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Ethiopia to Review VAT, TOT and Excise Tax

Ministry of Finance and Economic Cooperation will conduct a study in collaboration with Ethiopian Revenue and Customs Authority (ERCA) to amend the Turn Over Tax (ToT), Value Added Tax (VAT) and Excise Tax.

The study is aimed at making efficient tax system following the adjustments made along with the latest income tax and tax administration proclamations. In addition to this, the study will put into consideration the global market.

As it stands the TOT rate is 10 percent for services and 2 percent for goods, while there is 15 percent VAT on items sold. Excise tax on the other hand is 35 to 100 percent.

Commenting on the development, Abaynesh Abate, Tax Assessment and Collection procedures Design and Development Director, said the study aimed at making some improvement in line with recent income tax adjustment.

“Fourteen years have passed since we revised TOT, VAT and excise taxes though many changes have occurred in the market, there are procedures which have a negative impact on the our revenue and some others which have a similar impact on the business people and our study will look at that,” Abaynesh said.

The study would also try to address the low level of tax contribution to the Gross Domestic Product (GDP), which currently stands at 13 percent – one of the lowest in the world.

The draft study would soon be discussed by federal and state authorities later by gathering business people, business people, media and other concerned bodies, Abaynesh explained.

Source: Capital