Amhara Regional State Extends Tax Waivers to Small Businesses

The taxman in the Amhara Regional State has granted waivers to tens of thousands of small businesses affected by the civil war in the north resulting in deaths, displacements, and damaged public infrastructure.

Tsega Tibebu (PhD), head of the Amhara Revenues Bureau, allowed nearly 300,000 taxpayers in category ‘C’ to deduct the days their businesses had been closed due to the war when filing taxes. Businesses with less than half a million Birr in annual turnover fall under Category ‘C’. They pay tax based on the presumptive valuation method, as they are not required to keep accounts of their income.

Last week, Tsega notified six of the Bureau’s branch offices to make adjustments to accommodate taxpayers’ pleas. The regional state may forego close to 3.75 billion Br it has collected from taxpayers under Category 'C', representing 18pc of the tax it mobilised last year. It receives 44.5 billion Br in subsidies from the federal government.

“The intention is to provide relief to small businesses that have sustained heavy losses,” Tsega told Fortune.

Tax reform committees established in six of the 11 zones in the Regional State are tasked with determining the admissibility of taxpayers’ evidence. Waivers will not be available to small businesses in zones that were not directly affected by the war. The war last year caused severe damage to large areas of Gonder, Wello and Showa.

However, the severity of the war’s impact varies across the regional state, making it challenging to implement a uniform system, according to Tsega. Some weredas saw fighting for as long as four months.

Last year, the region’s tax authorities collected 20 billion Br through 11 branch offices. The North Gonder Branch Office collected 10 million Br last year.

Aderajew Azezew is head of the North Gonder Branch Office; his officers have begun to enforce the latest decree. However, tax collection has not resumed in six weredas and two towns, including Telemte, under his jurisdiction.

“It’s because of security concerns,” he said.

One of the beneficiaries of the tax waiver initiative is the Semien Mountain Tourist Guides Association. Its 90 members, whose lives depend on the tourists visiting one of Ethiopia’s most popular natural attractions (Semien Mountains National Park), have disrupted the past two years. According to Degen Gesete, member of the Association, business plummeted due to the pandemic and militarized conflict.

Semien Mountains National Park, in the North Gonder Zone, hosted 38,000 visitors two years ago. It was shut down in March 2020, following reports of the country’s first COVID-19 case, and briefly reopened last year. However, it was forced to close again as the fighting encroached on the area late last year.

Zerayakob Belete, managing partner at Nexus Investment Solution Plc, a consulting firm established 13 years ago, applauds the regional administration’s decision. He observes waiving taxes entirely would have been the wrong move.