A comparative overview this paper appraised and compared concisely the ethiopian value added tax vat and sales tax. Interest in enhancing revenue mobilization in developing countries is increasing. Ethiopia aspires to be a leading manufacturing hub in africa by 2025. Ethiopian tax system strikes one as random, disorganized, and incoherent in places. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Mar 08, 20 this file may not be suitable for users of assistive technology. On this page, you can find the rate of vat in ethiopia, voluntary and obligatory registration of vat in ethiopia, zero rate vat in ethiopia, and vat on imported goods. Whereas, it has become necessary to amend the value added tax proclamation n0. Ethiopia has recently implemented the value added tax system to its tax regime. Standard integrated government tax administration system.
To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. In ethiopia, from the time when modern tax system took a root, the 1940s, there have been a number of attempts to improve the tax system. Personal income tax rate in ethiopia is expected to reach 35. Ethiopian ministry of revenues mor is the body responsible for collecting revenue from customs duties and domestic taxes. The challenges of tax collection in developing economies. Citation markos abraha gebreegziabher 2010 value added tax vat administration and revenue performance. Understand the valueadded tax, how it works and how it differs from a traditional sales tax, and the arguments for and against it. Tax has been replaced by value added tax, and the overall taxation. Whereas, it is believed that introducing the system of advance tax ruling helps. If you use assistive technology such as a screen reader and need a version of this document in a. The tax system of ethiopia by peter schwab in 1966 emperor haile selassie i of ethiopia promulgated by executive decree a new tax law. Eswatini ethiopia gambia ivory coast kenya mauritania mauritius. A study o f operating cost and compliance, a thesis submitted to the faculty of law of t he university of new south wale s.
Addis ababa, ethiopia 12 october 2017 revenue mobilisation in africa continues to improve, says new report the mobilisation of domestic resources is improving steadily in african countries, according to new data from revenue statistics in africa 2017 released today in addis ababa at a meeting of tax and finance. It seizes and takes legal action on the people and vehicles involved in the act of smuggling while it facilitates the legitimate movement of goods and people. Implementation of value added tax and its challenges journal of. Ethiopia introduced value added tax vat in the year 2003 as a replacement to. The vat regime under ethiopian law with special emphasis on. Income tax, consumption taxes on various types of purchases of ngos like sales tax, valueadded tax, exercise tax, turnover tax, property tax. In the case of a taxpayer subject to income tax on schedule c income, any reduction of tax prescribed by subarticle 1 shall be limited to the tax that would otherwise be payable in ethiopia computed as if article 28 loss carry forward of this proclamation applied separately to each foreign country in respect of profit and losses derived. An indirect tax is that tax which is initially paid by one individual, but the burden of which is passed over to some other individually who ultimately bear it. A word or term in these regulations shall have the same meaning that it has in the. The impact of tax reform on private sector development 1 introduction 1. The impact of tax reform on private sector development. Aug 16, 2009 the paper suggests that in ethiopia attempting to implement what is legislated in the main areas such as refunds deserves the governments due attention. Oct 03, 2014 issuu is a digital publishing platform that makes it simple to publish magazines, catalogs, newspapers, books, and more online.
The federal democratic republic of ethiopia ethiopian revenues and customs authority. In ethiopia, the adoption of vat to replace the out dated general sales tax as of january 2003 becomes the central landmark tax reform. The principal taxes currently in place are company profit tax, turn over tax value added tax vat, excise tax, customs duty, income tax from employment and income tax from business. The role of value added tax on economic growth of ethiopia. Ethiopia is one of the poorest countries in the world, with a per capita gross national. Value added tax as a tool for national development in ethiopia. Since the jurisprudence of ethiopian taxation is yet to develop fully, this. Ethiopia personal income tax rate 20062020 data 2021. Accordingly, the goe prioritizes industrial park development and expansion. Ethiopia introduced vat as a replacement to sales tax in the year 2003. In the longterm, the ethiopia personal income tax rate is projected to trend around 35. This paper appraised and compared concisely the ethiopian value added tax vat and sales tax. Value added tax refund practices and revenue performance in ethiopia.
Tax reform discourse and its implication on development. Addis ababa, ethiopia 12 october 2017 african union. Value added tax vat, input tax, output tax view show. In the longterm, the ethiopia sales tax rate vat is projected to trend around 15. Being a tax levied on the final consumption of goods and services, vat is collected at each stage of production and distributions when value is added up on them. Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. No extensive research has been done in these essential and critical features of the comparison of sales tax with vat in the ethiopian context.
Now, therefore, in accordance with article 55 1 and 11 of the constitution of the federal democratic republic of ethiopia it is hereby proclaimed as follows. Tax jurisdictions do not receive the tax revenue until the sale is made to the final consumer. Challenges and opportunities in the mekelle branch of the ethiopian revenue and custom authority erca, thesis. As most of the developing countries do, ethiopia was highly dependent on external financial resources to finance its development activities. A valueadded tax vat is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production. Most developing countries are emerging from the crisis with their fiscal prospects broadly intact imf, 2010a, but with many still facing a fundamental need to raise more revenue from their own tax bases. Easily share your publications and get them in front of issuus. Whether the direct or indirect tax, the tax must be charged on. Dec 17, 2015 value added tax is a recent addition to the tax regime in ethiopia. Standard vat is currently fixed at the rate of 15%. Poverty, incidence analysis, valueadded tax, povertyrelated expenditure.
We are more accustomed to talking if ever about income taxes even then, of specific income taxes, the value added tax, or customs duties than of the ethiopian tax system as a whole. Wollela abehodie yesegat, 2009, value added tax in ethiopia. Value added tax registration, rates, and exemptions in ethiopia details written by administrator published on 30 april 2008 category. The challenges of tax collection in developing economies with special reference to india pramod k.
Value added tax was originally developed to tackle some of the disadvantages associated with general sales tax. Tax rate and tariff reductions, overhauling the tax system and improving tax admin. Though there is no constitutional distinction between bills subject to parliamentary legislation and those subject to executive declaration, parliamentary ratification has been, and continues to be. Here we can share knowledge and experience about vat. This is due to the reason that under a general sales tax system, taxes are charged in full at each. Pdf as most of the developing countries do, ethiopia was highly dependent on external financial resources to finance its development activities. A reflection of problems wollela abehodie yesegat abstract this paper examines vat administration in ethiopia and identifies key problems including lack of sufficient number of. Vat is imposed for every imported goods and services other than an exempt imports and an import of services. Value added tax vat or goods and services tax gst as termed in some countries has become a major tax instrument in a large number of countries worldwide. Value added tax registration, rates, and exemptions in ethiopia. Pdf value added tax collection challenges in ethiopia. Ramaswami parameswaran2005, public finance and taxation, departments.
Value added tax registration, rates, and exemptions in. For many decades, the tax contribution to gdp was very less and this needs an improvement. Nenggapratama internusantara as a taxable entrepreneur is in accordance with law no. Various taxes have been introduced at different times with the. The following shall, in particular, be considered to be a permanent. Download pdf a proclamation to amend the national bank of ethiopia establishment proclamation whereas, for the rapid economic development of ethiopia stable price and. The sales tax, value added tax customs duty are the best examples of the indirect taxes. Pdf addis ababa university faculty of business and. Types value added tax is a recent addition to the tax regime in ethiopia. Mscprogram value added tax vat withholding practices and challenges acknowledgment. Value added tax administration in ethiopia unsw business school.
842 1321 743 1533 118 1337 1255 804 1497 1282 1144 1343 832 580 1303 1246 1424 525 669 1235 482 777 696 991 1074 131 249 367 352 1153 1201 1257 956 447