Development Research Institute (EDRI) and the Ministry of Revenue and the Ethiopian Customs Commission (formerly Ethiopian Revenue and Customs Authority).
- The African Development Bank said it would provide technical assistance to support the authorities in implementing the research findings.
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- The assistance will complement ongoing advisory services to support reforms, notably to the Public-Private Partnerships Framework and the logistics sector.
- Additional assistance is being designed to advance financial sector development, industrial policy and strategy development, and the mining and petroleum sectors.
- Beyond implementing the emerging policy recommendations, the Ethiopian government and the African Development Bank pledged to explore additional areas for impactful policy research on domestic revenue mobilization, in line with the mutual commitment to improving the quality of life of the people of Ethiopia.
The findings were revealed at a workshop hosted by the African Development Bank and a high-level delegation from the Ethiopian government. The workshop formed part of the Bank’s commitment to helping the government fund its ambitious development plans.
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.