VAT withholding in Ethiopia: Implications for revenue collection and refunds
Source: Australian Tax Forum Journal Article
Published Date: 1 Jul 2017
Limited fiscal capacity poses a significant challenge in Ethiopia. Recently, Ethiopia has implemented a value-added tax (VAT) withholding system on payments for acquisitions by governments and government bodies with the aim of mitigating evasion and increasing revenue collection. This study assesses the VAT withholding system and its implications for revenue collection and refunds. The findings are based on data collected through in-depth interviews with selected officials from the Ethiopian Ministry of Finance and Economic Cooperation and Ethiopian Revenue and Customs Authority, and taxpayers in Addis Ababa. The interview data is supplemented by data and documents obtained from these government agencies. A trend analysis suggests that, overall, there is little change in revenue collection.
The study finds that VAT withholding-related refund requests are increasing and imposing a significant burden on the tax administration and business cash flows. In view of the problems of VAT withholding and poor revenue collections, this study suggests that the government should consider the possibility of abolishing the scheme and taking other measures, such as increasing the registration threshold. It is also important to enhance information exchange with government agencies and exclude those taxpayers who fail to comply with the tax system from the list of suppliers to the government.
Sorry, this is subscriber only content.
To gain access to this material and much more - Subscribe Now.
(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).
Already a Subscriber? Login now
Already a Subscriber? Login now
Details
- Published By: Sally‘Ann Joseph, Wollela Yesegat
- Published On:1 Jul 2017
The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.
Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.
The Tax Institute
(ABN 45 008 392 372 (PRV14016))
("TTI")
The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009.
Copyright Statement
All materials provided on this site are protected by copyright and are owned by or licensed to TTI.
Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.
Tags
Share this page