No different than the previous
meetings the Tax Authority has held with businesses,
a meeting with those upgraded from category “C” to
“B”, on Tuesday, October 25, 2011, was full of
complain and left participants frustrated.
Many had come thinking that this was
a session where they would be allowed room to
negotiate their placement and work out a better
arrangement. To their dismay, what unfolded was an
awareness creation on their rights and
responsibilities under their new placement. However,
it did not stop them from voicing their frustration.
Chaired by Mamo Abdi, advisor to the
general director of the Authority, the meeting was
attended by 100 taxpayers and business-owners from
the Kolfe Keranio district out of the 22,000
citywide whose category has been upgraded. The
upgrade came after the Ethiopian Revenues & Customs
Authority (ERCA) discarded the income estimation
been in use since 1996 based on the declaration of
This was due to the tax assessment
conducted by the Authority, following the prevailing
notion in the government that many businesses were
not fully disclosing their daily revenue. It had
hired 1,200 fresh graduates to conduct the
assessment last year. The assessment was conducted
not by looking at the accounting books, which many
of the category “C” taxpayers did not have, but on
the type of furniture and equipment in their
establishments, to come up with a figure.
Accordingly, those who had been in
tax band “C”, the lowest classification by the
Authority, previously reserved for those whose
revenue is less than 100,000 Br per year, were moved
into “B”, a category for those whose annual revenue
falls between 100,000 and half a billion Birr.
However, almost all of the taxpayers
in attendance did not agree with their
classification. Even more prominent was their
grievance towards the mechanisms in place to hear
their complaint – the Tax Review Committee and the
Tax Appellate Committee.
Members of the review committee are
appointed and accountable to the ERCA and the Tax
Appellate Commission, which is accountable to the
Ministry of Justice (MoJ).
All of the business owners who got
up to speak during the meeting claimed that they
were wrongly categorised in the system, citing what
they used to pay and what they are being asked to
pay following the upgrade. Although the Tax Review
Committee is a place where they could take their
dispute, they considered it biased. All the
attendees claimed they had gone to the committee,
which had found no fault in the Authority’s new tax
“Although the Tax Review Committee
had looked at my case, they upheld the notice given
to me by the Authority,” said a businessman selling
Tej (local honey mead), who went on to claim that he
was asked to pay 19,000 Br under the new assessment.
It was a similar story that was
being told by all those who got up to make a
comment. After hearing complaints of bias in the
review committee, only one person had raised their
hand when asked if anyone had gone to the Appellate
Commission, the next step in pursuit a dispute of
Going for appeal requires a down
payment of half of the amount in dispute within 30
days of the decision of the committee. This
provision of the income tax law has been major
source of contention between the tax payers and
authority. It is also considered as an impediment
for access to justice by legal experts.
“Since the amount of money claimed
by the authority is disputable, the authority should
not demand half of it to go to appeal,” a legal
expert who wished to remain anonymous told Fortune.
“The authority could make the down payment half of
what taxpayer paid the year before the dispute
Although an assessment and dispute
settlement of tax notice occupied bulk of the
meeting, cash register machines, which the taxpayers
will have to install as a result of their new
categorisation, was an issue that saw floor time as
Even if they were to accept their
upgraded category, they could not afford to buy the
machines and should be afforded the chance to buy
them on credit, many of the participants said.
“The minimum cost of a machine on
the market is 5,000 Br, which is very expensive for
me personally,” one of them had stated.
Although the Authority had attempted
to have the machines made available through the
state owned Merchandise Wholesale Import & Trade
Enterprise (MEWIT), it had failed, Mamo admitted.
“We will consider the option again,”
he told the indignant participants.
So far the only companies who can
import the machines and the software are those
authorised by the ERCA. At the end of last year
there were 62 different cash register models and six
software programmes identified by the Authority,
which are provided through nine approved vendors.
At the end of the meeting that went
on for six hours with no break, participants were
left with more frustration than answers.