The Ethiopian Revenue and Customs Authority affirmed that the tax levied on undistributed dividend applies to private limited companies and share companies.

The authority contradicted the claims made about the legality of the tax by members of the business community claiming that the tax proclamation served as the framework for the application.

The authority will enforce the payment of ten percent of accumulated net profit earmarked for distribution amongst shareholders even if it remains undivided said Melaku Fenta, Director of the ERCA speaking at meeting he had with members of the business community protesting the law last Saturday. The tax authority will not exempt companies from the law although it will reconsider the penalties on the unpaid tax for the common good he said.  ERCA will have no choice but to pursue legal measures against companies who refuse to abide by this option.

ERCA has discovered 810 million birr outstanding from 1464 eligible companies explained Nebyu Samuel, advisor to ERCA director. The authority has already notified 470 of these companies and 120 have paid while 115 have paid an allotment but have requested an extension he said. An additional 144 companies are appealing for a revision of the decision added Nebyu.

The contentious tax law was introduced recently on the basis of a circular signed by Eshetu Dessie, Deputy Director of change and modernization works sector under ERCA.

Source: Capital