Hirut
Teshome, is in her mid twenties and sells jewellery,
umbrellas, perfumes, and wallets at her older
sister’s shop in TK International Building located
around Bole International Airport.
Her sister rented a corner space inside the building
and is paying 2,000 Br per month for rent. However,
they only earn about 1,000 Br profit per month on
average depending on the customers bargaining
ability and the number of customers.
Her sister’s shop is among the 41 business centres
of the town which were ordered to purchase a cash
register within a month’s time.
The Ethiopian Revenues and Customs Authority (ERCA)
has been enforcing the obligatory use of cash
register machines, known as fiscal cash registers
and printer cash registers, on tax payers who are
registered as Federal Tax Payers. The authority,
which was mandated by the Council of Ministers to
issue a directive on the application and enforcement
of the usage of the machines, had been registering
tax payers in a series of campaigns since February
10, 2008.
To date, the ERCA has made hotels, restaurants,
cafés, butchers, gold and silver smiths, stationery
shops, and construction companies use the cash
register machine. The machines then require the
issuance of printed receipts which record the sale
of goods or services, including the Value Added Tax
(VAT), on a daily basis irrespective of whether they
may have made any transactions or not in a given
day.
The eighth and most recent round, in which the
authority aims to incorporate many of the city’s
businesses, is giving business owners one month to
start using the machines, from March 13 until April
13. This round incorporates the usage of sales
register machines by businesses located in different
parts of the city which were not included in the
previous rounds.
Hirut, who has not registered to buy a machine yet,
has already been approached by wereda officials
urging her to register and start reporting sales
through a cash register machine last week. Failure
to comply with this law would cost businesses like
hers their licence, on top of civil and criminal
liabilities.
Most of the businesses, under this deadline, have
not yet placed their orders to buy the cash register
from one of the eight certified suppliers, while
others have made the drastic choice of shutting down
their business.
Petram Plc, Omedad Plc, Jupiter Trading Plc, Haron
Computer Plc, Merchandise Wholesale & Import Trade
Enterprise (MWITE), I-POS International Trading Plc,
Ambasel Trading Plc, and Addis Home Depot Plc are
the only suppliers who have been accredited by ERCA
to supply the sales register machines.
The authority requires a supplier to deposit one
million Birr in a blocked account as a guarantee.
This blocked account is to be renewed on a yearly
basis for an additional five years every time;
ensuring the blocked account stays blocked until the
company gives up its position as supplier of the
cash registers.
These suppliers, which are accredited for 56 brand
models by the ERCA, are obliged to train customers
on how to operate the machines and maintain them
when necessary.
They are also the only ones allowed to install and
remove the machines, while always notifying the
authority before changing its location after they
have installed it for a particular customer.
Etenesh Kidane, an employee of Adone Decor & Gift
Land, which was established in 2008 with a capital
of 25,000 Br, at Getu Commercial Center on Africa
Avenue (Bole Road). She has been doing business for
the last two years offering candles, photograph
frames, and jewellery.
She claims that news of the required use of a cash
register made her fearful. The company currently
issues manual receipts, which is easy for Etenesh
who says she is usually flooded with customers who
are attracted by her products the moment they walk
into the building.
“I have known people who have resigned from their
jobs due to fear of operating the machine, creating
the same feeling on my part although I do not want
to lose my job,” she told Fortune.
The same fear was expressed by Sintayew Zebene who
works at Beza Max Boutique on the second floor of
the same building. The boutique does not issue
receipts because it has fixed prices on the clothes,
shoes, ladies’ bags, perfumes and some cosmetics,
she claims.
However, Anteneh Tamrat, sales register machine
administration and implementation team coordinator,
does not agree with the traders’ fears claiming that
anyone who can operate a mobile phone can operate
the machines effectively.
Cafés located around Haya-Hulet Mazoria and Bole
Medhanialem, which had already installed the sales
register during the last round, confirmed that
operating the machine is not complex. However,
getting the maintenance while the machine
malfunctions is difficult and takes days, they
claim.
The cost of the machines, which ranges from 4,900 Br
up to 15,000 Br depending on the quality, function
and the brand is another inconvenience raised by
most of the businesses Fortune talked to. They are
preparing to install the machines on their
respective shops despite being small in size and not
transacting as much business.
