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Ethiopian Parliament Approves Chat Excise Tax

The Ethiopian House of People’s Representatives approved a new Chat excise tax law. The new law will result in the administration of Turnover Tax or Value Added Tax on the sale of the stimulating leaf.

The law has the dual intention of administering official income tax from the domestic trade in Chat as well as discouraging the local consumption of the substance.

The proclamation levies excise tax on any person transporting or handling Chat for commercial purposes in addition to all other direct or indirect taxes applicable.

The tax levied on Chat prior to this proclamation has been inconsistent nationally with different states levying different tax rates on the Chat sector it was noted. The law just approved mandates 5 birr per kilogram on Chat designated for local consumption.

A potentially advantageous side effect that is expected from the implementation of this tax is enhancing export earnings. Chat exporters who fail to export the Chat designated for export purposes will be liable to pay the domestic excise tax as well as 25% of the tax as penalty stipulates the new law.

The new law was tabled to the Parliament by the Ministry of Finance and Economic Development on the 5th of July.

It is to be noted that Ethiopia has earned more than 221 million US dollars from the export of Chat in the first 11 months of the just concluded fiscal year.

Source: Capital