ADDIS ABABA – Ethiopia’s Ministry of Revenue appealed for the large taxpayers to play a major role in the bid to achieve the 2023/24 tax collection plan.
The annual tax collection target is set at 529 Billion Birr, according to Revenues Minister Aynalem Nigussie.
On Friday, the minister discussed the plan and last year’s performance with businesses under the federal large taxpayers’ category.
Tax collection for the June-ended fiscal year fell short of targets including the one set for the large taxpayers. The category contributed 176.16 Billion Birr, meeting only 96% of the plan set at 183.91 Billion Birr.
In the same year, the Ministry of Revenue nearly missed its annual target. Authorities raised 442 Billion Birr from domestic and foreign trade tax last year, achieving 98% of its plan.
This, however close to the target, is significantly less than the growing need to fund the national spending plan, Aynalem said.
The government plans to cover 441 Billion Birr of the current fiscal year’s 801 billion Birr budget through tax income, with the remaining coming from other domestic revenue sources as well as foreign loans and assistance.
Revenues Minister Aynalem said various activities are underway to improve the tax administration and other reforms that are aimed at boosting government’s domestic revenues.
These activities involve strictly enacting the recently revised excise tax law and incoming new tax laws.
Authorities plan to raise an additional 30 billion Birr when an Excise Stamp, and Track and Trace System is put in place based on the revised excise tax law. They also aim to gather another 30 billion Birr annually from a proposed Property Tax bill set to be tabled for the lawmakers for approval this year, according to the Budget proclamation.
In the meantime, we expect the private sector to take a lion’s share in the bid to achieve the 529 billion Birr tax collection plan, Revenues Minister Aynalem urged the large taxpayers.
Currently, there are 742 businesses and companies that fall under the large Taxpayers category. This year, they are expected to contribute 226.1 Billion Birr to the annual tax mobilization plan, according to Aynalem.
Ethiopia relies on a fairly narrow tax base to raise government revenue partly due to its large informal sector, and weak tax administration. Its tax-to-GDP ratio remains less than 10% which is significantly below the average for sub-Saharan Africa of a little over 14%.