Ethiopia collects $5 billion tax

The revenue authority of Ethiopia says it has collected 145 billion birr ($5 billion) during the first nine months of Ethiopian fiscal year started July 8, 2018.

This is indicated at a panel discussion the Ministry of Revenue of Ethiopia has organized on Friday. The Ministry has met 80 percent of its target for the period. The money the Ministry has collected in nine months is almost equal to what it collected in 12 months of last fiscal year.

The tax collection of the country has improved following the recent reform and restructuring of tax collection authorities. As a result, the Ministry has been compacting illegal trade and tax frauds, which generated billions of birr over the past few months. At the end of this year the Ministry plans to collect 213 billion birr tax (around $7.5 billion). Reports also suggest that the recent national tax awareness campaign by the Ministry has also been contributing to Ethiopia’s tax income increment.

Ethiopia’s tax collection increased from Birr 12.4 billion in 2005 to Birr 165.3 billion in 2015 indicating over thirteen fold increase in the decade, according to the 2017 study by the UN Development Program, entitled Performance and Prospects of Tax Collection in Ethiopia.

The report stated that the share of domestic revenue in the total public revenue increased from 77 percent to 94 percent in the same period, and the share of tax revenue stands at 83 percent in 2015.

It says however, there is a challenge increasing the tax revenue proportionate GDP; the tax to GDP ratio remained low at 13.4 percent in 2015 which is way below the Sub Saharan Average of about 18 percent, over 20percent for emerging economies and above 30percent for developed economies.

In 2005 Ethiopia’s tax to GDP ratio was 12.5 percent after a decade of robust and strong economic growth this ratio came to 13.4 percent posting very little progress.