Tax Appeal in Ethiopia

Tax appeal in Ethiopia is dealt with based on the following legal documents.

Federal Tax Administration proclamation No. 983/2016 DOWNLOAD
Council of Ministers Federal Tax Administration No. 407/2017 DOWNLOAD
A directive to establish and regulate the Tax Review Department No. 127/2009 EC DOWNLOAD
Tax review department directive amendment DOWNLOAD
A directive to provide for the revocation of tax administrative decision No. 137/2010 EC DOWNLOAD
Tax administrative decision directive amendment DOWNLOAD

According to article 53 of the Federal Tax Administration Proclamation (herein after the proclamation), except in proceedings under Part 9 of the Proclamation a tax or appealable decision is final and conclusive, and cannot be disputed in the Tax Appeal Commission (herein after the Commission) or a Court, or in any other proceedings on any ground whatsoever. The proceedings under Part 9 of the proclamation include:

1. Notice of Objection to a Tax Decision

(Article 54 of the Proclamation)

A taxpayer dissatisfied with a tax decision may file a notice of objection to the decision, in writing, with the Authority within 21 (Twenty-one) days after service of the notice of the decision. A notice of objection is valid only upon the fulfillment of the following conditions:

  1.  the notice of objection states precisely the grounds of the taxpayer’s objection to the tax decision, the amendments that the taxpayer believes are required to be made to correct the decision, and the reasons for making those amendments;
  2. when the objection relates to a tax assessment, the taxpayer must pay any tax due under the tax assessment that is not disputed by the taxpayer in the objection; and
  3. A full payment of the tax if a tax payer prefers to pay the tax assessed on protest. 

When the Authority considers that a notice of objection filed by a taxpayer has not been validly filed, the Authority is obliged to immediately serve written notice to the taxpayer. The notice of objection will lapse unless a valid objection is filed by the later of 21 (Twenty-one) days from the date of service of the notice of the tax decision to which the objection relates; or 10 (Ten) days from the date of service of the notice of refusal.

A taxpayer may apply, in writing and before the end of the objection period stated above to the Authority for an extension of time to file a notice of objection. Such application for extension is only accepted if the Ministry of Revenue is satisfied that the reason for extension owes to an absence from Ethiopia, sickness, or other reasonable cause.

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2. Tax Review Departments

(Article 55 of the Proclamation) 

The proclamation compels the Ministry of Revenue to establish a review department as a permanent office within the Ministry. The review department must provide for an independent review of objections validly filed under the article 54 of the Proclamation. However, the department doesn’t render binding decision rather make recommendations to the Ministry as to the decision to be taken on an objection. 

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3. Tax Appeal Commission

(Articles 56, 86 - 94 of the Proclamation)

The proclamation establishes the Tax Appeal Commission (herein after the Commission) which is accountable to the Prime Minister. A person dissatisfied with the decision of the Ministry (after the review by the Review Department), may appeal an appealable decision after fulfilling the following conditions:

  1. File a notice of appeal (which include a statement of reasons for an appeal) against the decision with the Commission in the approved form and within 30 (Thirty) days after the service of notice of the Ministry’s decision to the tax payer. However, the Commission may, on an application in writing and if good cause is shown, extend the time for lodging a notice of appeal.
  2. The tax payer should effect a payment of 50% of the tax in dispute under the tax assessment to the Ministry. The term “tax in dispute” excludes penalty and late payment interest payable in respect of the disputed tax.

After the notice of appeal is accepted, the Commission will hear and determine an appeal and make a decision. Note worthily, if the aggrieved tax payer fails to appear in person/ represented during the hearing session the commission may dismiss the appeal.

The decision of the commission may affirm, vary or set aside the decision, or remit the decision to the Ministry for reconsideration in accordance with the directions of the Commission.

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4. Appeal to the Federal High Court

(Article 57 of the Proclamation)

A party to a proceeding before the Commission who is dissatisfied with the decision of the Commission may, within 30 (Thirty) days after being served with notice of the decision, file a notice of appeal to the Federal High Court. The Federal High Court may, on an application in writing by a party to a proceeding before the Commission, extend the time for lodging a notice of appeal.

A notice of appeal to the Federal High Court by a taxpayer in relation to an objection to a tax assessment is treated as validly filed only if the taxpayer has paid 75% of the tax in dispute under the assessment. Furthermore, an appeal to the Federal High Court must be only made on a question of law which should be stated in the notice of appeal.

After application of the notice of appeal, the Federal High Court hears the appeal and may:

  1. decide to affirm the decision of the Commission;
  2. decide to set aside the decision of the Commission which either substitute or remit (for reconsideration in accordance with the directions of the court) the decision of the Commission.
  3. decide to dismiss the appeal; or
  4. make any other decision the court thinks appropriate.

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5. Appeal to the Federal Supreme Court

(Article 58 of the Proclamation)

A party to a proceeding before the Federal High Court who is dissatisfied with the decision of the Federal High Court may, within 30 (Thirty) days after being served with notice of the decision, file a notice of appeal to the Federal Supreme Court. The Federal Supreme Court may, on an application in writing by a party to a proceeding before the Federal High Court, extend the time for lodging a notice of appeal.

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6. Burden of Proof

(Article 59 of the Proclamation)

In the above proceedings in relation to a tax decision, the burden of proof lies on the taxpayer to prove that the tax decision is incorrect.

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7. Implementation of Decision of Commission or Court

The Ministry shall, within 30 (thirty) days after being served with notice of the decision of the Tax Appeal Commission, Federal High Court, or Federal Supreme Court, take such action, including serving the taxpayer with notice of an amended assessment, as is necessary to give effect to the decision.

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