Takele Uma, deputy mayor of Addis Abeba.

The City Administration is waiting for the approval of the Attorney General to drop charges on 1,780 taxpayers who are accused of tax fraud.

The request was filed with the Office of the Attorney General by Deputy Mayor Takele Uma. The Deputy Mayor called to drop the charges following a petition signed by 4,000 business people that was filed with the Addis Abeba Revenues Authority last December.

“After reviewing the request of the petitioners,” said Shisema Gebreselassie, director general of the Authority, “the City Administration and we reviewed the cases and found out that most of the crimes were minor offences or committed unintentionally.”

The Authority, which has collected 18.7 billion Br in the first half of the current fiscal year, submitted the findings along with a recommendation to Deputy Mayor Takele, who also agreed with the suggestion to drop the charges.

Some businesses have been dealing with the issue for the last two years after they were charged for making transactions without issuing value-added tax (VAT) receipts. Most of the businesses were small cafes and kiosks. Since then, the cases have been under court trial and have reached various stages- while some of them have already been convicted, other cases are still pending in the courts.

The approval from the Office of the Attorney General may dismiss the court cases and release jailed individuals after reviewing all the legal procedures, according to Shisema.

The Office of the Attorney General is reviewing the request and will announce its decision once the review process is completed, according to Zinabu Tunu, communications director at the Attorney General Office.

“It is very easy to shut down shops or sue their owners,” said Takele during his discussion at the end of last week with businesses operating in Merkato, “But we know we won’t achieve our goals by being too aggressive. Instead, we want to get closer to you.”

Currently, no less than 40pc of the city’s economy operates in the shadows, according to a study presented during the discussion that was organised by the Authority, which plans to collect 33.5 billion Br this fiscal year from direct and indirect taxes. The city government has set a 46 billion Br budgetary revenue plan for this fiscal year.

The Authority has a total of 336,173 taxpayers, of which over half of them are ‘category C’ taxpayers that have an annual turnover of less than half a million Birr.

Though the city’s Revenues Authority claims that the businesses were identified for committing minor crimes, experts argue that not issuing receipts cannot be considered minor offence.

“Not issuing a receipt is not a minor offence and is stated as a criminal act,” said Liqu Worqu, a legal practitioner and founder of Abyssinia Law, a website that consolidates Ethiopia’s legal codes and legal frameworks.

Under-invoicing was mentioned as the major cause for not issuing receipts during transactions, according to the business owners who have attended the meeting with the Deputy Mayor last Thursday, March 21, 2019, at Addis Ketema district near Medhanialem High School on Malawi Road.

“Most of the items, which we receive from importers, enter the country with under invoiced documents,” said Tewdros Fikru, a businessperson in Merkato retailing home and office furniture and textiles. “It is tough to issue receipts with the actual prices while buying the items with under invoiced receipts.”

With the fear of massive taxes that would be levied on them, most of the businesses refrain from issuing receipts, according to the taxpayers.

“The Authority should understand this and find a way to circumvent this,” Tewdros said.

However, Yohannes Woldegebriel, a tax law expert argues the problem lies with the tax collecting Authority.

“The tax authority doesn’t have the infrastructure, knowledge or structure to detect under invoicing,” said Yohannes. “Only with a knowledgeable staff, well-structured system and stable business environment can we control this problem.”

Yohannes also asserts that the Authority has to have well-defined rules and regulations which do not frustrate business people but rather solve the problem.

Last February the City Administration wiped the slate clean for some 6,000 category “C” taxpayers who have been in a protracted tax valuation dispute with the Authority. The Authority collected 27.5 billion Br from tax revenues last fiscal year, short of the planned 31.5 billion Br.

PUBLISHED ON Mar 23,2019 [ VOL 19 , NO 986]

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