Ethiopia provides $2.4 billion tax incentive for investors

Ethiopia tax income up 10%


BY ANDUALEM SISAY GESSESSE-The tax income of Ethiopia over the past six months has increased by 10% compared to last year same period (August 8, 2014 – Jan 7, 2015), Prime Minister Hailemariam Desalegn told members of the parliament on Thursday.

“In the first six months of this budget year $65.9 billion birr (around 3.1 billion at current exchange rate) net tax income is collected, which is 47% of the total annual planned tax income. Compared to same period last year it is higher by 6.5 billion birr (around $306 million) or 10.8% more,” he said this morning presenting the last six month report of his government.

Almost half of the total tax collected in the past six months, which is 31.7 billion birr (around $1.5 billion) was obtained from importers, according the prime minister, who noted that his country
has spent a total of $8.3 billion for import and gained only $1.3 billion in the last six months.

The six month tax income of Ethiopia from importers has increased by slightly over 16% compared to last year same period, according to Hailemariam, who stressed that his government is strengthening tax
reform implementations and is prepared to pursuit both local and foreign businesses who are engaged in tax frauds.

Meanwhile, reports show that due to tax frauds and poor tax law enforcement among others, Ethiopia’s tax contribution to its GDP is still around 13%, which below the sub-Saharan average of close to 16%.

“Our tax income has continue growing. Meanwhile our tax collection has not yet reached at the level it should be based on what our economy is currently generating; it needs special effort,” the premier said.

Recent report by Financial Integrity has ranked Ethiopia among the top African nations losing billions of dollars every year with companies engaged in tax fraud. The report, ‘Cumulative Illicit Financial Flows
from Developing Countries, 2004-2013’, indicated that from 2004 – 2013, $26 billion has left Ethiopia illegally, mainly related to tax fraud.

Out of this amount outflows through mis-invoicing has the lion share, which is $20 billion, according to the report released at the end of 2015.