By Muluken Yewondowssen
Even though it has improved in some areas, the Ministry of Revenue (MoR) is facing criticism for difficulty clearing audits according
to a longitudinal study which reviewed six fiscal years leading up to 2016/17. MoR says the delays are largely due to appeals in tax
During an extra ordinary meeting at the parliament,House Speaker, TageseChafo, who leads a special committee formed last summer
by members of parliament and government agencies, including representatives from the Ministry of Finance, the Federal Attorney
General, and leaders from MoR and the Office of the Federal Auditor General (OFAG) met on Thursday afternoon to evaluate the tax
collection and tax audit performance of the Ministry based on the findings reported by OFAG.
OFAG indicated that during the six years 645 cases were discovered during their financial audit.
The audit finding evaluated the performance audit and other regular audits under the operation of the tax and customs collection.
AdanechAbebe, Minister of MoR said that of the audit cases in question, 101 have been corrected and 196 are in the process of being
solved. She said 348, which is a majority, have not yet been dealt with.
In the audit finding the tax body was expected to collect over 11.3 billion birr over six years. However, so far it has only collected 11
percent of that amount or 1.2 billion birr.
GemechuDubiso, Auditor General of OFAG, even though MoR has taken in a significant amount it is a lot less than they expected.
“The tax collection body has worked hard and we appreciate their efforts in auditing but the matter of the audits being solved is
another issue,” he explained.
He highlighted that there is still nine billion birr of uncollected tax from the 2016/17 budget year, and that in the last six months that
amount has risen to 10.6 billion birr.
“They have to reconsider it and improve it,” he added.
Getting receipts during sales are still a huge problem which the tax intelligence unit needs to work on, according to the auditor
general. He said that the government needs to give adequate resources and attention getting people to issue receipts.
Due to gap in controlling, which could be intentional or because of inability, problems with tax collection costs billions of birr every
year, for instance on OFAG random review in the 2016/17 budget year 1.4 billion was not collected.
According to the auditor general, tax appeals are another problem that needs addressed. He said that the committee following up on
tax appeals has not been providing solutions in a timely manner. He indicated that in the 2016/17 budget year due to tax appeals 1.6
billion birr was not collected on time.
He claimed that the duty free incentives are not properly being followed up on by the government, and that as a result, the county is
losing about 60 billion birr on duty free incentives. He stressed that there is no organized manner for approving duty free incentives.
There are actors providing access for duty free incentives in the federal and regional government.
“Investors that accessed duty free support for their export business are supplying their product for local market than fulfill their duty,”
He has also insisted that the government establish ways for responsible professionals to better handle accounting in companies.
Adanech accepted most the problems at the tax body. She said that her ministry is under reform to change its capacity in different
aspects including boosting the capacity of human resources by providing incentives and trainings besides several rehabilitations.
The technological reforms and modernizing and harmonizing the database system and other technologies are also major areas that
MoR is applying at its facility and Customs Commission.
“A new study supported by the World Bank regarding the technological system will be accomplished in January. We hope that it will
modernize our operation,” she said.
She said there is widespread illegal activity in the tax system and that the public should be made aware of this. For example the private
sector often exaggerates its expense report to get a vat refund and lower tax payment.
She has confirmed that some of the over 11 billion birr may not collected. Adanech disclosed that achievements have observed on
solving the claims at the appeal committee. “Every week we are solving 34 cases, which was less than four in the past,” the
Minister said. ”In the past one of the challenges at the appeal has been the interference of third party and not giving priorities on
those that need priority in different reason,” she said.
With regard to the tax information administration gaps found by the auditor MoR stated that it has solved the problems and informed
OFAG. The information administration gap shows that there are individuals with more than one TIN, case on the cash register
machine, lack of organized information in tax appeal settlements and harmonization of the database.
Other issues are administrating implementation of electronic cargo tracking, and sealing export cargos and importing fuel according to
the auditors general. During the discussions last Thursday, representatives of MoR claimed that it would be difficult to apply sealing
oil on trucks to keep them from being stolen because the cost of sealing is very high. Gemechu recalled that the sealing on oil trucks
was once applied.
DebeleQabeta, Commissioner of Customs Commission, which recently was restructured under MoR, said that the price of sealing of
oil trucks at Djibouti is between USD 28 to 35 which is bit expensive.
He said that the commission is considering other options to monitor oil trucks traveling in the country. (Capital Ethiopia)