The Ethiopian Revenues & Customs Authority (ERCA) extended the deadline for companies to report and submit supporting documents for ploughed back profits up to March 28, 2014, Fortune reported.

Businesses are required to pay 10 percent dividend tax, according to the Income Tax Proclamation No. 286/2002. However, if companies retained part of their net profits the purpose of reinvesting in the business itself, they will not be required to pay the tax.

The ERCA initially set the deadline for February 7, 2014, however, some companies were not able to comply with the deadline. The companies cite lengthy processes and lack of information on what to do in each stage of the process, said Getachew Regassa, secretary general of the Addis Ababa Chamber of Commerce & Sectoral Association (AACCSA).

Businesses appealed to the AACCSA as the deadline approached to to urge the ERCA to extend the deadline on their behalf.

The payment of dividend tax on ploughed back profits has been a subject of a lengthy controversy between the business community and the ERCA. ERCA dropped its plan to collect tax on ploughed back profits after the matter was settled in favour of the business community last July.

Source: Fortune