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The tax authority’s drive to coral as many
businesses as exist across the nation has gained
little momentum in the eastern part of Addis Abeba.
Despite mandatory requirements by the East Shoa Zone
Customs & Revenues Bureau that around 1,151
identified businesses in Adama (Nazareth), Dukem,
and Bishoftu (Debre Zeit) towns register for
value-added tax (VAT) and start using cash
registers, only 28.3pc of them have complied as of
mid-January 2012.
This is the first time that businesses in Oromia
Regional State have been asked to install cash
registers and the second time that such a
requirement has been placed on regional towns, as
part of the government’s plan to expand its tax base
across the country.
Five months ago, the government required 700
businesses to install cash registers in Hawassa,
273km from the capital and the seat of Southern
Regional State.
The Authority has plans to collect 8.8 billion Br
from its Adama Bureau during the 2011/12 fiscal
year. If it succeeds, the Bureau’s achievement will
make it the third-largest source of revenues,
contributing nearly 11pc of the 35.1 billion Br that
the Authority collects for the first half of this
fiscal year.
The Zone still plans to register more businesses in
the region for the second round, although Dukem,
Bishoftu, and Adama have been selected for the first
time.
The affairs of these three towns, all on the western
half of the Addis-Harar Highway 4, used to be
handled directly by the Oromia government.
Mobilising domestic revenues, nonetheless, falls
under the direct mandate of the East Shoa Zone
Bureau of the Authority, which oversees 10 weredas.
“When buying cash registers, businesses have to
bring in their purchase receipts to the Bureau and
fill out the necessary forms in order to be included
in the system,” Tesfaye Hailu, manager of the East
Shoa Zone Revenues & Customs Bureau, told Fortune.
“VAT-registered businesses that fail to do this will
no longer be allowed to operate.”
The businesses that are required to use cash
registers were provided with training by the federal
tax Authority, the Zone’s Revenues Bureau, and the
revenues bureaus of all of the three cities.
Four companies, Ambassel, Omedad, Jupiter, and
Payment Business Solution, have been issued permits
to sell cash registers and train people in their
use. Except for Jupiter, all of the other companies
have started selling machines in these three towns.
“We were asked to sell the machines through our
Adama branch, starting from December 2011,” Belay
Ketema, manager of Omedad’s branch office, told
Fortune. “However, we did not have enough stock in
our warehouse, so we started selling two weeks
late.”
So far, Omedad is the top seller of cash registers
in the region, having sold 170 of them, as of two
weeks ago. Close to 88pc of these machines were sold
to businesses in Adama, which has a population of
271,558, according to 2010 data from the Central
Statistical Agency (CSA).
Some VAT-registered businesses in Adama have made
slight increases in prices, subsequent to their use
of cash registers. A well-known hotel in Adama, for
instance, increased the price of some of its food
selections, although it has made no changes to its
prices of alcoholic drinks. Goat stew (kikil) which
used to cost 27 Br at this hotel now sells for 29
Br.
“Now that we are VAT-registered, every transaction
is recorded,” the owner told Fortune. “We have to
declare VAT for everything we sell; so we need to
increase some prices to stay profitable, but we have
kept drinks at the same price, only because we do
not want to lose customers.”
However, price increases have nothing to do with the
newly installed cash registers but, rather, have to
do with other factors in the market, other
businesses counter.
Still, others are apprehensive about the awareness
of use of the cash register machines being low. Some
are not clear on some points of the VAT declaration
process, either.
“Some government offices buy on credit,” Yared
Habtamu, owner of YT Solution Business Enterprise,
told Fortune. “I am not clear about whether we are
expected to declare VAT for transactions from our
own pockets.”
Sufficient training has been given to businesses
coming into the tax net, Tesfaye, of the Authority’s
Bureau, believes.
“We have taken a long time to implement the system,”
he told Fortune. “Businesses that supply goods to
government offices should submit their costs and be
paid in advance so that they do not have to pay VAT
on their own.” |
