Gov't Gears Up to Upgrade Tax Management Systems

The federal government gears up to replace the tax administration system in use for two decades, with tax authorities hoping the new system will ease taxpayers's burden and allow greater transparency.

Estimated to cost 60 million dollars, the Integrated Tax Administration System (ITAS) implementation, a solution to automate tax collections, is a part of a tax transformation programme launched in 2017 in a partnership between Ethiopia and the United Kingdom. A Tax Transformation Office established under the Ministry of Revenues has been working on the Programme, which will eventually allow taxpayers to settle payments online.

The current system, dubbed Standard Integrated Government Tax Administration System (SIGTAS), is not integrated with other government offices.

The tax regime is one of the areas that impact Ethiopia's score in the World Bank's index for ease of doing business. Ethiopia ranks 159th from 190 countries listed in the World Bank's latest Ease of Doing Business report.

Experts aspire to see the new system establish a single window through which businesses comply with regulations, including obtaining tax identification numbers and business registration certificates.

"We reviewed the systems of over 30 countries before deciding to change," Addis Tamire (MD), head of the Office, told Fortune.

A country that has successfully implemented such a system is Nigeria, where the solution helped reduce costs associated with tax collections and enable real-time tracking of invoices. It is also expected to integrate regional revenue bureaus using different tax collection systems, which experts hope will improve the efficacy of the country's revenues collection.

"The outdated tax system must be replaced to generate more revenues," said Dawit Tadesse, assistant professor of accounting and finance at St. Mary College for eight years.