Jan 25 , 2020
By DIBORA SAMSON ( FORTUNE STAFF WRITER
)
The Ministry of Revenues lost a court wrangling it had with Faffa Food S.C. over a 5.8 million Br Value Added Tax (VAT) refund.
The Federal High Court ruled in favour of Faffa Food, reversing the verdict of the Tax Appellate Commission that ordered Faffa to pay VAT along with a fine and interest.
Two years ago, the Ministry imposed 5.8 million Br in VAT on Faffa, the half-century-old pioneer of the food processing industry in Ethiopia, for inappropriately deducting VAT from the products it sold to humanitarian agencies. The Ministry claimed that the company deducted the VAT on the raw materials it used for the products it supplied to these agencies.
By law, food products sold to humanitarian agencies to be distributed to drought-affected people are exempted from VAT.
Then the Ministry requested Faffa pay 2.2 million Br as the principal VAT along with nearly two million Br in fines and about 1.6 million Br in interest.
Disagreeing with the Ministry's decision, Faffa appealed to the Tax Appellate Commission, which started hearing grievances and appeals from businesses two years ago after taking over the role of the dissolved tax council under the office of the Attorney General.
On May 20, 2019, the Commission that reviewed the case sustained the Ministry's decision, stating that the company should not ask for VAT refunds or deductions for the raw materials while selling the products without charging VAT.
Displeased with the ruling of the Commission, on June 13, 2019, Faffa filed a statement of claim to the High Court, arguing that it had been originally supplying its products with prices that include VAT. Faffa also stated that based on the government's instruction, it offered the products to humanitarian agencies excluding VAT.
Presiding over the case, the High Court summoned the Ministry to appear with its counterargument on the issue. The Ministry, which was represented by counselor Hailemelekot Abebe, requested that the Court reject Faffa's appeal.
The Ministry's statement filed on November 6, 2019, also states that after examining the products Faffa supplied with and without VAT to distinguish the products that are tax exempt, the amount was reduced to 5.8 million Br from 12 million Br.
After hearing both sides of the argument, the High court annulled the decision given by the lower Tax Appellate Commission, stating that it should be refunded for the VAT expenses the company spent on raw materials.
Muuz Abrha, a tax law practitioner and assistant professor at Adigrat University, argues that the High Court's ruling is not correct, explaining that Faffa should not be refunded the tax.
Muuz cites a proclamation that was legislated 11 years ago stating that the tax paid on raw materials, which are used to produce non-taxable products, are not refunded.
Representatives from the Ministry declined to comment on the issues, stating their plan to appeal to the Federal Supreme Court.
PUBLISHED ON
Jan 25,2020 [ VOL
20 , NO
1030]
Fortune News | Jun 10,2023
Fortune News | Apr 25,2020
Radar | May 27,2023
Radar | Sep 17,2022
Fortune News | Jan 05,2019
Radar | Jan 03,2021
Fortune News | Sep 28,2019
Radar | Mar 09,2019
Radar | Jan 16,2024
Radar | Jun 05,2021
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
May 3 , 2025
Pensioners have learned, rather painfully, the gulf between a figure on a passbook an...
Apr 26 , 2025
Benjamin Franklin famously quipped that “nothing is certain but death and taxes....
Apr 20 , 2025
Mufariat Kamil, the minister of Labour & Skills, recently told Parliament that he...
Apr 13 , 2025
The federal government will soon require one year of national service from university...
Loading your updates...