Jan 7 , 2024

Members of the Ethiopian Transport Employers Federation are facing serious difficulties adhering to bookkeeping standards introduced by the Revenues Bureau. Organised under 13 share companies, the pressure from tax authorities has prompted the 1475 members to chart a course on how to navigate hurdles such as acquiring receipts for expenses during road trips.

In response to the three-year-old ordinance by the capital's tax bureau, the Federation had filed letters to the ministries of Transport & Logistics, Revenues and Finance, citing difficulties in providing proper expense reports as a significant portion of their costs is conducted without receipts.

Berhane Zeru, president of the Federation, expressed frustration over the lack of progress in resolving the matter. The tax-related complications are compounded by the imminent renewal deadline for business licenses, adding pressure on the transport employers. Berhane highlighted the intricacies of the document request process, citing refusals from certain branches to provide clearances.

He conveyed the pervasive anxiety among drivers facing challenges in meeting tax requirements. The urgency of resolving these issues was attributed to renewing insurance policies as he hopes a recent meeting with Minister Ahmed Shide, will aid in temporary relief to the tax-related woes faced by transporters.

"The entire document request process is complicated," he said.

Transporters face difficulties in obtaining receipts for various expenses incurred on the road, including tyre repairs, refreshments, and entrance and exit fees at Djibouti ports. The issue lies in documenting these expenses properly, leaving them struggling to provide detailed expense reports as required by tax authorities. Owners, in turn, are subjected to additional per diem payments.

Teshome Geremew, head of the Addis Ethiopia Transport Logistics Company, applauded the Federation's efforts but recommended a structural change, considering the upcoming legal requirement for most transport providers to transition to commercial entities.

"We'll have to deal with that soon enough," he said.

Legal advocates faced a similar problem in managing multiple miscellaneous expenses but secured an exemption this year after presenting a detailed study to the tax authority.

Mulay Weldu, director of Tax Policy at the Ministry of Finance, acknowledged ongoing studies on the tax' issue but cited limitations in evaluating certain taxpayers under the current income tax proclamation.

While recognising the challenges raised by transporters, Mulay said only C-class taxpayers earning less than half a million Birr annually can be evaluated in presumptive taxes, highlighting limitations.

The Addis Abeba City Administration has already collected over 52 billion Br in tax revenue within the first five months of the fiscal year.

Shareholders describe the impossible task of finding a receipt on the road to the Djibouti ports.

Bayissa Ayele, a shareholder of Hibret Transport S.C., is eager for the outcome of negotiations with tax authorities. The company has 185 trucks under its fleet. He recounted paying penalties during the previous tax season and stressed the unique challenges of bookkeeping in the transport business.

He owns three freight trucks and was required to pay 6,000 Br to settle penalties during last year's tax season, which he fears might happen again. Bayissa said the only place where a proper receipt can be found is at a fuel station despite expenses climbing up to 175,000 Br for a single trip.

"The business is too peculiar for the bookkeeping requirements expected of us," he told Fortune. A sentiment shared by one representative of Bright Future Transport S.C., who pointed to the declining value of the Ethiopian currency while inflation keeps increasing.

With Djibouti serving as a crucial logistics corridor for nearly 95pc of Ethiopia's inflow of goods, any disruption to freight truck operations poses significant dangers to the country's supply chains. The Federation, facing financial challenges, is appealing to the Defence Ministry for belated payments amounting to 200 million Br for services provided by around 300 trucks.

Yohannes Woldegebriel, a lawyer specialising in Ethiopia's tax legal dynamics, empathised with the transporters' issues, recognising gaps that hinder the collection of payment receipts at every stop or service.

"Its proper implementation is questionable," he said, suggesting temporarily allowing previous payment modalities while restructuring tax obligations for the future.

PUBLISHED ON Jan 07,2024 [ VOL 24 , NO 1236]

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