Nonetheless, the authority has ordered traders to
report a zero transaction if they do not make a
transaction, still obliging them to buy the
equipment. These traders then claim that affording
the machine is a dilemma for them.
The cost of the machines also rises because of the
necessary software designed by Haron Computer Plc,
CNet Technologies, and Pos Land Plc, the only
software providers accredited by the ERCA.
“I cannot afford the machine which I am required to
install because I happen to be in a commercial
business building, while my income is similar with
that of street vendors who are selling freely,”
claims a boutique owner at Cherkos Trading Center.
The cost of the machines, which are imported duty
free, is fixed by the suppliers themselves, Anteneh
told Fortune. However, if there is an exaggerated
price due to high demand the authority will inspect
and control it.
“The traders’ fears and claims are legitimate
especially for those who are running small
businesses,” confirmed a tax expert, who teaches at
Addis Abeba University (AAU) and requested
anonymity. “The compliance cost will be higher for
them and they will shift the cost to the consumer
making some commodities more expensive.”
“The ERCA, which is introducing fiscal register use
equitably among federal tax payers, should provide
incentives such as decreased tax duties until they
recover their costs to encourage them,” he
explained.
“If the ERCA is introducing a uniform policy for
both big businesses and small businesses, it will be
bad news for the latter who will suffer the most,”
he warned.
The ERCA has planned to replace manual transactions
with automated cash registers for all tax payers at
the federal level. The only exceptions are gas
stations which require a different kind of cash
register machine, which will be attached to the
vehicle to measure the fuel being dispensed by the
gas station attendant.
The ERCA plans to have 100,000 new tax payers using
the cash registers by the end of June 2012.
“The authority will track transactions on a daily
basis, which it previously used to get after 59 days
of a transaction taking place and made it difficult
for the authority to track down actual transaction
costs. It will also make it easier for the ERCA to
identify traders who should be included in the VAT
scheme,” explained Anteneh.
On the other side, it is also expected that the
one-month notice issued to traders to install the
cash register machine in their business will flood
the eight suppliers with the high demand from
customers.
Sisay Shekure, general manager of Haron Computer
Plc, who has 5,000 cash register machines in stock
has already ordered 3,000 additional machines;
confident that his company is ready to meet the high
demand.
If there is a high demand, Sisay claims that they
have the potential to import up to 50,000 cash
registers at a time, including the technical support
which takes him two weeks to get in the town.
However, importing an order takes as much as 120
days, according to an employee of the same company,
who talked to Fortune on condition of anonymity.
Anteneh echoed the same opinion as Sisay refuting
the supply shortage claim. The suppliers have a
combined stock of 15,000 fiscal registers and they
are ordering more to meet the high demand they will
face. They are in the process of starting to locally
assemble the machines to meet the high demand, he
said.
On the other hand, there are customers who feel they
have to shut down their businesses due to the
introduction of the cash registers. For example, a
boutique owner around Piazza who was ordered to
install a cash register machine decided to shut down
her business of 10 years instead of complying with
the authority’s demand.
Similarly, there have been growing complaints from
businesses who are claiming that using the machines
would create inconveniences in their operations.
Anteneh also stated that the cash registers will
also be introduced to regional states that are
preparing their own directives on the implementation
process of installing the machines.
“The customers of the fiscal register have to have a
trade licence from the Ministry of Trade (MoT) which
requires all traders to have a new business licences
for each sector they would like to engage in, and
this was implemented on February 8, 2011. This new
procedure requires all applicants to have a TIN
number to be licensed on 982 types of businesses
recognised by MoT,” Amakele Yimame, director of
corporate communications at the MoT, told Fortune.
He is confident that the new licence issuance, which
will soon be offered by the MoT through an online
application for registration that is scheduled to be
launched soon, will not prolong the issuance of
either the machine or the licence required to get
the machine.
Etenesh, Hirut, and Sintayew, who lean more on the
negative prospects of having the fiscal registers
might be forced to face more uncertainties in
getting the machines until the end of the deadline,
when they are anticipating trouble on the
operational side.
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