Ethiopian Review

Addis Ababa — The Ethiopian Revenues and Customs Authority (ECRA) has discovered 1.3 billion birr it is owed in taxes due to tax evasion and tampering with books of account during the first ten months of the current fiscal year, Gebrewahid Woldegeorgis, Deputy Director General (Enforcement) with the authority, told the business community Thursday at a consultative meeting on tax administration held at the Harmony Hotel.

The alleged tax fraud was uncovered while the authority conducted assessment and desk auditing on the financial statements of a number of companies including state-owned enterprises going back to the last two to three years, according to Gebrewahid.

The authority was able to collect over 380 million birr from a single company through its data clearing system, the deputy general director said.

The authority has been aggressively auditing companies’ financial statements for the previous fiscal years, sparking controversy and a heated debate between the business community and ECRA officials during the consultative deliberation on tax.

“The authority has been forcing companies to pay additional taxes after the books were closed and this has been bringing forth uncalled for challenges for the businesses, which, at times, threatens their existence when they are requested to settle a huge sum of additional taxes,” representatives of different companies said during the meeting.

Officials of ECRA said that the authority can examine the books and force tax payers to pay unsettled additional taxes for a period of up to five years if it finds evidence that corroborate that the tax payer owes the authority unsettled tax payment, according to the tax proclamation.

“If a business has to pay a huge sum of unsettled tax payments, it will be given sufficient time to settle its debts,” officials of the authority said.

After auditing the financial statements of over one thousand companies, the authority has notified some 619 tax payers to pay over 500 million birr (during the reported first ten months of the current fiscal years) in tax arrears. Most of these tax payers have appealed against the tax assessment, according to Gebrewahid.

Recently, the authority has charged high profile businesses and individuals in connection with unsettled tax arrears.

The ratio of the country’s tax revenue against GDP stands at 10 percent, which is low even by sub-Saharan standards, which is on average 18 percent. This reflects the existence of poor tax compliance in the country, according ECRA officials.

- By Hayal Alemayehu | Ethiopian Reporter