Jun 23 , 2019

The City Administration requested the Office of the Attorney General dismiss charges against 3,000 taxpayers, who are accused of alleged tax fraud.

Initiated by the city's Revenues Authority, Deputy Mayor Takele Uma requested that the charges be dismissed under the approval of the  Attorney General before the new tax year starts. Before tabling the recommendation, the Authority has scrutinised the cases filed for tax fraud.

This was disclosed during a meeting held at the Intercontinental Addis Hotel in the presence of more than 2,400 taxpayers and representatives from the Attorney General's Office and the Police Commissioner last week.

The measure is aimed at closing the backlog of taxpayers charged with fraud that have been accumulating for the last five to seven years and streamline still pending cases at the Attorney General's Office and Police Commission, according to Shisema Gebresilassie, director general of the Authority.

“Our aim is to start the new tax year with a new anticipation," Shisema said.

Termination of charges does not include those with a record of printing and using fake receipts and those who have cases pending with auditors, according to Shisema.

The case dismissal will affect those who committed minor offences related to the failure of issuance of value-added tax (VAT) receipts during a transaction. The taxpayers have advanced different opinions during the discussions focusing on the challenges encountered during utilisation of cash register machines, corrupt auditors and improvement of the tax system in general.

Issuing VAT receipts for goods sold by wholesalers or importers that do not have legal price receipts or under-invoiced documents is very difficult, said Tadesse Tewodros, a participant at the meeting and retailer of edible products in Merkato.

The City Revenues Authority, which has collected around 29.7 billion Br in 11 months of the current fiscal year, has achieved 93.5pc of the plan for the specific months, according to the director.

The Authority plans to collect 33.5 billion Br this fiscal year from direct and indirect taxes, while the city government has set a 46-billion-Br budget plan for the same year.

“The measures we take against the taxpaying community should not be punitive," stressed the Deputy Mayor during the discussion. "That way we can achieve the goals we want to reach."

The solution is establishing an institution with a strong bureaucratic system that simplifies business, according to him. The Authority has a total of 336,173 taxpayers, of which over half are 'category C' taxpayers that have an annual turnover of less than half a million Birr.

The City Revenue Bureau has 15 tax branches, which include the newly opened branch for level one taxpayers whose annual transaction value exceeds 42 million Br. There are four branches for level two taxpayers, and 10 branches in every district of the city for level three taxpayers.

A researcher on taxation, monetary policy, the labour market and economic growth stresses that the tax system should focus on growing the perception of the taxpayers.

“The solution for the tax system is found in the questions raised by the taxpayers themselves,” said Abis Getachew. “For the taxpayers, there are no irrelevant questions.”

Even though it is expensive to tackle every question posed by taxpayers, making the playground smooth by devising convenient laws and incentives for the good performers is the only way to change their perception, Abis said.

"The experience of some African countries like Rwanda and Tanzania exhibits that," he said.

Earlier this year, the City Administration dismissed 7,800 cases against taxpayers who were suspected of tax fraud, which was then approved by the Attorney General.

PUBLISHED ON Jun 23,2019 [ VOL 20 , NO 999]

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