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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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