Published On  Oct 16,  2011






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Tax Authority Hunts for More Back Taxes

Tip-offs from informants and findings of an investigative audit have found millions in unpaid tax.


Continuing its investigation into oil companies, the Ethiopian Revenues & Customs Authority (ERCA) has found that it is owed millions in unpaid back taxes. It has identified unpaid taxes by Total Ethiopia and National Oil Company (NOC), sources disclosed to Fortune.

Total has been asked to pay a total of 23.9 million Br so far. Out of this it has paid 11.9 million Br asked in unpaid VAT and withholding tax. However, it has contested the remaining 12 million with the tax review committee, which is accountable for the authority, alleging that the amount is not fair, according to sources.

 The authority the amount in profit tax and payments made for technical services based on auditing the financial books of 2005 and 2003 to 2007, respectively. 

All payments in consideration of any kind of technical services or expert advice rendered outside of Ethiopia in any form shall be liable to tax at a flat rate of 10pc, which shall be withheld and paid to the tax authority, according to the tax law. 

In the same manner, the National Oil Company (NOC), the first indigenous Ethiopian company to engage in oil business,  has also paid around 2.6 million Br in  August, 2011, in back taxes that are not paid which the tax authority discovered by undertaking a comprehensive audit on its books between from 2004 and 2009, according to these sources.

Out of this amount, 2.2 million Br was for profit tax and 302,166.27Br for Value Added Tax (VAT) including interest and penalties.

ERCA, which collected 51 billion Br last year, has been going after companies for unpaid taxes which it says are owed and has given major businesses tax notices.

Notable among them are tax decision notices of 109 million Br to BGI, 53 million Br to Bambis Super market and 210 million Br to Libya Oil Ethiopia Ltd, based on  tips offs  in the last fiscal year. Except the later, the first two have settled the matter administratively and have started paying the alleged amount in instalments.

Failing to reach for administrative settlement with the Tax Authority and losing its case in the review committee, 115 million Br in the account of Oil Libya was frozen by ERCA to satisfy its claim of 91 million Br in dividend taxes after Oil Libya acquired the assets and operations of Shell Ethiopia Ltd. Although, the authority has drafted a charge to go after the oil company for the remaining amount, it has not been filed yet, according to sources.

Nevertheless, the tax dispute settlement is viewed as unfair by the tax payers and legal experts.

The Review Committee accountable by the tax authority and Appellate Commission accountable to the Ministry of Justice (MoJ) are the complaint hearing organs that tax payers exhaust in hierarchical order before appealing to the court of law. But the tax payer should deposit 50pc of the alleged amount before it appealing to the appellate commission and should pay the whole amount before it brings its case to the court of law.

This is viewed as a hurdle for the tax payer which denies tax payer’s access to justice and raises issues of impartiality by legal experts and tax payers.


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